The European Union plans to spend between €300 million ($327 million) and €500 million to support ammunition producers through the bloc’s budget, according to European Commissioner Thierry Breton.
(Bloomberg) — The European Union plans to spend between €300 million ($327 million) and €500 million to support ammunition producers through the bloc’s budget, according to European Commissioner Thierry Breton.
The funds would come on top of the €2 billion agreed by foreign and defense ministers earlier this week as the EU aims to provide Ukraine with 1 million rounds of artillery ammunition over the next year, a goal that leaders are expected to sign off on at a two-day summit in Brussels starting Thursday.
The funds outlined by Breton would be part of the third track of a broader strategy to boost production capacity in the EU, including by cutting bottlenecks. The program also involves joint purchases of ammunition and reimbursing, through the European Peace Facility, what member states send from their stockpiles of both modern and Soviet-era ammunition to Ukraine.
Breton, the internal market commissioner, acknowledged a possible bottleneck in gunpowder production. “We have that on our radar, we’ve already started to work on this,” Breton said, adding that some countries are already candidates to build new capacities.
Member states have been informed that one key challenge to manufacturing ammunition is the supply of gunpowder as it is currently supplied by a handful of countries. The EU is looking to both boost production at existing locations and new ones.
Breton said he believes the EU can deliver the 1 million shells to Ukraine in the next 12 months.
“It is a challenge, but using the existing stocks that member states have, which could be freed immediately, and with an increase in production capacity, yes, I’m confident we should be able to achieve this ambitious target for Ukraine,” Breton said.
More Cash Needed
EU leaders are also set to discuss options to unlock another €3.5 billion for the EPF, but many countries have questions about how it would be used. The EPF, which reimburses member states for their weapons deliveries to Ukraine and funds other projects, currently has a budget of around €7.7 billion, with much of it already pledged to support Kyiv.
But the ammunition pledges will exhaust the fund and more cash is needed to reimburse for other types of weapons countries may send in the future.
Defense companies in Europe in particular are struggling to expand production to the scale necessary, with many saying they lack the contracts needed to make large investments and open new facilities or produce to capacity.
While European governments have pledged to increase defense spending following Russia’s invasion of Ukraine, it takes time to inject cash into the industry after two decades of declining spending following the Cold War. Only after 2014, when Russia annexed Crimea, did spending in Europe start to pick up again.
–With assistance from Alberto Nardelli.
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