Brussels: The European Union’s (EU) 27 member states have given initial approval to a 150bil or about US$168.4bil defence fund that will distribute money to countries looking to invest in security capabilities such as ammunition, drones and the protection of critical infrastructure, according to people familiar with the matter.
The fund is expected to receive formal approval next week, said one of the people, who spoke on the condition of anonymity.
The programme was proposed by the European Commission, the EU’s executive arm, in March as a response to President Donald Trump’s pullback of American security in Europe.
The fund comes in addition to new rules that allow member states fiscal flexibility for spending on defence, which could mobilise a combined 800bil.
Sixteen member states have already requested the activation of this so-called national escape clause, according to a senior EU official.
The commission will raise the 150bil in the capital markets and disburse the money as loans to member states upon request to finance specific products that the continent lacks the most, according to one of the people.
These include missiles, ground capabilities and missile defence systems. Some countries outside of the EU are eligible to participate in the programme, provided those expenditures don’t exceed 35% of the cost, the person said. — Bloomberg
