JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A new European Defence Industrial Strategy: Achieving EU readiness through a responsive and resilient European Defence Industry
Date: 2024-03-05
Institutions: Directorate-General for Defence Industry and Space, European Commission
Subjects: EU financing, EU strategy, European security, Ukraine, common security and defence policy, defence policy, investment, military cooperation, military equipment, security of supply

EN 

  EN 

   EUROPEAN COMMISSION HIGH REPRESENTATIVE OF THE UNION FOR FOREIGN AFFAIRS AND SECURITY POLICY Brussels, 5.3.2024  JOIN(2024) 10 final  JOINT COMMUNICATION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A new European Defence Industrial Strategy: Achieving EU readiness through a responsive and resilient European Defence Industry  
 
 
INTRODUCTION 

On  14  and  15  December  2023,  the  European  Council,  in  line  with  the  Versailles 
Declaration1 and the Strategic Compass for Security and Defence2, underlined that more 
needs  to  be  done  to  fulfil  the  Union’s  objectives  of  increasing  defence  readiness3.  The 
European  Council  also  emphasised  the  need  to  strengthen  the  European  defence 
technological and industrial base (EDTIB), including SMEs, and to make it innovative, 
competitive and resilient.  A stronger and more  capable EU in  security and defence will 
contribute positively to global and transatlantic security and is complementary to the North 
Atlantic Treaty Organization (NATO), which remains the foundation of collective defence 
for its members.   

EU Defence readiness can be defined as a steady state of preparedness of the Union and 
its Member States to protect the security of its citizens, the integrity of its territory and 
critical  assets  or  infrastructures,  and  its  core  democratic  values  and  processes.  This 
includes an ability to provide military assistance to its partners, such as Ukraine. In line 
with the Strategic Compass, it encompasses the ability to act more quickly and decisively 
when facing crises, secure our citizens against rapidly evolving threats, invest in the needed 
capabilities  and  technologies  and  partner  with  others  to  achieve  common  goals.  This 
Strategy also responds to proposals made by citizens in the Conference on the Future of 
Europe4. 

A strong EU defence industry is an essential pre-requisite to achieve defence readiness. 
This  European  Defence  Industrial  Strategy,  based  on  the  findings  of  the  defence 
investment  gap  analysis  presented  in  the  Joint  Communication  of  18  May  20225,  and 
following  a  comprehensive  stakeholder  consultation  process,  proposes  an  ambitious 
approach underpinned by a European Defence Industry Programme (EDIP), together with 
a set of flanking measures and alongside the European Defence Fund (EDF), to strengthen 
the industrial pillar of EU defence readiness. This effort should be steadily pursued beyond 
the  current  Multiannual  Financial  Framework  (2021-2027),  with  EU  funding  delivered 
through future instruments whose scope and design will draw upon the experience gained 
through the implementation of the different defence programmes. 

1  

Informal meeting of the Heads of State or Government Versailles Declaration 10 and 11 March 2022, 
20220311-versailles-declaration-en.pdf (europa.eu) 

2   A Strategic Compass for Security and Defence - For a European Union that protects its citizens, values 
and interests and contributes to international peace and security, Brussels, 21 March 2022, 7371/22, pdf 
(europa.eu) 

3   European Council meeting, Brussels, 15 December 2023, EUCO 20/23, europeancouncilconclusions-
14-15-12-2023-en.pdf  (europa.eu).  Conclusions  read:  “Having  taken  stock  of  work  carried  out  to 
implement its previous conclusions, the Versailles Declaration and the Strategic Compass, the European 
Council underlines that more needs to be done  to fulfil the Union’s objectives of increasing defence 
readiness  and  increasing  defence  expenditure  in  a  collaborative  way,  including  enhancing  defence 
investment and capability development, and to achieve an effective and integrated market for defence”. 

4   EU public opinion surveys confirm the strong interest and high expectations of Europeans about more 
cooperation in defence matters. According to the Standard Eurobarometer 100 (December 2023), 79% 
of Europeans believe that co-operation in defence matters at EU level should be increased, and 69% 
consider that EU need to reinforce its capacity to produce military equipment. 

5  

Joint Communication on the Defence Investment Gaps Analysis and Way Forward. Brussels, 18.5.2022 
JOIN (2022) 24 final.  

 
 
  
 
The steep increase of regional and global threats and security challenges and in particular 
the return of high-intensity conventional warfare in Europe requires an urgent step-change 
in  the speed and  scale  at  which EDTIB  can identify,  develop  and produce the  requisite 
military equipment across the full spectrum, starting from the most urgent needs. Further 
strengthening and streamlining the tools and instruments that the Union has put in place 
over  the  past  years  is  necessary  in  this  respect.  Defence  industrial  readiness  must  be 
strengthened across the Union, paying particular attention to the specific implications that 
this  has  for  those  Member  States  most  exposed  to  the  risk  of  materialisation  of 
conventional military threats.  

Defence industrial readiness can only be achieved if the Member States’ continued increase 
of defence spending is enabled, through the appropriate tools and incentives, to actually 
prioritise collaborative investments. This will reinforce both their military capabilities and 
the defence industrial base on which the EU and its Member States can rely. This will also 
directly reinforce NATO, as Member States, including those who are NATO Allies6, have 
a  single  set  of  forces  that  they  can  make  available  in  different  frameworks.  It  also 
contributes  to  the  Union’s  wider  economic  security,  as  the  EDTIB  is  a  key  driver  of 
technological innovation and resilience across our societies. 

This strategy intends to enhance and support the Member States’ efforts to invest more, 
better,  together,  and  European  (Section  2).  The  increased  availability  of  defence 
products  and  systems  should  be  achieved  thanks  to  a  more  efficient  and  responsive 
EDTIB, relying on enhanced security of supply (Section 3). It is important to develop 
the financial means to underpin EU defence industrial readiness (Section 4). In addition, 
a defence readiness culture should be mainstreamed including across all EU policies 
(Section 5). Finally, partnerships should be leveraged to enhance readiness and resilience 
(Section 6).  

1.  ACHIEVING  DEFENCE  READINESS  THROUGH  A  MORE  RESPONSIVE  AND  RESILIENT 

EUROPEAN DEFENCE INDUSTRY  

1.1.  Defence readiness: imperative in the current geopolitical environment 

Faced with the return of high intensity warfare in Europe, following Russia’s unprovoked, 
full-scale  invasion  of  Ukraine  in  2022,  the  Union  must  swiftly  enhance  its  defence 
readiness.  

The rules-based global order is challenged to its core, and countries in the Union’s vicinity 
and  beyond  are  increasingly  affected  by  tensions,  instability,  hybrid  threats  and  armed 
conflicts.  Strategic  competitors  are  investing  heavily  in  military  capabilities,  defence 
industrial capacities and critical technologies, whilst the integrity of our supply chains and 
unimpeded access to resources can no longer be taken for granted. 

The  EU  and  its  Member  States  are  also  confronted  with  widespread  hybrid  threats, 
illustrated by a growing number of cyberattacks, sabotage, hacking of critical infrastructure 
and assets, disinformation, and foreign information manipulation and interference. They 
also face the contestation of Europe’s access to strategic domains such as the space, cyber, 

6   22  out  of  the  27  Member  States  are  currently  NATO  Members,  with  Sweden  expected  to  join  the 

Alliance imminently.  

2 

 
 
air and maritime domains. These developments are challenging our security, prosperity, 
and democratic values. 

The  defence  of  the  Member  States’  territory  and  citizens  is  primarily  a  national 
responsibility, including  through allies’ commitments in  the context of NATO. Against 
that background, the geopolitical developments point to a compelling need for Europe to 
take increased strategic responsibility for its own security, including to assist key partners 
such as Ukraine. Under the guidance of the Strategic Compass, the EU is and must continue 
to be a stronger player in security and defence, thus a more reliable security provider and 
capable defence actor not only for its own citizens but also to the benefit of international 
peace and security.  

A stronger and more capable EU in the field of security and defence will also contribute 
positively to global and transatlantic security and is complementary to NATO. For those 
Member States, who are also members of NATO, the Alliance remains the foundation of 
their  collective  defence.  Defence  readiness  requires  the  planning,  development  and 
operational  availability  of  the  necessary  defence  capabilities  and  strategic  enablers,  the 
mastery of critical technologies and the ability to procure, operate and protect the required 
full spectrum of capabilities, infrastructures and assets. 

Achieving  defence  readiness  therefore  requires  investing  massively,  in  a  coordinated 
manner, in the required defence capabilities, including in relevant critical infrastructure. 
This requires the agility to constantly integrate innovation that increasingly originates from 
small  and  non-traditional  players,  which  all  too  often  struggle  to  see  their  potential 
contribution  recognised.  Adversaries  have  engaged  in  a  global  race  for  technological 
supremacy requiring from all actors ever faster and increasingly costly investment cycles: 
the EU cannot afford falling behind.  

Even those Member States with the largest defence budgets in the Union at their disposal 
are increasingly facing difficulties to invest at the required levels on a standalone basis, 
exposing  the  EU  to  widening  capability  and  industrial  gaps  and  to  increased  strategic 
dependencies. The same goes for prime manufacturers and their supply chains. Defence 
readiness  therefore  calls  for  more  cooperation  and  collective  action.  In  times  of  high 
intensity warfare, this requires the ability to mass produce a large set of defence equipment 
such as ammunition, drones, air defence missiles and systems, deep strike and intelligence, 
surveillance and reconnaissance capabilities, as well as the ability to ensure its swift and 
sufficient availability.  

To enable this mass production, the organisation of the defence industrial sector needs to 
evolve.  

Box 1. Defence acquisitions in the EU: buying predominantly alone and from abroad 

As  highlighted  by  the  Defence  Investment  Gap  Analysis  and  Way  Forward,  had  all 
Member States spent 2% of their GDP on defence, with 20% dedicated to investment, 
since 2006 until 2020, this would have resulted in approximately an additional EUR 1,1 
trillion for defence, of which around EUR 270 billion on investment.  

In 2022, defence expenditures of the Member States increased for the eighth year in a 
row, amounting to EUR 240 billion7. 78% of the defence acquisitions by EU Member 

7   Against a historical low of EUR 171 billion in 2014. See European Defence Agency Defence Data 2022, 

key findings and analysis.  

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States between the start of Russia’s war of aggression and June 2023 were made 
from outside the EU, with the US alone representing 63%8. 

Between  2021  and  2022,  there  has  been  a  7%  increase  in  the  procurement  of  new 
equipment,  but  only  18%  of  the  total  equipment  spending  was  devoted  to  EU 
collaborative  defence  equipment  procurement  in  20229,  far  below  the  current  35% 
collective benchmark set by Member States10. 

1.2.  Defence Readiness requires a strong, responsive and innovative EDTIB  

As  highlighted  in  the  Strategic  Compass  and  the  EU  Heads  of  State  and  governments’ 
Granada Declaration11, strengthening EU’s defence readiness and capability investments 
requires a strong, agile and resilient technological and industrial base.  

The EDTIB is an essential and integral element to ensure that our societies are secure and 
prosperous today and in the future. A responsive and competitive EDTIB is the foundation 
of any credible European role in its own defence and security. 

EU  defence  industrial  readiness,  today  and  in  the  future,  requires  public  and  private 
investments  across  the  full  spectrum  of  needs,  to  enable  the  defence  industry’s 
responsiveness  in  time  and  scale  to  the  needs  of  Member  States.  Innovation  must  be  a 
constant focus of attention, while resilience to external shocks and disruptions should be 
ensured. 

Box 2. The EDTIB today: a strong potential, to be further tapped into 

The Union’s defence technological and industrial base today consists of a combination 
of  a  large  set  of  prime  contractors,  with  mid-caps  and  a  large  number  of  small  and 
medium-sized enterprises (SMEs).  

