Tue. Dec 10th, 2024

Luxembourg, 3 October 2024

  • The proposed European Defence Industry Programme (EDIP) aims to increase the bloc’s defence readiness and buttress its armaments industry
  • Auditors call for a sturdier policy design and a better balance between objectives, budget and timeline
  • Accountability arrangements must be clarified and strengthened

In an opinion issued today, the European Court of Auditors (ECA) calls for a more robust design of the European Defence Industry Programme (EDIP) and a better balance between the policy objectives, proposed budget and timeline. The auditors highlight the risk that the suggested €1.5 billion in spending along with the 2-year implementation period may not square with the ambitious objectives of strengthening the EU’s defence industry readiness and contributing to the industrial base for the defence of Ukraine.

Faced with the return of high-intensity warfare on the European continent, the EU has moved defence much higher up the agenda. The EDIP proposal is intended to be the first step in implementing the European defence industrial strategy. The aim is to strengthen the European defence technological and industrial base (EDTIB), in particular to ensure the timely availability and supply of defence products, while at the same time contributing to the recovery, reconstruction and modernisation of Ukraine’s defence capacity.

The EU’s legislative proposal to strengthen its defence industrial readiness needs more robust design. It is also necessary to find the right balance between the policy objectives, proposed budget, and timeline,” says Marek Opioła, the ECA member responsible for the opinion.

The auditors highlight the risk that the proposed financial envelope of 1.5 billion may not be commensurate with the programme ambitions. They point out that the Commission did not assess how much EU budgetary support would be necessary to implement the proposed policy instruments. They also warn that the EU’s resources could be spread across a wide array of projects that may not have a measurable impact at EU level. For this reason, it will be important to define milestones and targets to reflect the achievements that can realistically be expected by the end of 2027. What is more, complementary implementing provisions may be needed to provide a robust basis for the EDIP’s implementation and the targeted allocation of funds. Lastly, to reap the full benefits of the EU’s budgetary support the Commission should consider complementing the current defence industrial strategy by means of a long-term funding strategy for the EDTIB under the EU’s next multi-year budget.

The auditors call for the programme’s accountability arrangements to be clarified and reinforced, including in regard to the ECA’s audit rights, which must be upheld. This is important because of the complexity of governance arrangements around defence, in particular where programmes are not managed directly by the Commission or in parts where execution is entrusted to the Ukrainian authorities.

There is no fixed financial envelope for the Ukraine Support Instrument, which is part of the proposal. The member states have agreed to use the profits generated by investing frozen Russian assets for the purpose of supporting Ukraine; a percentage of the resulting revenue could be channelled to the Ukraine Support Instrument. However, there is a risk given the unpredictability of the amount and timespan of funding from this source.

The proposal also confers new responsibilities and rights on the Commission to ensure the security of supply of defence products. The auditors stress that the effective functioning of this mechanism will ultimately depend on the member states’ willingness to cooperate.

Background information

On 5 March 2024, the Commission published its proposal for a regulation establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products. Consultation with the ECA on the proposal is mandatory. In addition, the Council of the EU has asked for the auditors’ views before considering the proposal. This opinion, the ECA’s contribution to the legislative process, contains suggestions on clarifying certain parts of the proposal that may have an impact on the financial management of EU funds.

Opinion No 2/2024 is available on the ECA website in English; other EU languages will follow in due course.

ECA Opinion
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