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EU seeks ways to support defense companies, Bloomberg reveals details

EU seeks ways to support defense companies, Bloomberg reveals details President of the European Council Charles Michel (Photo: Thierry Monasse/Getty Images)
Author: Daria Shekina

The European Union is discussing ways to support the defense industry. This is related to the wars in Ukraine and Israel, reports Bloomberg.

Reportedly, President of the European Council Charles Michel plans to use the upcoming EU leaders' summit to raise concerns expressed by the defense industry.

Proposals include establishing a mechanism to prioritize the defense industry during competition with civilian goods in case of material shortages and ensuring long-term contracts for defense companies.

Meeting with defense companies

The EU seeks to boost its defense potential following Russia's invasion of Ukraine and years of insufficient funding from member states.

"The war between Israel and the militant group Hamas, as well as the possibility of Donald Trump returning to the White House, are adding urgency to the bloc’s efforts to boost its autonomy in defense," the material states.

On Monday, Michel met with representatives of major defense companies. About 10 CEOs attended the meeting, including those from Rheinmetall AG, Airbus SE, Milrem Robotics, Nammo AS, Nexter, Naviris, and the president of Saab AB.

The meeting was also attended by the EU's industry chief Thierry Breton and the executive director of the European Defence Agency.

What issues were discussed?

Key demands from company representatives included increasing cost predictability in defense spending through long-term government contracts to improve production capabilities and readiness.

Additionally, companies expressed concerns about access to raw materials, critical minerals, and other chemicals necessary for production.

They believe there should be a mechanism ensuring access to these materials, as the civil sector is given priority in case of shortages.

China's role

Access to critical materials has become a serious issue for the EU post-pandemic. Officials also fear that China may use its dominance over some key resources as a weapon.

This access has become even more relevant against the backdrop of global competition for the accelerated development of clean and digital technologies.

During the discussion, participants also talked about the important role the European Investment Bank will play in increasing investments in the defense industry.

Calls for increased defense spending

Earlier, NATO Secretary General Jens Stoltenberg said that this year, a record 18 out of 31 NATO members will meet the alliance's defense spending goal of 2% of GDP.

Danish Prime Minister Mette Frederiksen also said that Europe should limit spending on social welfare and cut taxes to deter a more aggressive Russia by increasing long-term defense and security funding.