Besides European leaders producing world-class advanced systems, mostly located in a 
handful of Member States, a no less crucial role is played by a wealth of smaller, but 
often  critical  platform  manufacturers,  equipment  suppliers,  consumables  -  such  as 
ammunitions  –  producers,  sub-suppliers,  and  niche  producers,  spread  all  across  the 
EU.  

The  Defence  Joint  Procurement  Task  Force  industry  mapping  showed  that  prime 
manufacturers for the 46 most urgently needed items were located in 23 Member States. 

The  EDTIB  is  competitive  at  global  level,  with  an  estimated  annual  turnover  of 
EUR 70 billion and strong export volumes (more than EUR 28 billion in 2021). Overall, 
the EDTIB is estimated to employ around 500,000 people12. 

8  

Jean-Pierre Maulny, THE IMPACT OF THE WAR IN UKRAINE ON THE EUROPEAN DEFENCE 
MARKET, IRIS, September 2023, 19_ProgEuropeIndusDef_JPMaulny.pdf (iris-france.org)  

9   2022 Coordinated Annual Review on Defence. 

10   Established by the EDA Ministerial Steering Board in 2007.  

11   European Council, the Granada Declaration, 6 October 2023. 

12   Data source: SIPRI estimates for the European Commission.  

4 

 
 
 
 
 
 
 
 
Notwithstanding  its  overall  competitiveness,  the  EDTIB’s  ability  to  unleash  its  full 
potential is undermined by years of underinvestment, despite the progress made over the 
last years. This is the consequence of Member States’ policy and budgetary choices in the 
past decades, and in a different geopolitical context, to allocate the dividend of peace to 
other societal uses. Persistent industrial fragmentation along national lines also acts as a 
hindrance to the optimum efficiency of defence investments. These trends have led to a 
significantly smaller comparative size of the EU defence market and presence on the global 
stage, increased dependencies on third countries, impairing the EDTIB’s ability to punch 
at its weight.  

1.3.  Too little cooperative investment in the EU keeps the EDTIB punching below 

its weight 

In a complex market in which national governments are the only buyers, Member States 
are  still  insufficiently  coordinating,  pooling  and  joining  their  defence  planning  and 
procurement  decisions  despite  the  range  of  European  tools  and  frameworks  at  their 
disposal.  Hence,  demand  is  still  largely  organised  along  national  lines,  with  most 
investment  decisions  arising  from  domestic  considerations,  and  based  on  national 
programming, often failing to factor in broader strategic and efficiency considerations. As 
a result, and despite certain phases of consolidation in the past decades, the supply side 
remains also essentially organised along national lines, with Member States opting where 
possible for national solutions, because of industrial and security of supply considerations. 
This results in a scattered EDTIB, acting in different, too narrow defence markets, rather 
than in a single, much larger and integrated one.  

This weakens the EDTIB. First, the demand side does not express itself collectively in an 
optimal  way.  This  results  in  duplications  and  foregone  opportunities  to  mutualise  and 
synchronise  investment  in  commonly  needed  equipment  or  infrastructure.  Second,  the 
supply side is  not  incentivised to  cooperate or  even integrate  to  match a  more efficient 
expression of demand. It suffers from lack of predictability and critical mass in the orders 
placed,  thereby  failing  to  seize  economies  of  scale.  Third,  especially  recently,  Member 
States tend to acquire off-the-shelf from third countries, thereby drying up internal demand 
and investing European taxpayers’ money in jobs and key technologies abroad rather than 
in Europe.  

This obliges in turn the EDTIB to focus on exports to ensure its viability, resulting in a risk 
of excessive reliance on third countries’ orders, with the consequence that responding to 
Member States’ orders may be  less a priority than honouring  third country contracts  in 
case of crises and related shortages.  

Security of supply is  undermined by the  combination of the above patterns. The single 
market has become a reality at lower tiers where supply chains span widely across borders. 
However,  this  is  not  reflected  in  a  collective  strategic  governance  at  the  EU  level  that 
would support security  of supply in  crisis  scenarios. The trend of overreliance on third 
countries’ supplies further undermines security of supply and freedom of action in case of 
crises.  

1.4.  Helping  Ukraine  withstand  the  Russian  aggression:  a  decisive  Union 

contribution, but strong potential for improvement 

The  EU  and  its  Member  States  have  demonstrated  their  capacity  to  swiftly  mobilise 
support for Ukraine’s armed forces, including from the EDTIB. As of late January 2024, 

5 

 
 
 
the EU and its Member States collectively delivered more than EUR 28 billion worth of 
military equipment to Ukraine.  

Thanks to the European Peace Facility (EPF), the EU supported Ukraine within a few days 
of the Russian full-scale invasion of February 2022, by reimbursing Member States who 
sent military assistance to Ukraine. The EPF is incentivising further deliveries of lethal and 
non-lethal equipment to Ukraine. With the three-track ammunition initiative13, the Council 
agreed  an ambitious framework to  incentivize the delivery and procurement of  artillery 
ammunition and ground-to-ground missiles, as well as industrial ramp-up. 

Through  this  initiative,  Member  States  have  placed  orders  in  the  EU  and  Norway  to 
procure additional artillery ammunition, including by using the framework contracts14 that 
the  European  Defence  Agency  negotiated  on  their  behalf  with  the  European  defence 
industry. The Union’s support delivered through the Regulation on supporting ammunition 
production (ASAP)15  is increasing  and speeding-up its capacity to  support Ukraine  and 
replenish national stocks.  

The EDTIB has also demonstrated its ability to effectively sustain these efforts. Since the 
beginning of the war, the EDTIB has increased its production capacity in artillery 
ammunition by 50%. It is already capable of producing one million artillery rounds per 
year and is anticipated to reach a capacity of over 1.4 million by the end of 2024 and 2 
million by the end of 2025.  

Beyond the donations from Member States’ stocks and from EPF-funded procurement, the 
EDTIB  has  also  provided  a  significant  amount  of  artillery  ammunition  through  direct 
contracts with Ukraine, displaying its ability to contribute to its fight against the invading 
forces. 

The  EU  also  put  in  place  new  initiatives  such  as  the  Regulation  on establishing  an 
instrument  for  the  reinforcement  of  the  European  defence  industry  through  common 
procurement  (EDIRPA)16.  Still,  much  more  needs  to  be  done,  both  at  industrial  and 
governmental level. 

1.5.  From emergency responses to readiness: time for a paradigm shift 

It is time to move from emergency responses to structural EU defence readiness across all 
time horizons. The EU needs to secure the availability to its Member States and partners 
of consumables in the requisite volumes, including during crisis times, while ensuring the 
timely development  and delivery of next  generation high end critical  capabilities in the 
coming  years.  This  also  takes  into  account  the  Ukrainian  defence  needs.  Additionally, 
secure  access  to  contested  domains  such  as  cyber,  space,  maritime  and  air,  cannot  be 
protected effectively  by a single  Member State.  Therefore, the EU needs to develop  its 

13   Delivery  and  joint  procurement  of  ammunition  for  Ukraine,  Brussels,  20  March  2023,  7632/23,  pdf 

(europa.eu) 

14   As of today, 60 framework contracts have been signed by the EDA with European industry. 

15   Regulation (EU) 2023/1525 on supporting ammunition production (ASAP), OJ L 185, 24.7.2023, p. 7–

25. 

16   Regulation (EU) 2023/2418 on establishing an instrument for the reinforcement of the European defence 

industry through common procurement (EDIRPA), OJ L, 2023/2418, 26.10.2023. 

6 

 
 
capacity to ensure its access to these areas collectively, through the necessary investment 
in European level solutions.  

A competitive EDTIB contributing to the security of Union’s citizens means an industrial 
sector capable of maintaining its technological excellence while delivering what is needed, 
when it is needed, without restrictions stemming from excessive external dependencies or 
bottlenecks17.  An industry  investing in new capacities and ready to  shift  to a ‘wartime’ 
economic model whenever needed, is essential. 

This implies a collective public and private engagement. The EU is ready to support both 
Member States and the EDTIB by de-risking investments, contributing to a more ambitious 
defence industrial policy at EU level. To achieve this, the Union needs to maximise the 
benefits  of  competition,  cooperation  and  consolidation.  By  the  same  token,  the 
competitiveness  of  the  EDTIB  and  its  ability  to  export  must  be  preserved,  whilst 
nonetheless ensuring that Member States can rely fully on their defence industry to deliver 
on their needs in a timely manner and in the requisite volume, when the security of EU 
citizens is at stake. 

This strategy introduces measures i) to support EU defence industrial readiness, based on 
an increased coordination of Member States’ defence needs, ii) to strengthen the EDTIB 
to produce more, while ensuring its security of supply, iii) to develop the financial means 
to  underpin  EU  defence  industrial  readiness  and  iv)  to  mainstream  a  defence  industrial 
readiness  culture,  while  v)  working  effectively  with  partners.  As  a  first  immediate 
initiative,  the  Commission  is  proposing  a  new  Regulation  establishing  EDIP,  to  ensure 
continuity  of  support  to  the  EDTIB  in  the  current  Multi  Annual  Financial  Framework 
(MFF), while testing new forms of support in view of the next programming period.  

The proposed EDIP will expand in time and scope the support to the competitiveness of 
the  EDTIB  brought  by  EDIRPA  and  ASAP.  It  will  incentivise  cooperation  in  the 
procurement  phase  of  defence  products  manufactured  by  the  EDTIB,  support  the 
industrialisation of products stemming from EDF funded actions or other EU cooperative 
frameworks and more generally support the defence industrial ramp-up in the Union. It 
will also establish an EU Security of Supply regime to enhance solidarity and effectiveness 
within the Union in response to crises.  

2.  LEVERAGING  READINESS  THROUGH  INVESTMENT:  MORE,  BETTER,  TOGETHER, 

EUROPEAN  

Ultimately,  the  realisation  of  the  defence  industrial  ramp-up  depends  on  an  increased 
volume of orders from Member States, which cannot be placed without increased defence 
budgets.  Member  States  have  started  to  increase  their  budgets  at  an  extraordinary  pace 
since February 2022 (see Box 1). However, significantly greater investment at national and 
European level is required to structurally adapt the EU industry, make it more innovative 
and competitive, to face the new security reality. It is now vital that the Union collectively 
makes  the  most  out  of  this  ongoing  budgetary  increase  to  achieve  defence  industrial 
readiness. To that end, the Commission and the High Representative / Head of the Agency 

17  The  EDTIB  would  benefit  from  a  more  resilient  EU  Single  Market  through  the  implementation  of 
measures, especially in times of crisis, laid out in "Updating the 2020 New Industrial Strategy: Building 
a stronger Single Market for Europe’s recovery " COM(2021) 350. 

7 

 
 
are ready to support Member States to continue investing more, but also to do that better, 
together, and European.  

2.1.   Investing better 

Investing  better  means  targeting  investments  where  it  matters  the  most,  avoiding 
duplication  and  increasing  efficiency.  This  requires  enhanced  coordination  of  Member 
States’ investment plans and efforts.  

2.1.1.  A new joint programming and procurement function  

As announced within the Joint Communication on Defence Investment Gaps Analysis and 
Way  Forward,  a  structured  approach  to  programming  and  procurement  will  reinforce 
transparency, coordination and consistency between Member States, and between the latter 
and EU institutions. It will complement and streamline existing initiatives in the capability, 
industrial,  research  and  defence  infrastructure  realms,  allowing  for  refined  and  shared 
prioritisation, as well as sustained cooperation efforts. 

A  Defence  Industrial  Readiness  Board  (hereafter  ‘the  Board’)  will  bring  together 
Member  States,  the  High  Representative/Head  of  the  Agency,  and  the  Commission,  in 
different  formats  1)  to  perform  the  EU  defence  joint  programming  and  procurement 
function envisaged in the Joint Communication on Defence Investment Gap Analysis and 
2) to support the implementation of EDIP.  

