Fourteen EU member states penned a letter on Sunday (17 March) urging the European Investment Bank (EIB) to boost its defence expenditure, as the bloc is scrambling to deliver the promised one million artillery shells to Ukraine.
The deadline for this delivery lapsed this month.
The letter argues that a revised EIB policy could create a “signalling effect,” increasing the acceptability for pension funds and banks to invest in security and defence.
Most pension funds and banks already invest in weapons and defence. However, public calls to increase these investments have not led to significant changes. Therefore, EU leaders hope that changing the EIBs rules could have an encouraging effect.
The letter’s signatories compromise Finland, Bulgaria, the Czech Republic, Denmark, Estonia, France, Germany, Latvia, Lithuania, the Netherlands, Poland, Romania, and Sweden.
Although the letter does not explicitly mention ammunition, French EU Commissioner for the internal market Thierry Breton previously suggested funding grenades using EIB loans.
Weapons and ammunition are currently on a list of excluded activities, which also include tobacco, gambling, sex trade and “projects with political or religious purpose.”
However, member states want to “explore different possibilities enabling the EIB to invest in defence-related activities beyond existing dual-use projects.”
“This would mean discussing and re-evaluating current definitions of dual-use projects and the list of excluded activities as well as reconsidering its defence industry lending policy and other restrictive elements,” the letter said.
EU leaders will meet on Thursday and Friday (21 and 22 March) in Brussels to discuss security, including the EIB’s role in financing defence.
According to an EIB spokesperson, the decision to modify the list of excluded activities lies with the EIB’s shareholders — which are the EU member states. This week’s discussion could, therefore, significantly impact the bank’s operations.
Leading up to the summit, senior bank officials have already voiced opposition to broadening the bank’s mandate to encompass weapons and ammunition.
EIB vice president Thomas Östros told Bloomberg in a live broadcast last week that “ammunition is not the place for the EIB to be.”
“The question is why would member states need us to invest in ammunition,” an EIB spokesperson told EUobserver, echoing Östros.
Just €2.3bn has been spent from a dedicated EIB fund for civilian security infrastructure through its Strategic European Security Initiative (SESI). This leaves almost €6bn for dual-use security funds that can be spent until 2027 untouched.
“Why not allocate those funds to initiatives that are needed anyway, like enhancing the energy efficiency of barracks or investing in cybersecurity. This would allow the government budget to cover ammunition costs without the need for involvement from a public lender,” he said.
“Including the EIB would only complicate matters,” he added.
