Filenews 20 May 2025
The European Union's 27 member states have given initial approval to a €150 billion ($169 billion) defence fund that will distribute money to countries wishing to invest in security areas such as ammunition, drones and critical infrastructure protection, according to people familiar with the matter.
The fund is expected to receive formal approval next week, said one of the people, who spoke on condition of anonymity.
The program was proposed by the European Commission, the EU's executive arm, in March in response to Donald Trump's retreat of U.S. security in Europe. The fund comes on top of new rules that allow member states budgetary flexibility for defence spending, which could mobilise a total of €800 billion.
Raising €150 billion from the capital markets
The Commission will draw the €150 billion from the capital markets and disburse the money as loans to member states on request to finance specific products that are most lacking on the continent, according to one of the people. These include missiles, land-based capabilities and missile defense systems, as reported by Bloomberg.
Some countries outside the EU can participate in the program, provided that these costs do not exceed 35 percent of the cost, the representative said. The U.K. and the EU reached a defense partnership on Monday, and the bloc pledged to explore ways to allow London access to the program.
The new loan instrument will be similar to the one created during the Covid pandemic to support Member States' short-term work programmes and similar measures.
Commission President Ursula von der Leyen described the moment as "a once-in-a-generation moment" and previously said that "the EU is facing defence investment needs of around €500 billion over the next decade".
The Financial Times earlier reported on the agreement to launch the program.
