How will it work?
The European Commission launched the European Defence Fund (EDF) in January 2021. The EDF has a capacity of EUR 7.9 billion to be spent between 2021 and 2027.
The total EUR 7.9 billion in funds will be spent along two major strategic directions: EUR 2.7 billion for collaborative defence research and EUR 5.3 billion for collaborative capability development projects complementing national contributions. The EDF also aims to spend between 4% and 8% of its funds on ‘disruptive technologies for defence” providing opportunities for start-ups or small and mid caps.
According to the Commission regulation, the EDF will have a strong role in supporting EU cyber defence capabilities. For example, the regulation mentions that the EDF will support projects by the future EU cyber competence centre and it will be used to identify synergies between civilian and defence projects in the cyber domain.
The first EDF expenditure totalled EUR 1.2 billion in 2021 for 23 calls for proposals which were published on 30 June 2021. The calls were for battle platforms but also for: cloud services and technologies, cyber incident management, remote sensing and detection equipment, surveillance technology, quantum computing, green technology or energy storage technologies, among others.
There are two major objectives that the Commission has with this fund: promote cross-border cooperation and research in defence; and increase Member States defence procurement coordination and close capability gaps. The Commission states that funds should be allocated in accordance with EU strategic objectives as laid down either by Member States, EU institutions or NATO.
The Council estimates that the EDF will allow the EU to become the single biggest investor in European defence. Most of the funds will be administered by the newly-created DG DEFIS which was created partly out of DG GROW and will be under the Internal Market Commissioner. The Commission also designed the EDF to reach small and medium-sized companies with the goal of creating a large industrial base for EU defence.
By Ion Dragusin, Consultant at SEC Newgate EU.