EIB under pressure: European leaders call for greater financial support for the defense industry

In an unprecedented concerted effort, Romania and 18 other European Union member states have signed and sent a letter to the European Investment Bank (EIB), calling for a more active role for it in financing the security and defense sector, according to an article published on the Euractiv website, which states that this initiative comes against the backdrop of intensifying security challenges at a global level and the acute need for investment in the production and acquisition of modern military equipment.

The cited source shows that in the letter addressed to the EIB management, European leaders advocate for a significant review of the bank's policies regarding defense investments. They believe that the institution must adopt a more flexible approach and facilitate European states' access to funds for the development of defensive capabilities.

In this regard, three essential proposals are put forward. The first refers to the review of the list of activities excluded from financing. The EIB currently does not finance projects involving munitions, weapons or dedicated military infrastructure. The signatory states are calling for the removal of restrictions from this list to allow financing of new defence equipment factories and other projects of a strategic nature. Such a measure could boost the European defence industry and reduce dependence on imports from outside the EU.

European leaders are also calling for an increase in the funds available for defence industry investments. The EIB currently allocates limited funds to projects with security applications. Even though the head of the institution, Nadia Calvino, recently announced a doubling of the amounts available for such projects in 2025 (from 1 billion last year to 2 billion euros), European leaders are calling for this amount to be significantly increased. However, the EIB has expressed concerns about the under-use of the funds already available, which indicates the need for clearer policies on their allocation.

Another proposal concerns the issuance of "defense bonds", a form of collective lending through which the EIB could mobilize significant financial resources for member states. However, this initiative should be analyzed in consultation with financial markets and rating agencies, in order to avoid risks to the financial stability of the EIB and the maintenance of its AAA credit rating.

The cited source mentions that the signatories of the letter submitted to the EIB are Finland, Belgium, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Italy, Latvia, Lithuania, Luxembourg, the Netherlands, Romania, Slovakia, Spain and Sweden. Most of these states have been calling for the revision of the EIB mandate since spring of last year, which led to changes in the criteria for financing dual-use projects (civilian and military). However, there is no guarantee that the requested changes will be implemented quickly, given that the EIB's decisions are governed by the member states and the institution's management adopts a cautious approach.

One of the main obstacles to the proposed changes is the impact on financial markets. The European Investment Bank must maintain a balance between supporting the defense industry and respecting ESG (Environmental, Social, and Governance) criteria, which discourage investment in arms production. In this context, a possible revision of these criteria by the European Commission could facilitate greater EIB involvement in this sector.