EU governments agree on €1.5 billion defense investment amid debate over “buy European” rules

European Union governments have reached agreement on a €1.5 billion plan to fund defense investments, though some countries expressed concerns about restrictive “buy European” provisions.

European Union governments have agreed on a €1.5 billion ($1.73 billion) scheme to fund defense investments, diplomats said on Wednesday. The agreement comes after over a year of negotiations on the European Commission’s proposal for a European Defense Industrial Programme (EDIP), part of a broader initiative to strengthen European defense in response to Russia’s 2022 invasion of Ukraine.

A central point of debate was eligibility for funding. France pushed for strict “buy European” rules to support European industry, while countries such as the Netherlands advocated for more flexibility, including the option to procure arms from the United States, the United Kingdom, and other non-EU countries.

The final compromise requires that at least 65% of the cost of the components of any item funded under the scheme must originate in the EU or certain associated countries, with some exceptions. Ambassadors from the EU’s 27 member states are expected to formally approve the deal on Monday. The agreement will then advance to negotiations with the European Parliament before it can enter into force.

A group of 10 member states – the Netherlands, Estonia, Latvia, Lithuania, the Czech Republic, Bulgaria, Romania, Croatia, Slovakia, and Finland – argued that the rules should better address the urgent need to bolster Europe’s defenses. In a joint statement, they said, “We fully support the goal of enhancing European security and resilience through increased defense cooperation and investment. However, we face an urgent threat to European territory and interests.”

The group noted that the EU defense industry “still depends – especially in the short to medium term – on critical components, technologies and know-how from like-minded third countries, in particular transatlantic allies.” Nonetheless, they stated they would not block the start of negotiations with the European Parliament.

EU officials described the €1.5 billion budget as modest for the defense sector but said that the criteria for eligibility were fiercely debated, as future funding for the programme could increase.

‍