To perform the EU defence joint programming and procurement function, building on 
the successful work of the Defence Joint Procurement Task Force, the Board will provide 
a forum, to be convened by the Commission and the High Representative/Head of Agency, 
to discuss and refine identified priorities at EU level, without prejudice to their respective 
roles and responsibilities. In this format, to be established by this strategy, the Board shall 
also support the coordination and de-confliction of Member States procurement plans and 
provide strategic guidance in view of more effectively matching demand and supply. In 
this regard, the work in the context of the Board should enable a common understanding 
among  Member  States  of  the  EDTIB  composition  and  promote  a  shared  awareness  on 
production  capacities  in  the  Union.  Based  on  a  consolidated  view  of  current  industrial 
capacities, the members meeting in  the context of the Board should assess the required 
production  capacities  to  meet  identified  procurement  needs  and  suggest  corresponding 
defence industrial production objectives, in particular for the most critical capabilities.  

As regards this EU defence joint programming and procurement function, meetings in the 
context of the Board will be prepared  and co-chaired by the Commission and the High 
Representative/Head of Agency.  

Furthermore, for the purpose of supporting the implementation of EDIP, the Board will 
be formally established within the EDIP Regulation notably to ensure security of supply 
at EU level but also inform and assist in the implementation of the different supporting 
measures to the EDTIB developed in EDIP. In this configuration, the Board itself will be 
chaired by the Commission, with the participation of the European External Action Service 
(EEAS) and of the European Defence Agency (EDA).  

Complementing this effort, to ensure an effective government-to-industry co-operation and 
to establish a closer dialogue and engagement, a high-level European Defence Industry 
Group will be established. This Group will meet in specific configurations (e.g. sector-
specific), depending on the issue at hand, and will function as a privileged interlocutor of 

8 

 
the Board to consult with industry and to increase consistency between Member States’ 
plans and what the EDTIB can deliver, without prejudice to applicable competition rules 
within the Treaty on the Functioning of the European Union. 

2.1.2.  From strategic programming to Projects of common interest 

One of the roles of Board, acting as the new EU level joint programming and procurement 
function will be the joint identification of possible Projects of common interest to focus 
EU effort and funding programmes. The new programming and procurement function 
will  be  based  on  the  existing  instruments  and  initiatives,  notably  the  Capability 
Development Plan (CDP), the Coordinated Annual Review on Defence (CARD) and the 
Permanent Structured Cooperation (PESCO).  

In view of increasing its defence readiness in the current security context, the Union should 
identify, within the EU Capability Development Priorities, European Defence Projects 
of Common Interest on which to focus efforts and resources. By investing more, better, 
together  and  European,  Member  States  will  be  able  to  maximise  the  impact  of  their 
investments  to  develop  and  operate  full-spectrum  capabilities.  This  will  contribute  to 
secure  access  to  strategic  domains  and  contested  spaces,  including  by  developing 
appropriate  systems  that  would  serve  as  European  defence  infrastructure  of  common 
interest and use. This would furthermore contribute to ensuring the availability of strategic 
enablers required for missions and operations, as well as for the EU Rapid Deployment 
Capacity.  

By 2035, the EU should have in place, or at a mature stage of development, projects for 
capabilities that are European by nature. Subject to Member States’ agreement, these could 
include:  capabilities  related  to  integrated  European  air  and  missile  defence  (whose 
criticality  has  been  confirmed  during  Russia’s  unprovoked  military  aggression  against 
Ukraine),  Space  Domain  Awareness,  a  network  of  cyber  defensive  capabilities 
commensurate to the need to effectively protect the Union, as well as properly dimensioned 
maritime and underwater protective assets. 

2.2.  Investing together 

Investing more together is the pre-requisite of a stronger EU defence readiness. Member 
States must cooperate more throughout the capability life cycle, starting at the research, 
development and procurement stages. Instruments to identify capability priorities (CDP) 
and collaborative opportunities (Coordinated Annual Review on Defence) already exist. It 
is imperative to ensure that they are effectively used to plan for, invest in and ultimately 
deliver concrete defence capabilities.  

2.2.1.  Common procurement as the norm whenever relevant: expanding the intervention 

logic developed under EDIRPA  

To further contribute to an effective expression of demand to support the competitiveness 
of the EDTIB, the Commission is proposing to expand the EDIRPA intervention logic 
and intensify the support to the common procurement of defence products stemming from 
the EDTIB. This window of the EDIP will offset the financial costs associated with the 
complexity of cooperation, going beyond the most urgent and critical defence products, 
thus broadening the intervention area of EDIRPA.  

The  joint  procurement  support  window  of  EDIP  will  help  speed  up  in  a  collaborative 
manner the adjustment of industry to structural changes. It will also incentivise solidarity 

9 

 
between Member States by enabling them to increase efficiencies in public spending and 
contribute to interoperability and interchangeability. 

The Commission and the High Representative/Head of the Agency will measure progress 
achieved in the consolidation of defence demand following the adoption of this strategy. 
Collaborative  research,  development  (R&D)  and  procurement  of  defence  equipment 
should progressively become the norm in the EU.  

To date, Member States have not been able to meet the benchmark they agreed first in 
2007,  of  spending  35%,  of  their  total  equipment  budget  in  European  collaborative 
equipment procurement18.  

To  shift  towards  a  sustained,  long-term  demand  signal  to  the  EDTIB,  it  is  proposed  to 
Member States, to achieve the goal of procuring at least 40% of defence equipment in 
a collaborative manner by 2030.  

With the fulfilment of this goal, ongoing and upcoming additional defence investments by 
Member  States  will  deliver  more  efficient  outcomes,  thereby  decisively  boosting  the 
resilience  and  security  of  the  EU.  The  significant  incentives  provided  at  EU  level  by 
EDIRPA and EDIP, combined with experience in the context of the EPF and the greater 
sense of necessity, urgency and solidarity resulting from the current geopolitical situation, 
make this both essential and realistic.   

2.2.2.  Acting more systematically in support of interoperability and interchangeability  

Ukraine’s  experience  in  its  fight  against  Russia’s  unjustified  aggression  evidenced  the 
value of interoperable and interchangeable defence capabilities. Lessons learned from the 
battlefield showed the challenges of using multiple similar, but not truly interoperable nor 
interchangeable weapons systems, including ammunition of the same calibre produced in 
different  Member  States.  In  addition  to  presenting  an  acute  operational  challenge,  this 
reduces  competitiveness,  economies  of  scale  and  hence  limits  the  functioning  of  the 
internal  market.  The current  and unsustainable limitations in this respect  find  their root 
causes in issues related to national requirements, the uptake of standards, and certification. 
To defragment the market, three elements are equally important: the definition by Member 
States of  common requirements, the use of existing standards or the generation of new 
ones, and a greater mutual recognition of certifications.  

Box 3: Suboptimal technical requirements, standards and certifications undermine EU 
defence readiness  

Past European collaborative programmes have been too often plagued by Member States’ 
tendency  to  over-customise  and  over-use  national  requirements  stemming  from 
national capability planning processes. This has generally resulted in multiple versions 
of the same capability, increasing R&D, procurement and maintenance costs, suboptimal 
supply-chains  use  and  generated  delays,  as  well  as  reduced  possibilities  for  common 
training, logistics and other collaborative opportunities. 

Whilst rigorous standardisation can help overcome such issues, there is ample evidence 
that  standards  alone  cannot  fully  avert  interoperability  and  interchangeability  issues. 
Despite the Standardisation Agreements (STANAGs) adopted in the framework of NATO, 
the  voluntary  uptake  of  these  standards  remains  an  issue.  Another  challenge  stems 
from the fact that currently agreed standards often do not sufficiently deliver the requisite 

18 Established by the EDA Ministerial Steering Board in 2007. 

10 

 
  
 
real interoperability and interchangeability in operational terms since they do not cover all 
defence systems, nor are they systematically detailed enough.  

Finally, certification also remains an issue to be addressed. Certifications are currently 
delivered by dedicated authorities at national level and not mutually recognised, often due 
to safety protocols, which de facto fragments the market and hampers logistics. 

Defence standards are a key enabler for the interoperability of the materiel and equipment 
that armed forces use. The EU, notably through activities implemented by EDA, supports 
the  Member  States  in  the  identification  of  standardisation  requirements  and  the  use  of 
standards in the context of the collaborative projects, while using STANAGs as the main 
reference.  

Many EDF projects already support increased standardisation of equipment at EU level, 
with a view to ensuring interoperability and interchangeability within any coalition. Thus, 
the EDF requires Member States to define common functional requirements through the 
call harmonisation process in which all Member States can participate. However, further 
efforts should  focus  on incentivising the use of the most common existing standards in 
armament  production  and  procurement,  building  on,  and  complementing  existing 
initiatives.  In  particular,  the  EDA-managed  European  Defence  STAndards  Reference 
system  (EDSTAR),  which  identifies  Best-Practices  Standards  (BPS)  in  support  of 
programmes,  organisations  and  agencies,  should  constitute  the  basis  for  further  work. 
EDSTAR is complementary to the NATO STANAGs and aims at optimising effectiveness, 
efficiency, and interoperability of standards application for defence and security products 
and services. EU defence industrial programmes and tools should incentivise further and 
prioritise projects that contribute to standardisation and harmonisation of requirements. 

The  Commission  will  therefore,  within  its  defence  industrial  programmes  and  in 
particular in EDF, promote the use of agreed civil – in line with the EU standardisation 
strategy19 - or defence standards such as NATO STANAGs.  

Certification can be defined as the formal recognition that an equipment complies with the 
applicable  requirements  guaranteeing  that  it  can  be  used  without  significant  hazard  to 
operators. In the defence sector, where equipment could significantly endanger the life of 
operators, Member States ensure safeguards by mandating authorities (usually Agencies 
within Ministries of Defence) to certify equipment before it can be used. A lack of mutual 
recognition of certifications results into the impossibility to offer a product throughout a 
certain market, even within the EU.  

To  address  certification-related  issues,  the  Commission  will  also  support  swift  cross-
certification  activities,  including  associated  testing  when  necessary.  Such  a  cross- 
certification is already a reality, on a voluntary basis, within the airworthiness sector in the 
framework  of  EDA.  The  Agency  will  also  seek  to  further  facilitate  other  certification, 
testing and evaluation activities. In particular, reinforcing EDA’s work on defence testing 
and  evaluation  would  facilitate  the  coordination  of  testing  activities  aimed  at  ensuring 
cross-certification of similar equipment across platforms. 

In addition, under specific circumstances during crisis times, the Commission proposes to 
allow mutual recognition of national certifications, under the provisions of the EDIP.  

19 

 EU Standardisation Strategy, COM(2022) 31. 

11 

 
 
2.2.3.  Towards robust cooperative full life cycle armament programmes: the Structure 

for European Armament Programme as a new powerful tool 

Cooperative  armament  programmes  by  Member  States  have  been  facing  significant 
challenges. They are being mostly set up on ad hoc basis and undermined by a lack of tools 
commensurate to  their  complexity. This  has often resulted in  delays and  cost  overruns. 
While  the  EDF  and  PESCO  have  offered  incentives  and  frameworks  to  remedy  this 
situation, the commitment of the Member States towards cooperation throughout the whole 
life cycle of defence capabilities needs to be further encouraged and powered up. To make 
this  happen,  the  Commission  will  make  available  a  new  legal  framework  –  the 
Structure for European Armament Programme (SEAP) – as a vehicle to underpin and 
strengthen  defence  cooperation,  including  in  the  context  of  PESCO,  if  so  agreed  by 
Member States.  

