According to the CEO of the European Investment Bank (EIB), the bank plans to increase funding for European defence projects including drones, satellites, and cyber security. The bank wants to invest an additional 6 billion euros ($6.4 billion) in this area.

The proposal highlights Europe’s growing readiness to lend money to military firms in the wake of Russia’s invasion of Ukraine, which upended the long-held belief that the area was secure from outside aggression and could depend on US defence.

“It is evident that Europe’s security and defence sector needs to be strengthened,” Nadia Calvino, head of the EIB, told the media. “We have earmarked 8 billion euros to invest in this area, of which only 2 billion have been invested.”

With Russia having placed its whole economy on a war posture, the measure is another meek attempt on the part of Europe to stay competitive.

Calvino stated that a dedicated group had been established to manage the funds. “We have established a dedicated office to accelerate the deployment of the 6 billion euros earmarked,” she stated.

She included border security, military mobility, de-mining, and military hospitals. “We are engaging actively with the European industry so it is to be expected that a pipeline of projects will be developed in the second part of the year,” she added.

The EIB, supported by the nations in the area, is quite powerful financially, but it is supporting defence with caution.

It has supported a German drone manufacturer and a Polish satellite project, but it avoids things like weaponry.

The guidelines that govern the EIB’s operations were recently modified to permit the organisation to lend to or indirectly invest in military companies.

According to Tim Lawrenson of the International Institute for Strategic Studies, the action would send a message to other banks—which frequently followed the EIB’s lead—that it was OK to support military industries. It was also symbolic.

“Any European tank is made up of thousands of parts built by hundreds of small defence suppliers across Europe,” he said. “These companies have struggled to borrow and stand to benefit most.”

“Of course 8 billion euros is small when compared with 2024 European defence spending of $476 billion, still less the $968 billion U.S. spend,” he said.

The fact that Russia is producing far more weapons than Ukraine is a problem that the move won’t really solve.

The CEO of JSC UDI, the state-owned arms manufacturer in Ukraine, Herman Smetanin, stated, “Ukraine’s state budget for defence is 10 billion euros.” Ten times as much is being spent by Russia. Fighting a battle with such asymmetry is difficult.”

In an effort to counter Russia’s aggression and curb its gains, the European Union and its allies in the West initiated a project in March 2023 to supply one million artillery rounds to Ukraine in a year.

However, it only produced a little over half of that quantity before the deadline.

(Adapted from Reuters.com)

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