The EU has signed off on €260m of funding to boost Ukraine’s defence base, as part of a €1.5bn programme unveiled on Monday (30 March).
The €260m will be made available under the Ukraine Support Instrument (USI), which was created as part of the EU’s revamped defence and security apparatus to invest in collaborative projects that increase production capacities in both Ukraine and Europe.
Meanwhile, more than €700m in EU grants have been signed off by the EU Commission to increase production of a range of products including counter-drones systems, missiles and ammunition.
The cash has been awarded as part of the European defence industry programme, one of a series of schemes launched by the EU to boost its defence industry and the bloc’s security.
The award of the grants “marks a decisive step to strengthen Europe’s defence readiness,” said defence commissioner Andrius Kubilius in a statement on Monday. The new funding mechanisms would allow European firms to “seize funding opportunities to strengthen defence cooperation and ramp up production,” he added.
The funding for Ukraine’s military is in addition to plans for a €90bn loan for Ukraine, now facing the fourth year of war since Russia’s full-scale invasion in 2022, that EU lawmakers are pressing ahead with despite the Hungarian government vetoing a budget instrument that would have allowed the cash to be available already.
The new funding platforms were set up after the EU Commission set out plans for an €800bn ‘ReArm’ programme last March, after US president Donald Trump threatened to pull the plug on the US military presence on Nato’s eastern flank after complaining that EU states were not spending enough on their own defence.
‘Re-arm’, together with the €150bn Security Action for Europe (SAFE), launched last May, which plans to offer low-interest loans to EU member states with 45 year repayment periods, have been set up to help EU governments increase their defence spending to two percent of GDP in line with their Nato commitments.
The EDIP is one of the instruments designed to help support joint procurement and production projects across the bloc.
One of the bottlenecks facing European defence firms is the lack of a single rulebook for making and certifying military equipment, as well as difficulty in obtaining finance.
It also allows non-EU countries, including Norway and Canada to bid for joint procurement tenders in exchange for a contribution to the EU budget.
Protracted talks on a similar agreement with the UK, home to Europe’s largest defence industry, are still ongoing but have been stalled by the UK’s reluctance to meet EU demands for an access fee of over €1bn.