EU auditors warn €1.5bn defence industry programme stretched too thin

The EU’s flagship €1.5 billion Defence Industry Programme, EDIP, doesn’t have enough budget to match its objectives, the European Court of Auditors said in an opinion published on Thursday (3 October).

The European Commission proposed the programme in March 2024 as a stopgap measure after Russia’s invasion of Ukraine, ahead of a longer-term structural increase in the bloc’s defences.

Commission President Ursula von der Leyen has now appointed a defence commissioner, Lithuania’s Andrius Kubilius, as the EU seeks to build capacity to meet the Russian threat.

While regulatory plans are still under review by lawmakers, the bloc’s official auditors reckon it needs a more robust policy design.

“It is also necessary to find the right balance between the policy objectives, the proposed budget and the timeline,” said Marek Opioła, the EU auditor in charge of the opinion.

In 41-page document, the EU’s Luxembourg-based financial watchdog warned that finances could end up spread thinly across a wide range of projects with no measurable impact, and recommended setting realistic targets by the end of 2027.

The EU auditors also called on the Commission to consider a long-term funding strategy to boost defence capabilities in its next seven-year spending programme, due to start in 2028.  

It appears the industry itself shares some of those concerns.

In a position paper sent to member states on 24 September and seen by Euronews, 28 European defence companies said EU financial support should be targeted at the domestic sector.

The short-term plan “should also serve as a test bed to quickly learn lessons for a longer-term and more ambitious programme” after 2028, said the letter, whose signatories include Leonardo, SAAB, Airbus, Rheinmetall and Indra.

Buy European?

Even if the programme is appropriate for peacetime, the companies call for an emergency section that can be politically activated during a crisis, based on fast-track administrative procedures and shorter timelines.

“Within the limited lifespan of the proposed regulation, such a section may not become relevant in practice, but it should already serve as a blueprint for a possible follow-on programme,” they argue.   

The EU industry wants funding to be restricted to products where at least 65% is from within the bloc. But some have pushed for a figure as high as 80%, and the industry overall views the lower number merely as a “starting point” for the future.

“This approach would not prevent member states from procuring from non-EU suppliers or cooperating with other like-minded non-associated European partners, like the UK, outside the framework of this EU-funded instrument,” the signatories added.  

EU ambassadors were due to discuss the topic on Wednesday (2 October), but the item was withdrawn from the agenda and no new date has yet been set, an EU diplomat told Euronews.