European Union restrictions impeding investments in defence capabilities
The current war in Ukraine has shown that defence capabilities are not of the past, but of paramount importance for the security of the European Union and our Member States. Germany invests an additional 100 billion euro in their defence and other Member States of the European Union are also increasing their budget to the 2% GDP norm. However, the implementation of increased defence investments and execution of work by industry is strongly hampered by two restrictions imposed by the European Union.
The first rule is the exclusion of investments in Military equipment by the European Investment Bank (EIB) and affiliates. This broad exclusion strongly encourages civilian banks and other financial institutions to apply a similar policy. It would be much more effective and allow the current urgent intentions of member states to be executed, when this exclusion would be limited to “controversial weapons”, like cluster munitions and chemical weapons, as laid down in several multinational treaties.
Another
pressing issue is the intention of the “Platform on Sustainable Finance” of the
European Commission to declare investments in European
defence socially unacceptable. Their report of 28 Feb 2022 again strongly discourages private investors throughout the European Union to invest in defence-related
companies. This increasingly hinders Member States to involve European industry when implementing their increased defence budgets. In view of
the recent geopolitical developments, this trend should be countered soon.
Both policies contradict the intention expressed in the Communication of the European Commission of 15 February on the Commission Contribution to European Defence pointing out on page 5: "to ensure that other horizontal policies, such as initiatives on sustainable financing, remain consistent with the EU's efforts to facilitate the European defence industry’s sufficient access to finance and investment”.
The EDTA has recommended the European Parliament to
take the necessary actions to allow the expedient implementation of increased
defence budgets by correction of the two restrictive policy measures mentioned.
If you have any questions please contact us at info@fedta.eu