EU plans new defense funding tool amid Russian threat
Photo: EU to spend COVID fund money on defense against Russia (Getty Images)
The EU intends to adopt the European Defense Industrial Program (EDIP) before the meeting of country leaders in Brussels at the end of June. The instrument will serve as a means for future defence funding of the bloc, Bloomberg reports.
Although it seems small—only 1.5 billion euros from the EU budget for 2025-2027—it may quickly grow. According to Bloomberg, the European Commission is offering member states the option to redirect unused pandemic recovery funds to the fund.
What still needs to be decided is the level of openness for using these resources to purchase American weapons, which is a delicate issue in view of sensitive trade negotiations with Washington, the agency writes.
Russian threat
The EU is facing a military threat from Russia, three years after Moscow’s troops invaded Ukraine. This is happening at a time when the US, its traditional security guarantor, is reviewing the post-war order under President Donald Trump.
As NATO members commit to increasing defence budgets, the 27 EU members are seeking a stronger security foundation in a changing geopolitical environment.
The European Commission is accepting applications for a 150 billion euro credit fund to increase defence spending. Another 650 billion euros may potentially be available to member states under a new mechanism that allows countries to deploy more funds from national budgets over four years without penalties.
Officials also aim to simplify the process of allocating funding provided by the European Defence Fund, a European Commission tool designed to support research and development. The fund began operation in 2021 with a budget of about 7.3 billion euros until 2027.
EU Covid Fund
The EU Covid Fund (officially: NextGenerationEU) is a temporary recovery fund established by the European Union in 2020 to overcome the economic and social consequences of the COVID-19 pandemic.
Volume of funds: about 807 billion euros (in 2018 prices), most of which are grants and loans to EU member states. Main instrument: the Recovery and Resilience Facility (RRF), which amounts to over 720 billion euros and funds reforms, digitalisation, the "green" economy, healthcare, and education.