Within  this  new  legal  framework,  Member  States  will  benefit  from  standardised 
procedures  for  initiating  and  managing  cooperative  defence  programmes.  Subject  to 
specific conditions, Member States will be able to benefit from an increased funding rate 
in  the  context  of  EDIP  as  well  as  simplified  and  harmonised  procurement  procedures. 
Where Member States jointly own the procured equipment through the SEAP (acting as 
an  international  organisation),  they  will  be  able  to  benefit  from  a  VAT  exemption. 
Moreover, EDIP will provide for a bonus for products developed and procured in the 
context of a SEAP if the concerned Member States agree on a common approach to exports 
for  defence.  In  addition,  the  international  organisation  status  will  also  allow  Member 
States,  if  they  so  wish,  to  issue  debt-titles  to  ensure  the  long-term  financing  plan  of 
armament programmes. While the Union would not be liable for debt issuance by Member 
States, contributions under EDIP to the functioning of SEAP might improve the conditions 
for financing by the Member States of the armament programmes, which are eligible for 
Union support.   

This new tool will also help to intensify Member States’ cooperation efforts, in line with 
the capability priorities commonly agreed by Member States within the framework of the 
Common  Foreign  and  Security  Policy  (CFSP),  notably  through  the  CDP.  It  should 
facilitate  and  support  the  implementation  of  PESCO  projects  and  contribute  to  the 
fulfilment of the more binding commitments undertaken by participating Member States. 
In the context of the  ongoing  PESCO Strategic Review,  the High Representative could 
recommend the participating Member States to strengthen the more binding commitments 
related  to  the  EDTIB  and  to  consider  possible  new  commitments,  notably  on  joint 
procurement from the EDTIB, in line with the ambition of the present strategy. These could 
also be taken into account in the establishment and implementation of the PESCO projects. 

As described in section 3 of this Joint Communication, the SEAP could also support the 
development of prototypes stemming from collaborative R&D actions funded by the EDF 
towards industrial production.  

2.3.  Investing European 

Investing more, better, and together will increase the Union’s defence readiness only if the 
increased investments resulting from larger national budgets benefit the Union’s defence 
industry. Nevertheless, channelling Member States’ investments into the EDTIB is highly 
dependent on the capacity of the latter to demonstrate its ability to meet the demand from 
the Member States in both speed and volume. 

12 

 
The  urgent  acquisition  decisions  made  by  Member  States  in  view  of  the  dramatically 
deteriorating security environment were undertaken against the backdrop of an EDTIB still 
constrained  by  limited,  peacetime-sized  production  capacity.  The  surge  in  acquisitions 
benefited mostly non-EU industry. Availability in time and in volume is therefore a new 
parameter of the competitiveness of EDTIB and of the security of the Union, especially 
during periods of heightened security tensions.  

The  intensification  of  that  trend  has  resulted  in  increasing  existing  dependencies  or 
generating new ones, thereby limiting the potential virtuous circle of increased investment 
resulting in a strengthening of the EDTIB. The volume of acquisitions made through the 
US  Foreign  Military  Sales  (FMS)  in  the  EU  has  increased  by  89%  between  2021  and 
202220. Moreover, emerging armament manufacturers from other third countries have also 
penetrated the EU market. This trend undermines the competitiveness of the EDTIB and 
results in EU taxpayers’ money creating jobs abroad and must thus be reversed.  

To that effect, the Commission, in cooperation with the High Representative/Head of the 
Agency, aims at the creation of a European Military Sales Mechanism, facilitating the 
availability  of  defence  products  from  the  EDTIB  and  increasing  awareness  of  such 
availability. The Commission proposes to test such a mechanism through a pilot project 
within EDIP with a view to co-building with Member States and industry a fully-fledged 
mechanism from 2028 onwards. The pilot mechanism will be organised in four pillars: 1) 
a catalogue of defence products, 2) financial support for the creation of pools of defence 
capabilities being quickly available, 3) provisions to ease procurement processes, and 4) 
capacity building measures for procurement agents.  

First,  by  building  on  existing  tools21,  the  Commission,  in  cooperation  with  the  High 
Representative/Head  of  Agency,  will  work  towards  the  establishment  of  a  single, 
centralised, up to date  catalogue of defence products developed by the EDTIB.  The 
ammunition crisis in the context of the war in Ukraine revealed that the Union had at its 
disposal  an  important  production  capacity,  but  the  widespread  underestimation  of  this 
capacity resulted in increased attention on third countries producers. Such misperceptions 
are prejudicial to the EDTIB and should be corrected. To increase the visibility of EU-
made solutions, the Commission, working closely with the High Representative/Head of 
the  Agency,  will  provide  a  single-entry  point  allowing  for  the  identification  of  defence 
products produced by the EDTIB. Such a catalogue will be fed voluntarily from industry, 
through dedicated calls for expression of interest.  

Second, the Commission will support the creation of defence industrial readiness pools, 
to increase availability and to speed up delivery time of EU-made defence products. By 
producing in limited quantities for smaller national markets, our industry suffers from a 
competitive disadvantage vis-à-vis non-EU players. While EU manufacturers have similar 
or  shorter  delivery  lead-time  compared  to  non-EU  manufacturers,  the  fact  that  non-EU 
products can often be made readily available from within existing non-EU stocks results 
in an increased speed to market, rendering these non-EU solutions more attractive. Within 
EDIP,  the  Commission  proposes  to  financially  support  the  purchase  of  additional 
quantities of defence capabilities for which Member States have decided to jointly procure 
within the SEAP. This would allow the creation of strategic reserves that could quickly be 
made  available  for  additional  customers  resulting  in  an  attractive  Government-to-
Government  scheme.  The  governance  on  the  use  of  equipment  in  reserve  will  be 

20   Center for International Policy, Security Assistance Monitor, securityassistance.org. 

21   Such as the EDA’s EUCLID database.  

13 

 
 
established by those Member States that are part of the Structures for European Armament 
Programme. 

Third,  the  Commission  proposes  to  introduce  a  standard  regime  applicable  to  future 
defence contracts and framework agreements with EU-based manufacturers. EU law 
already allows Member States to open their contracts and framework agreements to other 
Member  States,  when  this  possibility  is  foreseen  from  the  outset  of  the  procurement 
procedure.  However,  Member  States  only  very  rarely  use  this  possibility.  As  a 
consequence,  procurement  through  such  contracts  and  framework  agreements  by  other 
Member  States  is  very  limited.  To  remedy  this  situation  in  a  structural  manner,  this 
standard  regime  would  provide  that,  unless  expressly  otherwise  stipulated,  a  defence 
contract/framework agreement could be opened to any other Member State under the 
same  conditions  as  for  the  procuring  Member  State  (subject  to  the  agreement  of  the 
Member States in question). Furthermore, based on the practice of Member States since 
the  beginning  of  the  Russian  full-scale  war  of  aggression  against  Ukraine,  it  appears 
necessary to allow Member States to also use existing national framework contracts with 
EU-based manufacturers to procure additional quantities on behalf of others (lead nation 
framework). Therefore, the Commission proposes, in the context of EDIP, an extension 
of the temporary derogation from Directive 2009/81/EC, as provided within the ASAP 
Regulation. By virtue of this ‘Industrial Solidarity Clause’, Member States would be able 
to benefit from other Member States’ contracts, diminish their administrative burden (as 
well as the industrial one), and obtain equipment with a reduced delivery lead time.  

Fourth, to facilitate procurement from the EDTIB, Member States could request support 
under  existing  EU  instruments,  such  as  the  Technical  Support  Instrument  (TSI) 22  for 
administrative  capacity  building,  as  well  as  for  the  implementation  of  relevant 
reforms. Notably, Member States’ national procurement agencies could request support 
for the simplification of procurement procedures, reorganisation of governance structures, 
information  exchanges,  education  and  training,  with  the  objective  of  improving  joint 
procurement in the Union. EDA will further support this administrative capacity building 
by providing forums for sharing good practices and envisioning further cooperative actions 
within the scope of its Defence Acquisition Expert network.  

As in the case of collaborative procurement, it is essential that the Commission and the 
High Representative/Head of the Agency are able to measure progress together with the 
Member States, stemming from this strategy, thanks to data provided by Member States. 

Increased  investments  in  defence  will  achieve  their  purpose  only  through  increased 
cooperation,  as  the  precondition  to  overcoming  persistent  inefficiencies.  To  achieve 
resilience commensurate with threat level, Member States should tap the full opportunities 
offered by the EDTIB by cooperating across the full range of investment and acquisition. 
Two indicators can serve to measure progress deriving from the implementation of this 
strategy. 

First, between 2017 and 2023 the EU defence market has grown by 64% while defence 
trade between Member States has only marginally increased and it now represents only 
15% of the total value of the EU defence market23. This trend should be reversed. Member 

22  Regulation  2021/240  of  10  February  2021  establishing  a  Technical  Support  Instrument,  OJ  L  57, 

18.2.2021, p. 1–16. 

23   Data from the EEAS annual reports and database on EU Member States’ Arms exports provides useful 
information on the trends affecting the European defence market and industry. It allows to measure in 

14 

 
 
 
States are invited to ensure that, by 2030, the value of intra-EU defence trade represents 
at least 35% of the value of the EU defence market.  

Moreover, recent data indicate that  nearly 80% of Member States’ defence investments 
since  2022  have  been  implemented  with  non-EU  suppliers,  against  approximately  60% 
before the war. Whilst possibly justified by reasons of urgency, this worrying inflexion can 
be addressed by greater transparency and concrete progress availability and lead times of 
products from the EDTIB.  

In pursuit of the shared ambition embodied by this strategy, Member States should reverse 
the current trend and gradually bring their procurement level from the EDTIB first to the 
pre-war level,  and increase it as far  as possible  beyond that point. Member States  are 
invited  to  make  steady  progress  towards  procuring  at  least  50%  of  their  defence 
investments within the EU by 2030 and 60% by 203524.  

Reversing  current  trends  and  meeting  those  benchmarks  would  tangibly  increase  the 
resilience of the Union and the security of our citizens. Additional support to European 
cooperation brought by EDIP and EDF, as well as by successor programmes from 2028 
onwards, combined with strong political will and commitment by Member States, make 
those benchmarks realistic and achievable. 

Way forward: 

In  order  to  help  Member  States  invest  more,  better,  together  and  European,  The 
Commission and High Representative/Head of the Agency:  

➢  will set up a new joint programming and procurement function, by creating a 
Defence  Industrial  Readiness  Board,  as  well  a  high-level  European  Defence 
Industry Group with a consultative role. 

The Commission: 

➢  proposes to extend, within EDIP, the EDIRPA logic of supporting cooperation 

in procurement of products stemming from the EDTIB. 

➢  proposes to enable, within EDIP, a rapid mutual recognition of certification, 

during crisis times. 

➢  proposes  to  make  available  to  Member  States  a  new  legal  framework,  the 
Structure for European Armament Programme (SEAP), to strengthen defence 
cooperation, in full complementarity with the PESCO framework. 

particular the intensity of intra-EU trade flows, which provides indications on the intensity of both cross-
border procurement of final products and cross-border flows in the supply chains of the EDTIB. Indeed, 
when it comes to defence procurement by Member States, data on products’ origin is not collected in a 
centralised manner. Commission services, together with EEAS and EDA, will work with the Member 
States to develop a methodology to measure the share of procurement from the EDTIB compared to the 
one benefitting third countries entities. 

24  Within  the  Defence  Investment  Gap  Analysis  Communication,  the  Commission  indicated,  based  on  a 
scientific publication by D. Fiott (using import/export figures of the US State department) that between 
2007  and  2016  over  60%  of  European  defence  procurement  budget  was  spent  on  non-EU  military 
imports. As indicated in Box 1, during the period from the start of Russia’s war of aggression to June 
2023, 78% of the defence acquisitions by EU Member States were made from outside the EU, US alone 
representing 63% of this share. 

15 

 
 
 
 
➢  proposes the gradual creation of a European Military Sales Mechanism aimed 

at encouraging the availability of EU equipment in time and in volume. 

