The European Commission asked the European Investment Bank (EIB) on Tuesday to change its defense financing policy this year, as Europe seeks to urgently boost production in the sector to prepare for potential Russian aggression, Reuters reported.

Currently, military and defense spending is clearly excluded from the list of activities that can be financed by the EIB, an institution owned by 27 EU governments, Agerpres notes.

“The European Commission offers the management bodies of the EIB group to adapt defense-related exclusions from the bank’s credit policy. This will allow the EIB to support the production of military equipment and, in general, the European defense industry,” said the press release of the executive committee of the Community.

With a total balance sheet of €544.6 billion, the EIB is the world’s largest multilateral financial institution by assets, with €562 billion in loans granted and pledged in 2022, compared to the World Bank’s $171 billion. It is a key player in financing Europe’s ambitious transition to a zero-carbon and more digital economy, but it cannot finance the production of weapons or infrastructure for military purposes.

“Therefore, the modification of credit policy, especially of the EIB group, is necessary and a top priority for the defense sector to have access to financing and benefit from EU financial instruments. Such a change will also have positive “cascading” effects, taking into account a significant positive signal for financial markets and private banks,” the European Commission said.

A new European program for the defense industry

On Tuesday, the European Commission and the High Representative presented the first European Defense Industrial Strategy at EU level and proposed an ambitious set of new measures to support the competitiveness and readiness of the defense industry.

The European Defense Industrial Strategy (EDIS) sets out a clear, long-term vision for achieving defense industry readiness in the European Union. Today, the European Commission presents a legislative proposal for a European Defense Industrial Program (EDIP) and a framework of measures to ensure the availability and timely supply of defense products as an immediate and essential first means of implementing the strategy.

The strategy sets indicators to measure progress made by member states towards industrial training. Member States are invited to jointly procure at least 40% of defense equipment by 2030 to ensure that by then the value of intra-EU defense trade is at least 35% of the value of the EU defense market, in order to make steady progress towards at least 50% of their defense budget purchases in the EU by 2030 and 60% by 2035.

The European Defense Industry Program (EDIP) is a new legislative initiative that will combine the short-term emergency measures adopted in 2023 and ending in 2025 with a more structured and long-term approach to achieving defense industry readiness. This will ensure continuity of support for the European defense-industrial and technological base, which will accompany its rapid adaptation to the new reality.

The EDIP program includes both financial and regulatory aspects. EDIP will mobilize €1.5 billion from the EU budget in the period 2025-2027 to further increase the competitiveness of EDTIB. The financial support provided by EDIP will especially extend the intervention logic of EDIRPA (financial support from the EU budget to compensate for the complexity of cooperation between Member States at the stage of public procurement) and ASAP (financial support for defense industries that increase their production capacities). ) to encourage EDTIB investment. EDIP will also support the industrialization of products resulting from research and development cooperation supported by the European Defense Fund.

The European Commission says a stronger and more responsive European defense industry will benefit member states and ultimately EU citizens. It will also benefit the EU’s main partners, including NATO and Ukraine.