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€5.5Bn per year to boost Europe’s defence capabilities

Homeland June 8, 2017

European Commission launches European Defence Fund to ensure money is spent more efficiently.

Today ( 7 June 2017), the European Commission is launching a European Defence Fund to help Member States spend taxpayer money more efficiently, reduce duplications in spending, and get better value for money.

The fund is designed to coordinate, supplement and amplify national investments in defence research, in the development of prototypes and in the acquisition of defence equipment and technology.

Vice-President for Jobs, Growth, Investment and Competitiveness Jyrki Katainen said: “People across Europe are worried about their and their children’s security. Complementing our cooperation with NATO, we need to do more and better ourselves. Today we are showing that we walk the talk. The Fund will act as a catalyst for a strong European defence industry which develops cutting-edge, fully interoperable technologies and equipment. Member States will remain in the driving seat, get better value for their money – and ultimately see their influence increased.”

Commissioner Elżbieta Bieńkowska, responsible for Internal Market, Industry, Entrepreneurship and SMEs, added: “Europe must become a security provider. The Fund will support collaborative research in defence and the joint development of defence capabilities. It will therefore be a game-changer for the EU’s strategic autonomy and the competitiveness of Europe’s defence industry— including the many SMEs and mid-cap companies forming the European defence supply chain.”

The European Defence Fund has two strands:

• Research: The research aspect of the Fund is already delivering. Starting in 2017, the EU will for the first time offer grants for collaborative research in innovative defence technologies and products, fully and directly funded from the EU budget. Projects eligible for EU funding will focus on priority areas previously agreed by Member States, and could typically include electronics, metamaterials, encrypted software or robotics. This will be financed with:
• €90M until the end of 2019, with €25M allocated for 2017. A call for proposals is being launched today for projects in the areas of unmanned systems in a naval environment and soldiers systems. The signature of the first grant agreements is expected by the end of this year.
• 500M per year after 2020. In 2018, the Commission will propose a dedicated EU defence research programme with an estimated annual budget of €500M making the EU one of the biggest defence research investors in Europe.
• Development and acquisition: The Fund will create incentives for Member States to cooperate on joint development and the acquisition of defence equipment and technology through co-financing from the EU budget and practical support from the Commission. Member States may for example jointly invest in developing drone technology or satellite communication, or bulk buy helicopters to reduce costs. Only collaborative projects will be eligible, and a proportion of the overall budget will be earmarked for projects involving cross-border participation of SMEs. The EU will offer co-financing with:
• €500M in total for 2019 and 2020, under a dedicated defence and industrial development programme proposed today.
• €1Bn per year after 2020. A more substantial programme will be prepared for post-2020, with an estimated annual budget of €1Bn. The programme will leverage national financing with an expected multiplying effect of 5. It could therefore generate a total investment in defence capability development of €5Bn per year after 2020.

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Post written by: Abigail Burr