NewsEU pushes for EIB policy overhaul to fund defense sector projects

EU pushes for EIB policy overhaul to fund defense sector projects

President of the European Commission Ursula von der Leyen

Images source: © PAP | PAP/EPA/OLIVIER HOSLET

11:56 AM EST, March 5, 2024

Currently, the EIB does not finance the procurement of ammunition and military equipment. Nonetheless, it supports space technology, cybersecurity, dual-use technologies, critical infrastructure projects, and border security. The EIB, owned by the 27 EU member states, receives guidance from its member state owners on which sectors to finance.

The Commission is encouraging the EIB Group's governing bodies to reconsider the current exclusions concerning defense from the bank's lending policy. This adjustment would empower the EIB to aid in the production of military equipment, thereby significantly supporting the European defense industry.

This strategic push aims to ramp up the EU's defense manufacturing capabilities in response to Russia's comprehensive invasion of Ukraine in 2022.

"Revising the lending policy, especially that of the EIB Group, is crucial to guarantee the defense sector's access to EU financial tools and their full utilization," the Commission stated.

In a discussion with PAP, EIB President Nadia Calvino highlighted the necessity of strengthening the European defense industry, mentioning an available $6.4 billion earmarked for this purpose. She assured that the deployment of these funds would be expedited.

In a recent resolution, European Parliament members emphasized the urgent need for the EU to enhance its defensive capabilities due to the ongoing conflict between Russia and Ukraine. They urged the EIB to update its financing eligibility criteria to include ammunition and military equipment.

During a defense debate in Strasbourg, European Commission President Ursula von der Leyen advocated for a "new European approach to defense," spurred by institutions, industry, and investors alike. She expressed optimism regarding President Calvino's commitment to increasing the EIB's contribution to collaborative projects aimed at fortifying the European defense industry. Von der Leyen called on member states to back this initiative, highlighting the critical need for the defense industry in Europe to access capital.

As the EU's financial arm, the EIB supports investments aligning with EU policy goals. In 2023, the EIB Group inked agreements for over 900 projects for $94 billion. These endeavors are expected to catalyze investments totaling about $342 billion, aiding 400,000 companies and supporting 5.4 million jobs.

Approximately half of the EIB's financing within the EU targets cohesion policy regions, identified by their relatively low per capita income.