➢  proposes, through EDIP, the launch of European Defence Projects of common 
interest  to  contribute  –  at  EU  level  –  to  secure  and  protect  the  Union’s  and 
Member States’ free access to the contested areas such as cyber, space, air and 
maritime,  and  to  the  implementation  of  the  EU  Capability  Development 
Priorities. 

Furthermore, the High Representative: 

➢  will recommend the PESCO participating Member States, in the context of the 
PESCO  Strategic  Review  2023-2025,  to  strengthen  the  more  binding 
commitments in relation to the EDTIB (or consider possible new ones), and 
make use of PESCO projects to fulfil the ambition of the present strategy. 

3.  SECURING AVAILABILITY: A RESPONSIVE EDTIB UNDER ANY CIRCUMSTANCES AND 

TIME HORIZON  

The  EU  can  already  rely  on  an  overall  competitive,  world-class  EDTIB.  But  in  a 
dramatically changed geopolitical context where the EU and its Member States must take 
responsibility for the security of their citizens, partnering with a more responsive and more 
resilient EDTIB is more important than ever. This is about creating the conditions for the 
EU’s industry to meet Member States’ demand in time and scale. While Member States 
are  responsible  for  placing  firm  and  long-term  orders  ensuring  the  necessary  market 
predictability  to  defence  industry,  the  Commission  is  ready  to  use  its  prerogatives  and 
relevant programmes to support this endeavour.  

3.1.  Supporting a more rapid response and versatile adaptation to urgent needs 

As  vividly  illustrated  in  the  wake  of  Russian  military  aggression  against  Ukraine,  the 
Union’s security and its ability to effectively support its partners depend on its capacity to 
swiftly  mobilise  defence  equipment. As the threat  level  is  likely to  remain high  for the 
foreseeable future, the EDTIB must be able to deliver what is needed, in the right quantities 
And places, and at the right time. To achieve this, the EDTIB needs to undergo a paradigm 
shift, and take more risks to be more responsive to the needs of all the Member States. 

The  mobilisation  of  the  EDTIB  should  be  done  with  a  view  to  increase  resilience  and 
security  of  supply  across  Europe,  in  full  consideration  of  the  specific  needs  of  those 
Member  States  objectively  the  most  directly  exposed  to  the  risk  of  materialisation  of 
conventional  military  threats.  This  also  requires  addressing  bottlenecks  to  the  swift, 
efficient and unimpeded movement of defence equipment and capabilities through further 
investments in military mobility. 

The EU will accompany this change of mindset and contribute to de-risking its defence 
industry’s  efforts,  to  enhance  its  readiness  by  supporting  the  ramp-up  of  production 
capacity in the EU, in areas collectively identified by Member States and the Commission, 
with  a  particular  attention  to  SMEs  and  small  Mid-Caps.  To  do  so,  the  Commission 
proposes to expand the intervention logic of the ASAP programme, beyond ground-
to-ground  ammunition  and  missiles,  for  the  EU  to  be  able  to  accelerate  productive 
investments in the EDTIB for the products that are most needed. The EU financial support 
should provide for an increased volume of production of relevant defence equipment, help 
reduce  their  delivery  lead-time  and  address  potential  bottlenecks  and  factors  that  could 
delay or impede their supply and production. Insofar as possible, such financial support 

16 

 
should also encourage cross-border industrial partnerships and collaboration of relevant 
companies in a joint industry effort, in full respect of relevant financial and competition 
rules. 

Nevertheless, supporting ramp-up also requires dealing with the industrial consequences 
of a ramp-down once the surge in demand has been met. Investing now in the development 
of  ‘ever-warm’  facilities  and  the  possible  repurposing  of  civilian  production  lines 
would contribute to the security of the Union’s citizens, whilst preserving the flexibility of 
EDTIB manufacturing capacity and preserving its overall competitiveness. 

The  Commission  will  contribute  via  EDIP  to  the  building  up  of  ‘ever-warm’  spare 
industrial capacities that allow for the necessary flexibility to ramp up in response to urgent 
spikes in demand. This would be particularly appropriate where critical supply shortages 
were identified by Member States. 

It will be possible to provide for the funding, for instance, of machine tools and relevant 
personnel costs to ensure that in case of a major crisis the EDTIB can mass produce what 
is  needed  in  a  short  time  frame,  by  having  enhanced  the  availability  of  production 
capacities, while modernising production technologies where possible. This  will ensure 
that an immediate ramp-up can take place in case of need.  

The  Commission  will  also  explore  with  Member  States  measures  to  rapidly  mobilise 
production lines from civilian industry for defence production purposes, and to ensure that 
the requisite qualified workforce is available under such scenarios (e.g. preparing staff in 
terms of security clearance and training). These effective, practical solutions will enable 
the EDTIB’s production to be ready to adapt without delay to a fluctuation in the demand 
expressed by Member States. 

Box 3. A case for greater responsiveness: achieving the mass production of defence 
relevant drones against the backdrop of ongoing efforts to tap their potential  

Unmanned systems are playing a decisive role in air, sea and land domains of the war 
theatre in Ukraine, being widely used for reconnaissance and intelligence, fire support, 
and also as effectors. Ukraine is estimated to use up to 10.000 aerial drones per month 
on the battlefield while producing 40.000 new ones per month.  

Most of them are low-cost consumables, often repurposed commercial civilian drones, 
nonetheless  capable  of  destroying  far  more  costly  equipment.  Whilst  they  do  not 
diminish  the use case of  a broad range of special  purpose  military drones,  they have 
proven to be of considerable tactical and strategic value.  

Whilst the EDF and its precursors have since 2017 been financially supporting defence 
R&D actions in relation to unmanned systems, developing a capacity to swiftly ramp up 
and  achieve  the  mass  production  of  such  equipment,  can  be  identified  as  a  key 
element of EU defence readiness vis-à-vis high intensity conflicts. This could be the 
subject  matter  of  actions  under  the  future  EDIP,  and  any  critical  dependency  or 
bottleneck should be identified and eliminated. Support to joint procurement of drones 
or counter Unmanned Aerial Systems is also possible within EDIRPA. 

Unmanned Aerial Systems also figure among the priority needs of Ukraine that could 
be potentially supported via the European Peace Facility, in coordination with the work 
undertaken in the context of the Ukraine Defence Contact Group capability coalitions. 

17 

 
The Commission adopted a European drone strategy 2.0 on 29 November 2022, in the 
context of which several flagship actions are being implemented. On top of funding for 
relevant R&D actions under the Horizon Europe programme and the EDF, other actions 
have been initiated: first, coordinated calls combining funding from EU instruments and 
European  Investment  Bank  (EIB)  loans  to  support  a  new  flagship  project  on  ‘drone 
technologies’; second, the development of a Strategic Drone Technology Roadmap to 
identify  priority  areas  to  boost  research  and  innovation,  reduce  existing  strategic 
dependencies and avoid the emergence of new ones, or the set-up of an EU network on 
civil-defence drone testing centres to facilitate exchanges between civilian and defence 
sector. 

To further support the EDTIB’s versatility, the Commission is proposing, as part of the 
proposed  EDIP,  the  creation  of  a  Fund  to  Accelerate  Defence  Supply  Chain 
Transformation (FAST). The fund will aim at facilitating access to debt and/or equity 
financing  for  SMEs  and  small  midcaps  industrialising  defence  technologies  and/or 
manufacturing defence products or having imminent plans to enter those activities. FAST 
could allow generating a multiple of the budget allocated to the initiative by EDIP in loans 
or equity investments.  
By  leveraging  additional  public  and  private  investments  in  support  of  the  EDTIB,  the 
FAST  will  strengthen  the  resilience  of  the  Union’s  defence  industry  value  chains.  This 
initiative should also contribute to support the development of an ecosystem of investors 
focused  on  growth  stages,  investing  in  critical  defence  suppliers  and  supporting  the 
scaling-up of innovative defence companies. 

3.2.  Pursuing the technological forefront on defence 

While securing the EU’s ability to respond in manufacturing terms to security urgencies, 
it is equally important for Europe to remain at the cutting edge of innovation. A sustained 
R&D effort is  more necessary than ever to  maintain the EDTIB  competitiveness in  the 
longer term, notably in terms of its availability to tap the full potential of the excellence of 
its  scientists,  engineers  and  innovators.  In  the  short-term,  achieving  technological 
breakthroughs would also support tackling current challenges, including the ongoing war 
in Ukraine.  

3.2.1.  Support innovation and realise the defence potential of SMEs  

By encouraging and supporting more structured and systematic cooperation across the EU, 
the EDF has paved the way towards a more innovative EDTIB, and towards the opening- 
up and Europeanisation of supply chains. However, it is essential to further increase the 
EU’s ambition to efficiently foster defence innovation and the emergence of new players 
in  the  defence  supply  chains.  The  sector  needs  to  take  full  advantage  of  faster  civil 
innovation cycles for technologies with dual-use potential to maintain its competitiveness 
and ensure the military’s edge on the battlefield. 

To remain competitive, the capacity and autonomy to develop innovative defence products 
must also be underpinned by support for research into future-proof defence capabilities, 
including in disruptive technologies. The latter can have a profoundly transformative effect 
on Member States’ militaries and provide a critical operational advantage. To that effect, 
the EU must seek to offer innovative undertakings ‒ especially start-ups, SMEs, small Mid-
Caps and Research and Technology Organisations (RTOs) ‒ more flexible, faster, and 

18 

 
 
leaner funding cycles and  facilitate  better connections with military end-users and 
investors.  

Against this background, the EU Defence Innovation Scheme (EUDIS), developed under 
the EDF with a EUR 2 billion budget25, will propose within this MFF, innovation support 
services for single entities, including through matchmaking with investors, partners and 
end-users,  and  strengthen  support  for  innovative  product  and  technology  testing  and 
validation. It will work to reduce red tape, especially for SMEs and small Mid-Caps, by 
exploring  for  instance  the  introduction  of  ‘ever-warm’  calls  for  projects  and  ways  to 
support promising technology transfer from civil to defence, where applicable.  

The continuous and intense cooperation between the European Commission (EUDIS) and 
EDA (Hub for  EU  Defence  Innovation ‒  HEDI), allows defence innovators to  take full 
advantage of tailored EU support measures, including the guidance on the military end-
user  capability  requirements  and  opportunities  to  connect  to  European  defence 
communities. On an annual basis the EUDIS, in close cooperation with HEDI supports up 
to 400 innovative start-ups and SMEs to help them break through traditional entry barriers.  

The Commission services will support hackathons, after consultation with EDA (HEDI), 
where  young  engineers  and  start-ups  will  come  together  and  compete  to  find  the  best 
solution to solve concrete battlefield issues, starting with challenges encountered on the 
ground  by  Ukrainian  armed  forces.  To  further  support  the  Ukrainian  Defence 
Technological and Industrial Base, a EU Innovation Office in Kyiv will act as a bridge 
between EU start-ups and innovators and  Ukrainian industry and Armed Forces.  It will 
help transmit technological breakthroughs that can have an impact on the battleground. 

Box 4. SMEs: already at the core of the EU’s efforts in support of industrial defence 

As  agile  players,  SMEs  play  an  ever  more  important  role  as  providers  of  disruptive 
technologies and innovation in the defence community. The Commission has therefore 
taken action to support a more active contribution of SMEs to EU defence R&D, notably 
by  providing  dedicated  EDF  calls  targeted  at  SMEs  whilst  encouraging  their 
participation in all other projects. Cross-border cooperation involving SMEs is one of 
the award criteria of the EDF programme, and financial bonuses apply based on the level 
of involvement of SMEs for development actions.  

As a result of the 2021 and 2022 EDF calls, 511 SMEs have been awarded EUR 354 
million, representing respectively 40% of participants and 20% of the funding. In the 
2023 EDF calls, the participation of SMEs represented around 50% of the total number 
of entities, requesting 30% of total requested grant amount. For the period 2023-2027 
it is estimated that EDF should fund SMEs with up to EUR 840 million. 

