Nineteen EU member states leaders have asked the European Investement Bank (EIB) to strengthen its policies regarding the defence industry of the European Union, including through increasing funding as well as issuing debt for this purpose, in a letter which is also signed by President Christodoulides on behalf of Cyprus.
The letter is addressed to EIB President Nadia Calviño, as well as the President of the European Council, Antonio Costa, and the prime minister of Poland, Donald Tusk, whose countries holds the rotating Presidency of the Council of the EU.
The leaders of the 19 countries propose re-evaluating the list of activities and sectors excluded from financing by the EIB, increasing the volume of available funding for security and defence, as well as examining the possibility of issuing debt for funding security and defence projects.
The letter, dated January 30th, 2025, was sent a few days before the informal retreat of the leaders of the EU’s member states, which will focus exclusively and defence, and which will take place on Monday, February 3rd. It is signed by Finland, Belgium, Croatia, Cyprus, Czechia, Denmark, Estonia, France, Germany, Greece, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Romania, Slovakia, Spain and Sweden.
The leaders pointed out that in light of ongoing security challenges facing Europe, including Russia’s war of aggression against Ukraine, “it is crucial that we take decisive action to strengthen Europe’s overall defence readiness and capabilities and its defence industrial base”, and to “enhance our capabilities to address hybrid threats such as securing critical infrastructure”.
The EIB has a key role “in providing investment funding and leveraging private funding in the EU” within the security and defence financing ecosystem, the leaders add.
“By expanding funding mechanisms and employing all available means, we can address the urgent need to grow Europe’s defense industrial and technological base, ensuring it is capable of meeting both immediate and long-term challenges” they note.
The 19 countries welcome actions already taken, as well as Calviño’s stated personal commitment, focusing especially on the EIB’s decision to change its dual-use project requirements, the creation of a new credit line for security and defence SME financing as well as a one-stop shop for security and defence financing, along with the decision to increase the gearing ratio of the bank to 290%.
The member states set out proposals in three areas, seeking a stronger role for EIB in providing investment and leveraging private funding.
Firstly, the leaders ask for the re-evaluation of the list of excluded activities and sectors as regards the security and defence industry lending. “The terminology and content of excluded activities should be more precisely defined and as limited as possible in scope in order to be aligned with the new policy priorities of the EU”, in a way which safeguards the EIB’s operations and financial position, they note.
Secondly, the 19 member states call the EIB to adjust the lending policy to increase the volume of available funding in the field of security and defence. “This stronger emphasis on security and defence, for example by increasing the available investment volume of the Strategic European Security Initiative, should preserve effective financing of the EIB’s other strategic priorities” they point out.
Thirdly, the letter suggests that the EIB investigate earmarked debt issuance for funding security and defence projects, since this “could enhance transparency and provide clarity as well as the possibility of choice for investors”.
“This should however be considered in consultation with financial markets and rating agencies regarding the feasibility of this possibility, with due attention to ensuring the most efficient and cost-effective funding for security and defence projects as well as to the possible impact on financing costs of current EIB bonds” according to the letter.
CNA/YK/EPH/2025
ENDS, CYPRUS NEWS AGENCY
