MEPs give green light to new defence fund

MEPs have given their approval for the new European Defence Fund, backing a report that paves the way for the €13bn initiative to become fully operational.

The Fund is seen by the EU as a major initiative in the field of defence aiming to encourage cooperation in developing the technologies and equipment needed to address common defence and security challenges.

Reaction to the parliamentary committee vote came from the EPP which backs the fund as a “a long overdue strengthening of European defence capabilities.”

Françoise Grossetête, chairwoman of the EPP group’s working group on economy and environment,  said, “The EPP has always been a strong supporter of and has pioneered the idea of a dedicated fund for European defence.”

The French member added, “It is imperative that we improve European defence cooperation to avoid duplication of projects and develop strong flagship programmes".

“Too often, defence projects in Europe have been done on an isolated country-by-country basis, leading to, for example, a multitude of weapon systems compared to the United States, for instance.

“We want to encourage pan-European cooperation in defence projects and we want to make sure that eligibility criteria for companies are very strict to improve our strategic autonomy”, noted Grossetête.

“Competitiveness, innovation and excellence are the keys to selecting the projects”,said Grossetête.

The Commission said it also welcomed the “partial general approach” on the Fund, also reached on Monday by the council. The Fund was first announced by Commission president  Jean-Claude Juncker in September 2016 at his state of the union address.

In June, the Commission  followed up by tabling plans for the Fund for 2021-2027.

It will provide the financial firepower for cross-border collaboration in defence research and development projects for state-of-the-art, interoperable technology and equipment in areas such as encrypted software and drone technology.

Further reaction came from Elżbieta Bieńkowska, commissioner for the internal market, industry, entrepreneurship and SMEs, who said:"I welcome progress made by Council on our proposal for a European Defence Fund as part of the next long-term EU budget.

“The Fund is a game changer towards more defence cooperation in Europe and European strategic autonomy. 

“Once the European Parliament has adopted its position too, I invite the co-legislators to start discussions in order to reach a common position without delay".

The Fund will provide €4.1 billion to directly finance competitive and collaborative research projects, in particular through grants.

Beyond the research phase, €8.9 billion will be available to complement member states' investments in defence products by co-financing the costs for prototype development and the certification and testing phases.

Projects developed in the context of PESCO or involving SMEs that are deemed eligible will be able to benefit from higher co-financing rates.

The Commission also proposed that up to 5% of the budget should go to supporting disruptive technologies for defence.

This provision is particularly important to ensure the long-term competitiveness of the EU industry.

The approach adopted on Monday is labelled as "partial" as the financial and other horizontal aspects of the fund will depend on the overall agreement on the next multiannual financial framework

The Fund will have as a rule that at least three undertakings established in at least three member states will have to cooperate to receive project funding.

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Martin Banks

Martin Banks

Martin Banks is a highly qualified journalist with many years experience of working within the EU institutions. He is an occasional, and highly valued, contributor to EU today, writing on a wide variety of issues.

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