In 2022 the EDF allocated EUR 224 million to Defence Innovation and SME support 
under  EUDIS,  including  specific  activities  such  as  technological  challenges.  EUDIS 
measures  are  further  developed  and  implemented  to  support  SMEs  throughout  their 
growth  cycle.  A  major  milestone  was  reached  in  January  2024,  with  the  launch  of  a 
Defence Equity Facility to invest, together with the European Investment Fund, part 
of the EIB group, up to EUR 500 million in promising defence SMEs to accompany 

25   EUR 1.46 billion budget sourced from the EDF and EUR 500 million leveraged from other public and 

private sources. 

19 

 
 
their  growth.  In  2024  a  defence  accelerator  is  expected  to  be  launched,  and 
matchmaking activities with investors will be organised.  

3.2.2.  Help EDF projects become a tangible reality beyond the R&D phase 

With more than EUR 1 billion per year over 2021-2027, the EDF is already a powerful 
instrument  to  boost defence industrial  cooperation and  incentivize cross-border defence 
research and development contributing to more European defence industrial value chains26.  

However, beyond the research and early development phases, the collaborations reach a 
‘commercialisation gap’ at the prototyping stage, where the required level of Member State 
involvement becomes significantly higher.  

Moreover, diverging operational requirements and national industrial policies might lead 
defence  companies  to  terminate  cooperation  once  the  EDF  action  ends.  To  avoid  this, 
defence  cooperative  actions  initially  supported  by  the  EDF  and  having  reached  the 
prototype  stage,  based  on  common,  harmonised  functional  requirements,  might  need 
sustained support towards industrialisation.  

The  Structures  for  European  Armament  Programme  and  the  extension  of  the  EDIRPA 
logic  will  be  instrumental  to  maximise  the  uptake  of  projects  stemming  from  EDF.  In 
addition,  EDIP  will  provide  for  repayable  grants  for  specific  actions  linked  with  the 
production and commercialisation of prototypes, in particular those stemming from EDF.  

The  successful  bridging  of  the  ‘commercialisation  gap’  after  the  R&D  phase  of 
collaborative  projects  also  requires  that  the  involved  Member  States  agree  when  the 
prototype stage is reached, on the conditions for export of the jointly developed products. 
Considering  the  ongoing  review  of  the  EU  Common  Position  2008/944/CFSP  on  arms 
export control, the Commission together with the High Representative renews the call27 to 
Member States to explore ways towards the streamlining and gradual further convergence 
of  their  arms  export  control  practices,  especially  for  those  defence  capabilities  that  are 
jointly developed. For the same purpose, Member States should also exchange best practice 
on export control rules for jointly developed capabilities.  

Furthermore,  the  Commission  will  take  actions  to  facilitate  the  intra-EU  transfers  of 
defence-related products in EU-funded projects and seek to simplify the management of 
transfer  licensing  conditions  and  processes,  in  particular  by  introducing  clauses  on 
transfers in the concerned Model Grant Agreement with the aim of limiting the recourse to 
end-user certificates. 

Several  elements  currently  impede  a  correct  and  effective  implementation  of  Directive 
2009/43/EC, preventing the full exploitation of related benefits on the defence market. To 

26   In three years, more than 145 projects involving 2618 participants have been launched, (26) forming the 
backbone of the EU defence industrial ecosystem, which currently addresses a wide range of cutting-
edge  defence  capabilities  and  technologies.  Cooperations  involve  research  organisations  (609 
participations);  SMEs  (826  participations);  larger  entities  (1113  participations),  public  bodies  (456 
participations) and higher education institutes (230 participations) that together constitute the EDTIB of 
the future. 

27   Communication on Commission contribution to European defence, COM(2022) 60 final. 

20 

 
 
 
 
better  analyse  existing  challenges  currently  hindering  its  effective  implementation,  the 
Commission will perform an evaluation of the Directive by end 2025. 

3.3.  Ensuring Security of Supply at the EU level 

Resilience is a precondition of the EDTIB readiness and competitiveness.  

The EU has already developed tools and frameworks to increase industrial readiness and 
resilience  to  tackle  future  crisis  situations,  including  within  the  framework  of  EDA28. 
However,  such  measures  are  either  not  available  or  applied  only  to  a  limited  extent  by 
Member  States  to  support  the  EDTIB.  An  EU-wide  Security  of  Supply  regime  will 
therefore be put in place, warranting greater resilience and, by the same token, offering 
a competitive advantage for the EDTIB and EU  defence supply chains.  By providing a 
level of security of supply that external competitors cannot offer, EU defence supply chains 
could enjoy a ‘trust dividend’ from Member States. 

3.3.1.  Greater security of supply to maximise the defence potential of the internal market 

Within EDIP, the Commission proposes setting up a modular and gradual EU Security of 
Supply regime to enhance solidarity and effectiveness in response to tensions along the 
supply  chains  or  security  crises  and  allow  for  the  timely  identification  of  potential 
bottlenecks. Different sets of measures are proposed to tackle two types of crises: 

•  Supply  crises,  where  shortages  of  civilian  or  dual-use  components  or  of  raw 
materials  seriously  threaten  the  timely  availability  and  supply  of  defence 
products. In this case, after activation by the Council of a “crisis state”, a toolbox 
will  ensure  the  supply  of  the  concerned  components  and/or  raw  materials  for 
defence supply chains, including, where necessary and justified by the overarching 
public  interest,  by  ensuring  priority  over  some  or  all  civilian  supplies  (priority 
rated orders). 

•  Supply crises which are directly linked to the existence of a security crisis within 
the Union or its neighbourhood. To face such scenarios, the Council should be given 
the  possibility  to  activate  a  second,  upper  level  of  the  crisis  state  to  resort  to 
measures  necessary  and  proportionate  to  the  resolution  of  the  crisis  (mostly 
focusing on the supply of products specifically designed for military use). 

To  underpin  the  effective,  efficient,  and  proportionate  use  of  this  two-layer  crisis 
framework,  the  Commission  proposes  to  perform  an  identification  and  monitoring  of 
critical  products  for  certain  defence  supply  chains,  to  be  identified  together  with 
Member States in the frame of the Defence Industrial Readiness Board.  

Building upon the framework currently available in other sectors, and on the  EDA Key 
Strategic  Activities,  this  identification  and  monitoring  will  primarily  rely  on  publicly 
available information and, only where needed, on data provided by undertakings (subject 
to Member States national security guarantees). 

28   For instance, EU Member States adopted a Framework Arrangement on Security of Supply in 2013. 
This  framework  was  meant  to  be  implemented  through  the  establishment  of  codes  of  conduct  or 
implementing arrangement, and in 2014 a Code of Conduct on Prioritization was adopted by the EDA 
Steering Board.  

21 

 
 
3.3.2.  Enabling and de-risking strategic stockpiling 

To  further  de-risk  security  of  supply  for  the  EDTIB,  as  a  long-term  objective,  the 
Commission  will  consider  funding  strategic  stockpiling  by  industry  of  basic 
components such as electronic components and raw materials that are transversally used 
in defence systems 29. The creation of such stocks would allow for cost reduction, in case 
large orders are placed, and permit to contain the price inflation resulting from the surge 
in demand during a crisis.  

As part of the EDIP, the Commission proposes a small-scale preliminary pilot test, by 
allowing  for  the  support  to  the  creation  of  strategic  stockpiling.  Such  a  system  will 
complement the crisis time prioritisation mechanism, ensuring the latter will remain a last 
resort option. Ongoing work on resilience and preparedness measures as part of the Action 
Plan  on  Military  Mobility  2.0,  including  through  existing  PESCO  projects  on  military 
mobility and a network of logistic hubs could also be considered in this regard.  

3.3.3. 

Identifying upfront and addressing the most strategic dependencies 

Excessive dependencies on technologies that are critical for the defence sector hamper the 
freedom of action of Member States’ Armed Forces and have a potential negative impact 
on the competitiveness of the EDTIB, because of associated restrictions.  

The Commission has already established the EU Observatory of Critical Technologies30 
to  identify  dependencies  and  develop  technology  roadmaps  to  mitigate  them.  Its  first 
classified report has just been delivered to Member States. A scaling up of the Observatory 
will allow a faster identification of dependencies,  monitoring  of supply chains  and will 
create an overview of criticalities. Work to date has been started with a subset of Electrical, 
Electronic  and  Electro-mechanical  (EEE)  semiconductor-based  components  and 
autonomous systems technologies.  

In parallel, cross-fertilisation between work programmes of other Union instruments, such 
as the EDF and Chips for Europe programme, will be sought, to mitigate dependencies 
identified  and  ensure  that  the  EDTIB  has  at  its  disposal  defence  industrial  enabling 
technology and products such as trusted chips, supporting its readiness. 

The Commission also supports EU Member States, in particular their regional and local 
authorities, through the Technical Support Instrument31, providing tailor-made technical 
support to design and implement reforms for advancing economic and technology security, 
competitiveness and bolstering the resilience of supply chains in the Member States. 

Way forward: 
To secure availability based on a more responsive EDTIB across all time horizons, the 
Commission:  

➢    proposes  to  expand,  within  EDIP,  the  ASAP  intervention  logic,  beyond 
ammunition and missiles, and to complement it with the development of ‘ever-
warm’ facilities and possible repurposing of civilian production lines. 

29 

In this regard, the Commission will consider the possibility to rely on tools developed under the Critical 
Raw Materials Act [COM(2023) 160].  

30   Roadmap on critical technologies for security and defence, Strasbourg, 15.2.2022 COM(2022) 61 final. 

31  https://commission.europa.eu/funding-tenders/find-funding/eu-funding-programmes/technical-support-

instrument/technical-support-instrument-tsi_en 

22 

 
 
 
➢    will, together with the High Representative and Member States, design a policy 
proposal to support the production of drones within the EU or possibly jointly 
with Ukraine by mobilising relevant instruments. 

➢    proposes, within EDIP, the creation of a Fund to Accelerate Defence Supply 
Chain  Transformation  (FAST).  This  new  financial  instrument  will  support 
SMEs via debt and/or equity financing.  

➢    will  provide  sustained  support  towards  industrialisation  of  defence 
cooperative actions initially supported by EDF, through repayable grants under 
the framework of EDIP. 

➢    proposes the establishment of a modular and gradual EU Security of Supply 
regime to enhance solidarity and effectiveness in response to tensions along the 
supply  chains  or  security  crises  and  allow  for  the  timely  identification  of 
potential bottlenecks. 

The EU: 

➢    will open an  Innovation Office in  Kyiv to  ensure matchmaking between  the 
Union’s start-ups and innovators and Ukraine’s industry and armed forces.  

4.  FINANCING THE UNION’S AMBITION FOR DEFENCE INDUSTRIAL READINESS 

In order for this strategy to succeed in its aim to implement a new ambition for defence 
industrial readiness at EU level, it should be accompanied by a bold increase of funding, 
commensurate with the challenge we are facing.  

The proposal for a Regulation establishing EDIP alongside this strategy includes a budget 
of EUR 1.5 billion for investment in the defence industrial readiness of the EDTIB. 

This should be complemented by additional amounts for the development of the Ukrainian 
DTIB and its closer integration with the EDTIB and the Union defence equipment market. 
Also, the immediate defence exigencies of Ukraine call for additional financing  for the 
procurement of military material in support of the exercise of its right of self-defence. If 
the Council were to adopt a CFSP decision under Article 29 of the Treaty on European 
Union  (TEU)  upon  a  proposal  by  the  High  Representative  to  transfer  to  the  Union 
extraordinary cash balances of central securities depositories arising from the unexpected 
and extraordinary revenues from Russia’s immobilised sovereign assets, such additional 
support could  be drawn from  these revenues,  in  line with the objectives of the Union’s 
CFSP. In case these additional resources were to become available, they could potentially 
increase the European Peace Facility’s financial capacity for the procurement of military 
equipment  in  support of Ukraine, or any other  Union instrument.  In other words,  this 
would entail using the windfall profits of frozen Russian assets to jointly purchase 
military equipment for Ukraine. 

