The European Union (EU) is seeking to amend existing funding regulations to support coordinated investment in European defence technology, including areas such as missile defence, artillery systems, and missiles and ammunition, among others.
According to a European Commission (EC) statement on 22 April, under planned new regulations to “stimulate defence-related investments within the EU budget”, the EU will look to strengthen its defence Readiness 2030 to implement the ReArm Europe plan.
The proposed amendments are intended to improve the ability of EU member states to develop and scale up defence capabilities, while streamlining access to EU funds for defence projects.
Changes include a broadening of the scope of the Strategic Technologies for Europe Platform (STEP) programme to cover defence-related technologies and products, particularly those identified as priority capabilities in the recent White Paper for European Defence – Readiness 2030.
Detailed in an EC legal document published on 22 April, additional details were able to be gleaned absent in the initial release, including opening up investment into technology areas such as air and missile defence, artillery, deep precision strike capabilities, missiles and ammunition, drones and anti-drone systems, and strategic enablers.
This would create a fourth strategic sector under the STEP initiatives.
Funding areas that could be used to finance STEP programmes includes the European Defence Fund (EDF), which is the EC’s instrument to support research and development in of advanced military capabilities.
The EDF has a committed budget of nearly €7.3bn ($8.3bn) for 2021-2027, with €2.7bn allocated for collaborative defence research and €5.3bn for collaborative capability development projects that complement national contributions.
According to official data, support is offered primarily through grants of up to 100% of eligible costs and a bonus system that considers SMEs, mid-caps, and connection to a PESCO project, which are pan-European programmes featuring multiple member states.
The amended regulation also introduces additional flexibility in using EU funding to bolster the continent’s defence industry. In particular, the regulation includes a ‘landing clause’ within both the EDF and the Act in Support of Ammunition Production (ASAP).
This provision allows member states, on a voluntary basis, to transfer resources allocated to them under cohesion policy funds to these two programmes. The duration of ASAP is also extended until 31 December 2026.
The EC added that the package of proposed amendments will complement the Omnibus Defence Simplification Package, expected to be presented in June 2025.
EU-UK defence pact on the cards
Meanwhile, as reported by The Times newspaper, the UK appears to be on the verge of agreeing a landmark defence and security partnership with the EU, enabling UK’s defence sector to invest in programmes associated with the €150bn SAFE plan.
Without a partnership agreement, third-party countries are limited in how much they can invest in European defence programmes that utilise finances from the €150bn loan fund. However, with a deal, the UK would be allowed to commit greater industrial resources, and gain greater benefits, from pan-European defence collaborations.
For the EU, enabling the UK to provide its own defence expertise in European rearmament plans is critical. The UK is considered to have an advanced defence economy, with particular expertise in military aerospace technology.
