The informal agreement reached on Thursday by MEPs and the Danish Presidency of the Council will allow for the creation of the first-ever European defence industry programme (EDIP). The scheme seeks to strengthen the European defence technological and industrial base essential for boosting European defence capabilities.
During negotiations, MEPs successfully pushed for an increase to the programme’s budget, by providing for additional financial contributions such as through the channelling of additional contributions negotiated under the SAFE instrument. In addition, the programme allows for member states to use the Recovery and Resilience Facility (RRF) to its full potential, by diverting and reallocating unspent RRF-backed funds to support EDIP projects. The overall envelope is worth €1.5 billion of which €300 million would go to the Ukraine Support Instrument. Furthermore, co-legislators agreed on creating a FAST instrument with the aim of reaching an indicative amount of at least €150 million through additional financial contributions.
MEPs also secured a “buy European” principle by ensuring that eligible entities obtain the design authority of the product. Furthermore, the agreement allows for the funding of defence products where the cost of components originating in the EU or in participating countries represents maximum 35% of the estimated cost of components.
The programme will set up a legal framework for European Defence Projects of Common Interest, which should involve at least 4 Member States to be eligible for funding, and Ukraine will be able to participate. A European ‘military sales mechanism’ will act as a centralised catalogue of defence products and services to bolster EU-wide demand, alongside a voluntary European armament programme designed to support member states’ cooperation throughout the defence equipment lifecycle. Finally, the programme will set up an EU security of supply regime to gradually guarantee continuous access to essential defence products to tackle future supply crises.
Military support for Ukraine
The legislation will set up a Ukraine Support Instrument (USI) to help modernise the Ukrainian defence industry and ease its integration with the European defence industry. EU funding of up to €300 million should scale up direct investment in Ukraine’s defence industry, facilitate partnerships between EU and Ukrainian defence actors and increase EU procurement of defence capacities produced in Ukraine, including for Ukraine itself.
Quotes
“The agreement on the European Defence Industry Programme (EDIP) marks an important step towards a more efficient, faster and genuinely European approach to defence procurement and strengthening European defence capabilities. EDIP is designed to have a lasting impact. It can serve as a reference point for future initiatives and help shape the way European cooperation in defence production is organised beyond 2027”, said Marie-Agnes Strack-Zimmermann (Renew, Germany), the Security and Defence committee Chair.
“This agreement represents a major step forward for the security of the European continent and the development of our defense industry. After decades of dangerous dependencies that threatened the sovereignty of our democracies and the protection of our countries, the EDIP program will reverse the logic of imports that prevailed in Europe. It will concretely support the strengthening of our industrial base and autonomously ensure that our armed forces have the means to fulfill their mission”, said François-Xavier Bellamy (EPP, France), co-rapporteur from the Committee on Industry, Research and Energy.
“Russia’s aggression against Ukraine and its ongoing hybrid attacks on EU countries remind us that Europe can no longer afford to hesitate. We must be able to defend ourselves with strength, unity, and purpose. The European Defence Industry Programme (EDIP) was created precisely for this — to build a resilient, sovereign Europe through joint investment, common procurement, and the full integration of Ukrainian and European industries” said Raphaël Glucksmann (S&D, France), co-rapporteur from the Committee on Security and Defence. “Today’s agreement marks real progress — a concrete step toward greater autonomy, stronger capabilities, and the protection of our democracies” he added.
Next steps
The agreement will now have to be endorsed by both Parliament and Council to become law. The ITRE and SEDE parliamentary committees will jointly hold their vote on the 20th of October.
Background
The Commission put forward a proposal for a European defence industry programme (EDIP) regulation on 5 March 2024. The EDIP – with a proposed budget of €1.5 billion – seeks to achieve defence industrial readiness by bridging the gap between short-term emergency measures, such as the Act in Support of Ammunition Production (ASAP) and the European Defence Industry Reinforcement through Common Procurement Act (EDIRPA), with a more structural, long-term approach.
The European defence industrial base comprises a number of large multinational companies, mid-caps and over 2,000 small and medium-sized enterprises, with an estimated combined annual turnover of €70 billion.
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