As and when the immediate defence needs of Ukraine permit, certain amounts could also 
be drawn from such extraordinary cash balances for the purposes of the medium- and long-
term  development  of the Ukrainian DTIB,  benefiting from  the provisions set  out  in the 
proposal for a Regulation establishing EDIP, as well as for Ukraine’s general budgetary 
needs for recovery and reconstruction. 

This budget, given the scale of the effort needed to ensure the defence industrial readiness 
across the Union, has to be considered as a bridge – limited in scale - towards the next 
Multi-Annual Financial Framework. Given that the security challenges faced by Europe 

23 

 
 
 
are likely to remain, it is important that the next MFF includes an ambitious financial 
envelope on defence with relevant budgets for the successors of both EDF and EDIP for 
the period from 2028 onwards.  

This  Strategy  calls  for  a  renewed  ambition  in  the  current  MFF  via  the  EDIP,  and  a 
strengthened  budget  in  support  of  defence  industries  for  the  next  MFF.  Still,  given  the 
change of the security paradigm resulting from the steep increase of regional and global 
threats,  representing  potentially  existential  security  challenges  for  the  Union  and  its 
Member States, and the fact that the next MFF will only begin in 2028, it is necessary to 
launch  a  discussion  on  quantifying  the  EU’s  financing  needs  for  defence  industrial 
readiness which would be commensurate with this change of the  security paradigm, and 
on how to ensure such adequate financing. This calls for a joint exploration with Member 
States,  in  a  short  time-frame,  to  assess  needs  and  options  to  boost  through  available 
instruments,  such  as  a  financially  reinforced  EDIP  and  EPF,  large-scale  joint  defence 
procurements for Ukraine and for Member States, massive and faster industrial ramp-up 
of the EU defence industrial base and the launch of defence flagship projects to protect 
unimpeded access to the EU’s contested areas. 

5.  MAINSTREAMING  A  DEFENCE  READINESS  CULTURE,  INCLUDING  ACROSS  EU 

POLICIES  

The  European  defence  industry  is  a  crucial  contributor  to  resilience,  security,  and 
social  sustainability.  There  will  be  no  economic  prosperity  without  peace  on  the 
continent, and the EDTIB role in this respect needs to be fully acknowledged in the Union’s 
regulatory environment and policies. The EDTIB also forms a single and critical aerospace 
and defence ecosystem, whose key actors are also contributors to technologies that are at 
the core of the green transition. 

It is therefore crucial to make sure that the EDTIB enjoys a level of access to finance that 
is commensurate to the level of investments needed, operates in the adequate regulatory 
environment and is sufficiently attractive for the young generations and the most talented.  

5.1.  Facilitating access to finance 

Ensuring sufficient access to finance and leveraging public investment for the EU defence 
sector is vital given the compelling need to boost investment in this ecosystem. Therefore, 
it is indispensable to involve the financial sector. To achieve this, the Commission and the 
High Representative/Head of the Agency, where relevant, will work with Member States, 
industry and the financial sector to improve the EDTIB access to both private and public 
finance.  

5.1.1.  Access to private finance 

The  EDTIB  faces  persistent  barriers  in  accessing  finance,  in  particular  private  finance. 
According to a recent Commission study32, SMEs operating within the defence sector face 
higher barriers to accessing finance compared to companies active in other sectors. During 
2021-2022, two thirds of the consulted companies refrained from seeking equity financing 

32 

“Access 
space.ec.europa.eu/study-results-access-equity-financing-european-defence-smes-2024-01-11_en 

defence  SMEs” 

for  European 

https://defence-industry-

financing 

equity 

to 

24 

 
 
and  close  to  50%  refrained  from  seeking  debt  financing,  a  stark  contrast  to  the  6.6% 
average among SMEs in the EU during the same period. 

With  a  view  to  boosting  the  sector’s  access  to  financing,  the  Commission  and  EDA 
together with Member States will take the initiative to reach out to banks and investors for 
a high-level dialogue to discuss their intensified participation, identify difficulties and find 
ways to stimulate private sector engagement to support defence investments.  

Financial actors’ willingness to engage with the defence industry appears to be affected by 
specificities of the defence market (including complexity of procurement or the difficulties 
for them to assess the exact implications of existing international conventions on arms) or 
to assumptions around Environmental Social Governance (ESG) factors. 

Under  the  EU  sustainable  finance  framework,  no  EU  rule,  or  any  EU  planned  rule, 
impedes private investment in the defence industry. The Commission services, together 
with ESMA as appropriate, will provide guidance on the application of the EU sustainable 
finance framework in the area of defence. In close cooperation with EDA, the Commission 
will  enhance  the  dialogue  between  the  defence  and  financial  sectors  and  contribute  to 
support  industry  in  increasing  transparency.  The  Commission  will  also  work  towards  a 
better recognition of the EU’s sovereignty, resilience and security, in particular within the 
EU sustainable finance framework. The Governmental Expert Network on ESG, managed 
by the EDA, is one example of a platform where such mutual understanding and trust could 
be  further  developed.  In  particular,  this  forum  should  strengthen  the  interface  between 
Member States’ Ministries of Defence and the financial sector. 

This would allow for concrete actions to mitigate the defence industry’s current challenges 
relating to access to finance, as synergies between institutional actors and private actors on 
capital markets have been identified as critical in this regard. 

Box 5: Defence industry and the EU sustainable finance framework  

The Union defence industry is a crucial contributor to the resilience and the security of the 
Union,  and  therefore  to  peace  and  social  sustainability.  Against  this  backdrop,  the  EU 
sustainable finance framework is fully consistent with the Union’s efforts to facilitate 
the European defence industry’s sufficient access to finance and investment. It does not 
impose any limitations ono the financing of the defence sector. 

EU  rules  on  sustainability  disclosures  and  preferences  apply  horizontally  across  all 
industries and do not single out any sector. The Commission has not issued any kind of 
‘social Taxonomy’ so far and there are no plans to do so. With the exception of weapons 
subject to prohibitions by international conventions signed by Member States - which are 
therefore deemed by the EU to be incompatible with social sustainability - the defence 
industry enhances sustainability, given its contribution to resilience, security and peace. 

Similarly, the fact that specific defence industrial activities have so far not been included 
in  the  EU’s  Environmental  Taxonomy,  does  not  prejudge  defence  industries’ 
environmental performance and should therefore not affect their access to finance.  

5.1.2.  Taking full benefit of existing horizontal EU financial instruments 

The  EDTIB  can  already,  in  principle,  benefit  from  existing  EU  financial  instruments, 
implemented  via  InvestEU.  Nevertheless,  the  current  lending  policies  of  the  European 
financial  actors  implementing  InvestEU,  including  the  EIB  Group  and  National 

25 

 
Promotional Banks and Institutions, and of International Financial Institutions, represent a 
major hurdle in the deployment of such financial instruments, beyond the potential 
financing of dual-use technologies, in support of the sector.  

This is illustrated by the inability to implement the ASAP ‘Ramp-up Fund’. Modifying 
their lending policies, in particular that of the EIB Group, is thus necessary and a 
major priority to ensure that the defence sector has access to and can fully benefit from 
EU financial instruments. Such a modification will also have positive cascading effects, 
by giving a significant positive signal to the financial market and private banks.  

In  addition,  the  EU  needs  to  maximise  opportunities  offered  by  synergies  and 
complementarities between financing instruments and grants. The future MFF should, in 
that respect, seek to further optimise synergies between EU instruments, as mentioned in 
the Commission White Paper on options to boost investment in R&D of technologies with 
dual use potential33. The public consultation on the White Paper being currently ongoing, 
the content of this strategy is without prejudice to future Commission actions in this area. 
Under the current set-up it is already possible for defence to tap into faster civil innovation 
cycles where applicable, and vice-versa, bearing in mind that some technologies used in 
defence platforms have dual-use potential.  

The  Commission  and  the  High  Representative/Head  of  the  Agency  invite  the  EIB 
Group’s  governing  bodies  and  in  particular  the  EIB  Board  to  adapt  defence-related 
exclusions from the EIB Group’s Lending Policies, in line with EU policy priorities and 
applicable law. This would allow the EIB to support production of military equipment and 
more generally the European defence industry, as recently also called for by the European 
Parliament34.  An  agreement  on  a  common  definition  of  ‘technologies  with  dual-use 
potential’ between the Commission and the EIB Group, building on the Strategic European 
Security  Initiative  and  the  Defence  Equity  Facility,  could  contribute  to  promote  joint 
investments in technologies, products and infrastructure with a dual-use potential.  

However, such a step, while welcome, would not be sufficient. The EIB, by its mandate 
stemming  from  Article  309  of  the  Treaty  on  the  Functioning  of  the  European  Union, 
shall contribute  to  the  balanced  and  steady  development  of  the  internal  market  in  the 
interest of the Union. The defence industry is an integral part of the internal market. To 
meet  the  financing  needs  of  the  sector  and  enable  the  full  mobilisation  of  EU  funding 
programmes, including InvestEU, in support of defence readiness, the EIB should take 
all necessary steps35 to review its lending policy this year and to adapt it in line with 
current policy priorities and objective needs. The public financial actors of the Member 
States are invited to do likewise. 

33  The European Commission, White Paper on options for enhancing support for research and development 

involving technologies with dual-use potential, Brussels, 24.1.2024 COM(2024) 27 final. 

34   See   European Parliament resolution of 28 February 2024 on the financial  activities of the European 
Investment  Bank  -  annual  report  2023  (2023/2229(INI)).  The  report  particular  “calls  on  the  EIB  to 
enhance its support to the Strategic European Security Initiative and to the European defence industry, 
including SMEs, in particular to contribute to continued support for Ukraine; calls on the EIB to reform 
its eligibility list so that ammunition and military equipment that go beyond dual-use application are no 
longer excluded from EIB financing”. 

35   E.g. any necessary preparatory steps, such as market analyses. 

26 

 
 
 
5.1.3.  Full integration of defence and security as a strategic objective of relevant Union 

funding and programmes  

The  EDTIB  should  fully  benefit  from  Union  funding  designed  for  technological  and 
industrial  development,  including  under  Cohesion  Policy  Funds,  notably  the  ERDF36, 
ESF+37 (e.g. on skills), Cohesion Fund (e.g. for transport) and InvestEU, provided this is 
in line with the respective programme and policy objectives. While the defence industry is 
already  eligible  under  these  instruments,  Member  States  should  consider  a  stronger 
steering of those EU funds that are under shared management towards the sector, where 
this supports regional development and competitiveness, to mirror its prominent role as a 
priority of the Union and a crucial contributor to the Union’s stability and security.  

In this respect, the Commission will consider including or maintaining defence readiness, 
security  and  resilience  as  an  explicit  strategic  objective  under  future  relevant  EU 
programmes  to  ensure  that  they  support  fully  the  EDTIB,  and  that  the  implementing 
partners  and  intermediaries  (in  the  case  of  indirect  management)  face  no  obstacles  in 
pursuing those objectives. 

5.2.  Ensuring that the EDTIB operates in an adequate regulatory environment  

The EDTIB should be able to operate in an adequate regulatory environment. To do so, 
defence  considerations  need  to  be  mainstreamed  in  EU  policies.  Possible  negative 
impacts on the EDTIB of Union’s initiatives should be identified and mitigated as early as 
possible.  The  Commission  will  therefore  include  in  its  initiatives  defence  industrial 
readiness considerations, on a more systematic basis and where relevant. Moreover, the 
Commission  in  cooperation  with  the  High  Representative/Head  of  the  Agency  will 
continue to liaise with the Member States and the EDTIB on these issues, by building on 
existing initiatives facilitated by the EDA in areas such as Regulation (EC) No 1907/2006 
on Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) 38 and 
the Single European Sky (SES) initiative. 

