Strasbourg: The European Parliament has adopted a new law aimed at bolstering the EU’s defence industry, encouraging joint European defence procurement, enhancing defence manufacturing, and increasing support for Ukraine. The regulation, which has been informally agreed upon with the Council, will establish the first-ever European Defence Industry Programme (EDIP). The initiative seeks to fortify the European defence technological and industrial base while enhancing European defence capabilities.
According to Cyprus News Agency, the EDIP is endowed with a budget of £1.5 billion, of which £300 million is allocated to the Ukraine Support Instrument. Additionally, a Fund to Accelerate Defence Supply Chain Transformation (the FAST instrument) will be created, aiming for an indicative amount of at least £150 million through extra financial contributions. During dialogues with the Council, Members of the European Parliament (MEPs) advocated for a budget increase, utilizing additional contributions from the Security Action for Europe instrument (SAFE). The programme also allows member states to maximize the use of the Recovery and Resilience Facility (RRF) by reallocating unspent RRF-backed funds to support EDIP projects.
MEPs have also championed the ‘buy European’ principle, ensuring that for defence products to receive funding, the cost of components from non-associated third countries cannot exceed 35% of the total estimated cost.
The programme establishes a legal framework for European defence projects of common interest, requiring participation from at least four member states, with Ukraine eligible to join. Furthermore, it sets up a Ukraine Support Instrument (USI) to modernize the Ukrainian defence industry and facilitate its integration with the European defence sector.
The legislation was passed with 457 votes in favor, 148 against, and 33 abstentions. It now awaits formal endorsement by member states before its publication in the Official Journal. The European defence industrial base includes large multinational companies, mid-caps, and over 2,000 small and medium-sized enterprises, with an estimated annual turnover of £70 billion.