The European Commission proposed a $1.6 billion defense industry package that was designed to bolster the region's military capabilities by promoting joint military purchases among the member states.
On Tuesday, officials presented the European Defense Industry Program (EDIP) that seeks to bolster a sector that has struggled to increase production amid Russia's full-scale invasion of Ukraine. Josep Borrell, the EU's high representative for foreign affairs and security policy, said that the war was already at their borders.
European Defense Industry Package
During a news conference in Brussels, Borrell said that Moscow's war of aggression against Kyiv has brought a great sense of urgency to step up industrial defense capacities. Each of the EU's 27 member states is in charge of its defense budget. This has caused economic nationalism to push countries, such as France and Germany, to buy local rather than European.
The result of this situation is said to include consequences as a European Parliament report in 2019 found that the costs of duplication in security and defense policy among the bloc are at least $24 billion, as per Defense News.
The European Commission's executive vice president, Margrethe Vestager, said that in the last two years, the region has faced the situation of a defense industry that does not have sufficient production capacity to meet rising demand.
She added that they have been vividly confronted with a well-known structural fragmentation along national borders that limits economies of scale. Vestager said that this creates mistrust while also preventing genuine competition between industrial players.
The funding for the EDIP runs from 2025 to 2027 and serves as a bridge until the bloc is able to negotiate a new long-term budget. The commission also suggested that the profits generated by frozen Russian assets could be used to fund support for Ukraine within the program's framework.
Boosting Military Capabilities
Vestager also acknowledged that $1.6 billion was "not a lot of money when it comes to the defense industry." However, she noted that it could still create incentives to get the 27 member states of the EU, which have a responsibility for defense, to work together on the matter, according to Reuters.
In recent years, EU countries have sharply increased defense spending as they have been alarmed by Russia's invasion of Ukraine. From the start of the conflict up until June last year, several EU states have spent more than $108 billion on military equipment.
On Tuesday, officials said that the EU should set a goal to procure at least 40% of defense equipment "in a collaborative manner" by the end of the decade. They also urged the states to spend at least 50% of defense procurement budgets within the EU by the same timeframe.
The latest move marks a shift from the strategy that has been used in the past few decades, which has caused Europe to rely on the protective cover of the United States through the NATO military alliance.
The European Commission also called on the European Investment Bank (EIB) to change its policy to enable it to fund defense projects. The EIB has a balance sheet total of $590 billion and is the biggest multilateral financial institution by assets and the biggest multilateral lender in the world, said Aljazeera.
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