The  evolving  security  situation  also  requires  the  Commission  to  reflect  on  reducing 
administrative  lead  times,  while  ensuring  the  necessary  degree  of  sound  financial 
management. The 2024 revision of the Financial Regulation will allow the Union to take 
the necessary steps under emergency conditions to support defence industrial readiness.  

5.3.  Improving the attractiveness of the defence sector for the young generations and 

the most talented  

Investing in people and their skills is key to keeping abreast of emerging technologies and 
to attracting and retaining talent in the sector. The EU is supporting Member States and 
facilitating  partnerships  to  work  together  on  understanding  the  current  and  future  skills 
needs of the sector (e.g. through the European Pact for Skills). 

The prevailing labour and skills shortages in the defence industry have their roots in the 
previous underinvestment in new defence programmes and the lack of attractiveness of the 
sector, as well as restricted work force mobility and its ageing. While understanding and 
mitigating the negative perceptions of the defence industry is key to improving the sector’s 

36   European Regional Development Fund. 

37   European Social Fund Plus  

38 

Including continued cooperation with the European Chemicals Agency. 

27 

 
 
attractiveness, also for a diverse workforce, further actions are needed by all stakeholders 
to be fully able to tap into the Union’s human resource potential, including overcoming 
gender-based  stereotypes.    To  this  end,  the  Commission’s  forthcoming  Action  Plan  to 
address  labour  and  skills  shortages  in  the  EU  will  aim  at  removing  the  bottlenecks  for 
sustainable growth that these shortages have contributed to create in many sectors, thereby 
enabling the EU’s future long-term  competitiveness  while upholding quality  jobs and a 
workforce that is equipped with the right skills.   

The  Commission  and  the  High  Representative/Head  of  the  Agency  will,  in  addition  to 
mainstreaming defence, explore actions with the aim of improving workforce mobility 
and supporting defence-related education, notably through the opportunities provided 
by the EU defence industrial programmes, and cooperation between education providers, 
including the European Security and Defence College.  

5.4.  Helping the EDTIB to contribute to the green transition 

To contribute to the green transition and strengthen its resilience and cost-efficiency, the 
EDTIB must continue its  efforts to  make its production and products  more sustainable, 
reducing  carbon  emissions  and  increasing  circularity  in  line  with  EU  policies  and 
ambitions. The Joint Communication on a New Outlook on the Climate and Security Nexus 
recognises the importance of the defence industry for the climate adaptation and mitigation 
efforts  of  Member  States’  Armed  Forces.  There  are  further  opportunities  to  explore 
synergies  and  possible  areas  of  cooperation  between  Member  States,  industry  and  EU 
services,  including  with  regard  to  innovation,  analytics  and  standardisation  for  new 
renewable  energy  sources  used  by  the  military  as  well  as  wider  commercial  sector. 
Ensuring an appropriate visibility and recognition of efforts made by the defence sector 
towards  environmental  sustainability  could  also  contribute  to  its  overall  societal 
acceptance. 

The  Commission  and  the  High  Representative/Head  of  the  Agency  will  continue  to 
support the EDTIB’s efforts towards green transition, e.g. through the actions proposed 
in  the  Joint  Communication  on  the  Climate  and  Security  Nexus,  including  Green 
Procurement.  

Way forward: 
In order to mainstream a European defence readiness culture, the Commission, working 
with the High Representative/Head of the Agency:  
➢  invites  EIB  Group’s  governing  bodies  to  review  this  year  the  EIB  Group’s 
Lending Policies, and to adapt the current defence-related exclusions, in line with 
EU policy priorities and applicable law. 

➢  will enhance the dialogue between the defence and financial sectors, and provide 

guidance on the application of the EU sustainable finance framework.  

Furthermore, the Commission: 
➢  will encourage increased support to security, resilience and defence readiness 
through Union funding programmes. This objective will be also considered in the 
preparation of future EU programmes. 

6.  ACHIEVING READINESS AND RESILIENCE THROUGH PARTNERSHIPS 

The  ambition  of  the  EU  to  swiftly  achieve  defence  readiness  should  also  be  leveraged 
through  partnerships,  including  notably  with  Ukraine,  as  well  as  through  enhanced 

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cooperation with NATO, strategic partners and like-minded partners – European, trans-
atlantic and beyond - and other international organisations 

6.1.  Developing ever closer ties with Ukraine 

Ukraine is and will increasingly be a crucial partner of the Union in the defence industrial 
sector. Faced with a high intensity war of aggression, the Ukrainian DTIB had to shift to a 
war economy model. It will emerge as one of the engines of the economic recovery of the 
country  at  the  end  of  the  war  and  a  testbed  of  defence  industrial  readiness.  A  closer 
cooperation between the EU and the Ukrainian defence industrial sectors will be part of 
the EU’s future security commitments to Ukraine. The Ukrainian DTIB and the EDTIB 
could therefore mutually benefit from enhanced cooperation. 

The Commission and the High Representative/Head of the Agency will take forward the 
following measures.  

Participation in Union programme in support of defence industry: 

-  To strengthen ties between EDTIB and Ukraine’s DTIB, the EDIP will provide the 
possibility for Ukraine to participate in joint procurement and to Ukrainian defence 
companies  to  be  supported  in  their  industrial  ramp-up  and  cooperation  with  the 
EDTIB.  

Stimulating cooperation between the Ukrainian DTIB and the EDTIB: 

-  The  EDA  will  make  full  use  of  its  existing  Administrative  Arrangement  with 
Ukraine, and together with Member States explore a possible revision of its scope 
as soon as conditions allow.  

-  The  Commission  services,  the  EDA  and  the  EEAS  will  foster  dedicated 

- 

information exchange on standards and on respective lessons learned. 
In the context of the proposed Ukraine Assistance Fund within the European Peace 
Facility the EEAS will explore options to further incentivise cooperation between 
EU and Ukrainian defence industries. 

-  The  EU  will  host  an  EU-Ukraine  Defence  Industry  Forum  in  2024,  to  bolster 

cooperation between Ukrainian and EU defence industries.  

Further support to Ukraine through the EDTIB: 

-  Through joint procurement from the EDTIB of the military equipment delivered in 
the framework of the proposed Ukraine Assistance Fund within the European Peace 
Facility,  the  EU  defence  industry  will  benefit  from  more  predictability  on  the 
priority needs of Ukraine 

-  Subject  to  decision  by  the  Council,  further  support  for  procurement  of  military 
equipment  for  Ukraine  could  be  done  via  the  European  Peace  Facility,  drawing 
from the extraordinary cash balances of central securities depositories arising from 
the unexpected and extraordinary revenues from Russia’s immobilised sovereign 
assets. 

-  The EEAS, the EDA and the Commission services will continue to regularly update 
the  Ukraine  Defence  Contact  Group  and  promote  the  capacity  of  the  EDTIB  to 
further  support  Ukrainian  needs,  including  in  the  context  of  the  capability 
coalitions. 

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6.2.  NATO 

In line with the three Joint Declarations on EU-NATO cooperation39, enhanced staff-to-
staff talks, including the possibility of a dedicated structured dialogue with NATO, could 
cover more prominently defence industry-related activities and topics of mutual interest, 
including  on  circular  economy,  interoperability,  industry  aspects  of  climate  change, 
interoperability,  standardisation  cross-certification,  and  responses  to  new  and  emerging 
threats. This will require increased information sharing, including classified information, 
between NATO Staff, on the one hand, and relevant Commission services, the EEAS and 
EDA on the other hand. Both organisations should continue to exchange views and explore 
synergies and complementarity of efforts in the realm of supply chain security essential to 
capability development and delivery. 

The EU will also explore the potential for further strengthening cooperation between the 
EEAS, EDA, NATO International Staff and the NATO Support and Procurement Agency 
(NSPA), as well as between the  Defence  Innovation  Accelerator for the  North  Atlantic 
(DIANA), the EDA HEDI and EUDIS on innovation. 

6.3.  Teaming-up  with  strategic  and  international  partners  to  achieve  defence 

readiness 

The internationalisation of supply chains means that it is virtually impossible to maintain 
an end-to-end control on raw materials and thousands of components of a complex system. 

Strengthening  mutually  beneficial  partnerships  with  strategic  partners,  international 
organisations,  and  like-minded  third  countries,  including  through  security  and  defence 
dialogues,  can  amplify  the  Union’s  efforts  towards  defence  industrial  readiness.  This 
cooperation will be flexible. It will vary in form, scope and types of participants in function 
of shared interests. Such a cooperation should contribute to further secure supply chains, 
reinforce the EDTIB  and reduce EU’s strategic  dependencies, without creating new (or 
perpetuating existing) ones.  

In  addition,  the  EDA  will  continue  to  make  best  use  of  its  existing  administrative 
arrangements,  in  line  with  the  principles  for  cooperation  with  third  parties  agreed  by 
Member States. 

Way forward: 
The Commission and the High Representative /Head of the Agency, will: 
➢  explore  measures  to  enhance  the  participation  of  Ukraine  in  the  Union’s 
programmes in support of defence industry, including under EDIP, the possibility 
for Ukraine to participate in joint procurement, support the industrial ramp-up 
in Ukraine and enhance cooperation between the EDTIB and the Ukrainian defence 
industry; 

➢  in  the  context  of  the  Ukraine  Assistance  Fund  proposed  by  the  High 
Representative,  ensure  further  EU  military  support  to  Ukraine,  notably  through 
sending demand signals  to the European defence industry to increase production 
capacity with a view to sustaining Ukraine’s war effort in the long-term as well as 
incentivising cooperation between European and Ukrainian defence industries 
➢  enhance  staff-to-staff  structured  dialogue  with  NATO  on  topics  of  mutual 

interest. 

39   EU-NATO Joint Declaration (8 July 2016); EU-NATO Joint Declaration (10 July 2018); EU-NATO 

Joint Declaration (10 January 2023). 

30 

 
 
➢  host  an  EU-Ukraine  Defence  Industry  Forum  in  2024  to  bolster  cooperation 

between Ukrainian and EU defence industries. 

CONCLUSION 

For  decades  the  Union’s  citizens  have  enjoyed  an  unprecedented  period  of  peace. 
However, Russia’s war of aggression against Ukraine, as well as the rising tensions at EU’s 
doorsteps, call for the EU and its Member States to take up strategic responsibility and 
power  up  the  EU  defence  industry  to  address  the  unprecedented  security  threats  and 
challenges they are facing.  

A  technological  cutting  edge  and  capacity  to  steadily  guarantee  the  availability  of  any 
defence  equipment  are  prerequisites  to  the  ability  of  the  Union  to  guarantee  the 
effectiveness of its Member States’s armed forces and thereby to preserve peace on the 
continent. This strategy proposes ambitious measures to foster and support the EDTIB’s 
transformation over the coming decade. 

By  expanding  and  complementing  existing  EU  defence  industrial  policy  tools  and  by 
outlining the political, industrial, and budgetary ambition to be mobilised in support to the 
EDTIB, the latter will be empowered to leverage the efficiency gains of a more genuinely 
integrated defence market and to unleash the untapped potential of scale effects.  

The  implementation  of  the  strategy  will  help  the  European  defence  industry  to  be 
more responsive to urgent needs without sacrificing the future. From earlier and more 
cooperative  investment  planning  to  greater  support  to  industrialisation  and  joint 
acquisition; from a more effective incorporation of innovation to greater continuity in the 
efforts  deployed  to  develop  high  end  capabilities  and  strategic  enablers;  from  stronger 
security of supply to greater freedom of action, this strategy will serve as a catalyst of 
what it takes to restore and preserve peace in the European continent.  

The adaptation of the Union’s defence industry to the current security and market trends 
has  to  be  addressed  as  a  matter  of  priority.  The  European  Commission  and  the  High 
Representative / Head of the Agency are ready to support Member States in this endeavour. 

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