European Union leaders will back a change to the lending policy of the European Investment Bank (EIB) so the huge European government-owned lender can finance more defence projects, draft conclusions of the leaders' summit next week said, APA reports.
The executive European Commission called on the EIB last week to change its lending policy, which now explicitly excludes lending for purely military projects, to help Europe ramp up its defence production following Russia's invasion of Ukraine.
But some EU governments, especially neutral countries, have been reluctant, concerned that financing defence could hurt the EIB's top credit rating and not address the problem, which they say is not a lack of funding, but of long-term contracts.
The EIB is a key player in funding Europe's ambitious transition towards a net-zero-carbon and more digitised economy, and countries are concerned that adding ammunition and weapons to its investment list could scare off investors.
The wording of the draft conclusions of EU leaders prepared for the March 21-22 summit in Brussels pushes for the EIB to do more on defence spending, but stops short of explicitly mentioning funding for weapons or ammunition.
The EIB already lends for the production of equipment that can be used by both civilians and the military like drones or helicopters, or so-called dual-use goods, and the discussion continues on how much further the bank should go.
To address the predictability of demand, crucial for the defence industry to boost its capacity, the leaders call in the draft for multi-year fixed contracts for defence firms.
EU leaders also call in the draft for more integration in the EU defence market and for investment in skilled labour for companies making defence equipment.
With a balance sheet total of 544.6 billion euros ($590.78 billion), the EIB is the world's biggest multilateral financial institution by assets and the biggest multilateral lender, with disbursed and promised loans of 562 billion euros in 2022 compared to the World Bank's $171 billion.
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