The European Commission is considering halving its proposed €500 million short-term joint defence procurement fund for Ukraine to €250 million, instead prioritising the long-term modernisation of Europe’s defence industry, three EU sources told EURACTIV.

The initiative, dubbed EDIRPA, was proposed by the EU executive last July. It seeks to incentivise urgent joint procurement of weapons by EU member states to replenish their stockpiles and continue military support to Ukraine. The current proposal includes a €500 million budget for two years.

The European Commission can amend a proposal in case there have been new developments since the original proposal was put forward, and it would therefore no longer be considered the right way to tackle the issue.

It is allowed to do so as long as member states have not yet given their final green light.

The Commission’s idea to cut the fund in half to €250 million over one year follows several issues the regulation has stumbled over since it was proposed, such as delays in negotiations and the proposal of new ideas to respond to the urgent supply needs.

Internal battles over which committee in the European Parliament should drive the file have substantially delayed the negotiations over the past months.

Also, several EU officials have told EURACTIV that the programme, originally proposed to meet Ukraine’s urgent defence needs, will fail to meet its main objective, in this case, the urgent replenishment of stocks and. supply of weapons to Kyiv.

In addition, as Kyiv’s needs remain acute but now mainly focus on ammunition rounds, the EU countries agreed to send and jointly procure €4 billion worth of ammunition last month – even though the plan stalls over legal definitions – filling the urgent needs that EDIRPA could have.

The delays in negotiations also kept the member states from preparing joint procurement projects, defence industry representatives told EURACTIV.

One project currently negotiated has been identified as a potential future beneficiary from the fund would be the joint purchase of MBDA’s Mistral missile, a push led by France, two industry sources said.

Production capacity

The European Commission and the EU’s diplomatic service (EEAS) earlier this year suggested the bloc should invest in the urgent ramp-up of the ammunition production capacity for the medium and short-term sustainability of the European defence industry, which would rely on the little EU budget left available.

Internal Market Commissioner Thierry Breton, also responsible for the defence industry and space, has been touring member states in recent weeks to identify production capacity and is expected to send his plan to the EU27 in the coming days.

The EU is also set to propose a European Defence Investment Programme (EDIP) that aims to boost production long-term, and beyond ammunition. The plan was to be presented in June but will likely be delayed towards the last quarter of the year, two people with knowledge of the matter said.

With that, the freed-up €250 million from EDIRPA could be redirected into EDIP, several EU sources said. Another option would be to use the funds to finance the industry boost of ammunition production only, they added.

“All options are currently under consideration on the potential use of the EU budget including that of mobilising EDIRPA, which has been developed as a short-term EU instrument incentivising common procurement to increase market predictability for the industry”, a Commission official told EURACTIV.

The Commission “is investigating the full spectrum of the possible measures to support such a ramp up, both in terms of instruments and substantive measures”, the official added.