EU reaches provisional deal on $1.75B defense industry program

ISTANBUL

The Council of the European Union and the European Parliament reached a provisional agreement Thursday on the creation of the European Defense Industry Program (EDIP), a €1.5 billion ($1.75 billion) initiative designed to strengthen the bloc’s defense readiness and industrial cooperation, including with Ukraine.

The agreement establishes the EU’s first-ever mechanism to ensure the security of supply of defense products and aims to enhance the competitiveness of Europe’s defense technology and industrial base.

“The European Defense Industry Program is key to Europe's defense readiness,” said Danish Deputy Prime Minister and Defense Minister Troels Lund Poulsen, according to a statement.

“It will boost our capacity to produce and supply critical defense equipment and ensure that we can respond swiftly and decisively to the increasingly complex security environment. At the same time, it will deepen our partnership with Ukraine by bringing its defense industry closer to ours.”

The EDIP, which will run from 2025 to 2027, allocates $1.75 billion in the form of grants, with $351 million earmarked for the Ukraine Support Instrument.

The program will also enable Ukrainian companies to participate in European Defense Projects of Common Interest (EDPCIs), integrating Ukraine more closely into the European defense industry.

EU negotiators agreed that no more than 35% of a defense product’s components may originate from non-EU or non-associated countries, maintaining what officials described as a “European preference principle” while allowing cooperation with trusted partners.

For the first time, the EU will also establish a security of supply regime to guarantee timely access to defense materials and components during crises.

The system will distinguish between defense and non-defense products and set out a two-stage approach for managing supply chains.

The program will further create a European military sales mechanism featuring a centralized catalogue of defense products and pooled resources to accelerate the delivery of equipment when needed.

The provisional agreement must now be formally endorsed by both the Council and the European Parliament before entering into force.