The European Investment Bank (EIB) said it plans to increase its investments in European defence, focusing on elements such as drones, satellites and cybersecurity.
The lender aims to inject a further €6 billion into the sector, EIB President María Calviño said on June 25.
The announcement illustrates a growing readiness in Europe to finance defence companies following Russia’s invasion of Ukraine, which shifted the long-held belief that the region could depend on the United States for protection.
During the US presidency of Donald Trump from 2017 to 2021, Europe had been warned it needed to invest in its own defence.
“It’s clear we need to reinforce Europe’s security and defence industry,” Calviño said.
“We have earmarked €8 billion to invest in this area, of which only €2 billion has [so far] been invested.”
Calvino announced the formation of a special team to invest the funds. “We have established a dedicated office to expedite the deployment of the €6 billion allocated,” she said.
The EIB recently changed the rules underpinning its activity, allowing it to lend to, or indirectly invest in, defence firms.
This shift in focus was motivated by the European Commission’s intention to create a fund of up to €100 billion to invest in the European defence industry, especially in technological development. In January this year, Internal Market Commissioner Thierry Breton said: “I believe we need to have a huge defence fund, to help – to accelerate even – probably in the [range] of €100 billion.”
He said the aim was to achieve European “independence” in the defence sector.
Current defence spending across the continent for the year 2024 is estimated to hit up to €476 billion, while the US is likely to spend some €968 billion.
The main European defence companies are Airbus (Netherlands), BAE Systems (UK), General Dynamics Corporation (US-UK), Indra Sistemas (Spain), Leonardo (Italy), Northrop Grumman (US-UK), Rheinmetall (Germany), Saab (Sweden) and THALES (France).
Germany’s Rheinmetall, the producer of Leopard tanks, is mainly backed by US investors. BlackRock owns 5.78 per cent; Bank of America, 4.74 per cent; Goldman Sachs, 4.69 per cent and The Capital Group Companies and FMR, both with 4.99 per cent.
