The European Investment Bank is increasing multibillion-dollar defense investments

The European Investment Bank (EIB) intends to increase its investment in European defense such as drones, satellites and cyber security, aiming to inject another 6 billion euros ($6.4 billion) into the sector, its head Nadia Calvino told Reuters.
The plan underscores Europe's growing willingness to lend to defense companies after Russia's invasion of Ukraine changed the entrenched view that the region is safe from attack and can blindly rely on the United States for protection.
"It is clear that we need to strengthen the European security and defense industry," the EIB president said. "We set aside 8 billion euros for investments in this area, of which only 2 billion euros have been invested."
The move marks another attempt by Europe to keep up with Russia, which has put its entire economy on a military basis.
Calvino said a special team had been set up on the matter.
"We have created a special service to accelerate the distribution of the planned 6 billion euros. We are actively involved in working with the European industry, so it can be expected that a set of projects will be developed in the second half of the year," she added.
The EIB, supported by countries in the region, has a large financial influence, although it is cautious about defense financing. It has backed a satellite project in Poland and a German drone manufacturer, but has avoided munitions, for example.
The EIB recently changed the rules on which it operates, allowing it to lend to or indirectly invest in defense companies.
Tim Lawrenson of the International Institute for Strategic Studies said the move was symbolic. It will send a signal to other banks, often led by the EIB, that it is acceptable to support companies in the defense sector.
"Each European tank is made up of thousands of parts produced by hundreds of small defense suppliers across Europe. These companies have difficulty borrowing and are the most favored," he said.
"Of course, €8 billion is small compared to European defense spending in 2024 of $476 billion, much less US spending of $968 billion," he added.
The change will do nothing to solve the question of how Russian arms production eclipses that of Ukraine.
"Ukraine's state defense budget is 10 billion euros. Russia spends ten times more. It is difficult to wage war with such an imbalance," said CEO of JSC UDI (Ukraine's state-owned arms manufacturer), Herman Smetanin.
The European Union, along with other Western allies, sought to limit Russian advances and repel its increasingly aggressive rival. Therefore, in March 2023, an initiative was launched to deliver one million artillery shells to Ukraine within 12 months.
By the deadline, however, he delivered just over half of that amount. | BGNES