In September 2016, the President of the European Commission announced the establishment of a European Defence Fund (EDF) to help Member States develop and acquire key strategic defence capabilities more quickly, jointly and in a more cost-effective way. The EDF is intended as an instrument to strengthen the competitiveness and the innovation of the European Defence Technological and Industrial Base (EDTIB), thereby contributing to the EU's strategic autonomy. Its main goal is to boost cooperation at each stage of the industrial cycle through the necessary incentives to trigger cooperative research and development programmes.
This is the first time the EU budget is used to support European defence cooperation. The progressive roll-out of the EDF reflects the nature of the EU budgetary planning cycles.
An initial test period under the 2014-2020 Multiannual Financial Framework (MFF)
As preparatory steps, the European Commission launched two initiatives with limited duration and budget to support collaborative defence research and development. The Preparatory Action on Defence Research (PADR) provides grants for collaborative defence researchprojects with a budget of €90 million for 2017-2019. The European Defence Industrial Development Programme (EDIDP) offers co-financing for collaborative defence developmentprojects with a budget of €500 million for 2019-2020.
- Preparatory Action on Defence Research (PADR)
The main objective of the PADR is to test mechanisms that can prepare, organize and deliver EU-funded cooperative defence research activities to improve the competitiveness and innovation in the European defence industry and to stimulate cooperation amongst R&T actors in all Member States. The core of the PADR is a research programme that is implemented through annual calls for proposals from 2017 onwards for 3 years.
The PADR is implemented by the European Defence Agency (EDA). The budget for the PADR related actions is split in three years as follows:
- 25 M€ in 2017
- 40 M€ in 2018
- 25 M€ in 2019
The EDIDP provides €500 million in co-financing over 2019-2020 for the joint development of defence equipment and technologies. As the PADR, the EDIDP is a testbed for a more ambitious EU programme in the next MFF (the EDF post-2020). The EDIDP is implemented directly by the European Commission through annual calls for proposals. These calls are based on a 2-year work programme which was adopted on March 2019. There will be 9 calls for proposals in 2019, and 12 in 2020.
EDIDP Work Programme
The EDF post-2020
On the basis of these two pilot programmes, in June 2018 the European Commission proposed in June 2018 a fully-fledged €13 billion European Defence Fund for the next MFF (2021-2027). The regulation establishing the EDF covers both research and (capability) development. €4.1 billion are proposed to finance collaborative research and €8.9 billion are allocated to complement Member States' investment in cooperative defence development projects.
Source: European Commission
In spring 2019, the European Parliament and Council reached a partial agreement on the Commission’s EDF proposal. Some of the main features of the EDF draft regulation are:
- Support to the entire industrial development lifecycle of defence products from research (up to 100%) to prototype development (up to 20%) to certification (up to 80%);
- Special incentives for participation of Small and medium-sized enterprises (SMEs) and mid-caps;
- Only collaborative projects involving at least three participants from three member states or associated countries are eligible.
Final adoption of the regulation is still pending, depending on the agreement of the next MFF (that sets the basis for all EU funding instruments).
Proposal for a regulation establishing the European Defence Fund
ASD welcomes the EDF proposal and its predecessors PADR and EDIDP. These initiatives show that the European Commission has, within the limits of its competencies as defined in the Treaty, instruments at its disposal that can make an important contribution to strengthening European defence. ASD is convinced that the EDF can help develop Europe’s defence capabilities and its industrial and technological base. In combination with other initiatives, namely PESCO and CARD, and in coordination with NATO, the EDF can lead to a real step-change in European defence cooperation.