EU defence industry: deal to boost ammunition production

“With Russia’s invasion of Ukraine, war has come to our doorstep. The EU defence industry is facing unprecedented challenges to cope with the new reality and existing gaps. We must do whatever we can to help the European defence industrial base produce more, for our own security as well as Ukraine’s ability to defend itself from an unjust war of aggression. This remains our priority and a matter of utmost urgency,” said Pål Jonson, Minister of Defence of Sweden.

By introducing targeted measures including financing, the proposed ASAP regulation aims to address the current shortage of ammunition and missiles, as well as their components, thereby implementing track 3 of the plan agreed by the Council in March 2023 to urgently deliver ammunition and missiles to Ukraine and help member states refill their stocks.

The European Commission’s proposal commits EUR 500 million in current prices from the EU budget.

The Council of the European Union confirmed the main features of the proposed regulation, notably the ‘Instrument’ through which the EU will financially support the reinforcement of the EU industrial production capacities for ammunition and missiles. In addition, a  Ramp-up Fund may be established, which intends  to make it easier for companies manufacturing ammunition and missiles across the value chain to access private capital.

The Council mandate also preserves various features of the ‘regulatory’ part of the proposal, such as a derogation from the Defence Procurement Directive. In order to reach swift agreement among member states and with a view to opening negotiations with the EP as soon as possible, some elements have nonetheless been separated from the proposal.

The 2022 Joint Communication on Defence Investment Gaps highlighted that continued underinvestment in defence has resulted in both capability and industrial gaps in the EU.

The Russian war of aggression against Ukraine has exposed the European defence equipment market to even bigger challenges, as the EU and its member states have stepped up their efforts to meet Ukraine’s pressing defence needs.

On 20 March 2023, the Council agreed on a three-track approach, aiming to provide one million rounds of artillery ammunition for Ukraine in a joint effort within the next twelve months. It agreed to urgently deliver ground-to-ground and artillery ammunition to Ukraine and, if requested, missiles from existing stocks or the reprioritisation of existing orders. It further called on member states to jointly procure ammunition and, if requested, missiles from the European defence industry and Norway; this would happen in the context of an existing project coordinated by the European Defence Agency or through complementary member state-led acquisition projects, in order to refill their stocks while continuing to support Ukraine.

Now that EU member states’ ambassadors have agreed a mandate on the proposal, the Council is ready to start negotiations with the European Parliament in order to agree on a final version of the text.