€300 Million Budget For EU Deal To Boost Defence Industry And Common Procurement Of Weapons
On Tuesday evening, the European Parliament and Council announced a breakthrough in negotiations, reaching a deal on new regulations aimed at incentivising EU countries to engage in joint defence product procurement and support the EU’s defence industry.
The agreement establishes a short-term instrument, known as the European Defence Industry and Research Programme Agency (EDIRPA), which will be in effect until December 31, 2025.
This tool aims to address the urgent and critical defence needs of member states, particularly in light of increased transfers of defence products to Ukraine, by promoting voluntary and collaborative efforts.
Michael Gahler, the rapporteur for the Foreign Affairs Committee and Security and Defence Subcommittee, emphasised the importance of the agreement in strengthening Europe’s security and defence capabilities.
He stated, “If Russia’s brutal war against Ukraine taught us one thing, it is that we are not prepared to defend ourselves. We can no longer afford to ignore that, and we need to remedy that situation together as we should have done already much earlier. Therefore, the agreement on EDIRPA, despite its rather small budget, marks an important step towards a real Common Security and Defence Policy of the EU.”
This informal agreement will now require endorsement from both the European Parliament and the Council before it becomes law.
The primary objectives of the EDIRPA are twofold. Firstly, it seeks to assist member states in meeting their pressing defence requirements. Secondly, it aims to enhance the competitiveness and efficiency of the European Defence Technological and Industrial Base (EDTIB), including small and medium-sized enterprises (SMEs) and mid-capitalisation companies.
This will be achieved through increased manufacturing capabilities and the establishment of cross-border cooperation in supply chains. Activation of common procurement under the EDIRPA will require participation from a minimum of three member states, covering defence products as defined in Article 2 of Directive 2009/81/EC.
To support the implementation of the EDIRPA, negotiators from the Parliament and Council agreed on a budget of 300 million euros. The EU will contribute up to 20% of the estimated value of each common procurement contract, for each consortium of member states and associated countries.
Entities engaged in common procurement contracts must be established either in the EU or in associated countries, which include EFTA members of the European Economic Area, namely Iceland, Liechtenstein, and Norway.
Maltese MEP Cyrus Engerer recently voted against the majority of the EU Parliament to allocate more funds to Ukraine to help in its war effort.
“Today I voted against the majority of the European Parliament on the proposal that funds dedicated to families and businesses be used for military arms,” Engerer wrote.
“Yes, Ukraine has the right to defend itself, but I strongly disagree that funds for economic recovery after the pandemic, which are crucial for Maltese and European families and businesses, should be used to manufacture and send weapons of war.”
“It is important for Ukraine to reclaim the land that has been taken from it, but European families and businesses have faced significant challenges for the past three years – we cannot ignore them.”
The €300 million budget allocated to this agreement for the whole EU contrasts quite starkly with an assistance measure worth €1 billion under the European Peace Facility (EPF) undertaken last month to further contribute to strengthening the capabilities and resilience of Ukraine to defend its independence, sovereignty and territorial integrity.
Significantly, member states participating in joint procurement may also opt to collaborate with Ukraine and Moldova in purchasing defence products, ensuring broader cooperation and strategic alignment.
In terms of monitoring and reporting, the European Commission will evaluate the impact and effectiveness of actions taken under the EDIRPA upon the termination of the program. The assessment will identify any potential shortcomings and critical dependencies on non-associated third countries concerning raw materials, components, and production capacities. The Commission will then propose mitigating measures to address these issues.
Zdzisław Krasnodębski, the rapporteur for the Industry, Research, and Energy Committee, expressed satisfaction with the compromise reached during the negotiations.
“We reached a reasonable compromise on this important file: the EP managed to achieve its main objectives, including securing a higher budget for the instrument, while preserving the financing of the equally important Act in Support of Ammunition Production. Such outcome guarantees that both programmes will ultimately meet the expectations attached to them in the difficult geopolitical circumstances we are currently facing.”
Background information reveals that the EDIRPA will complement the European Peace Facility, which supports member states’ decisions to supply defence equipment to Ukraine and facilitates coordination as outlined in the Strategic Compass for security and defence, approved by the Council in 2022.
With this new deal, the EU takes a significant step forward in strengthening its common security and defence capabilities, fostering cooperation among member states, and bolstering the European defence industry.
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