Europe’s defense industry is on a path to scale up production capacity through targeted support from the European Union. This week, the bloc confirmed a 500 million euro allocation to 31 defense projects across 15 EU countries and Norway, including two initiatives by the Spanish company Rheinmetall Expal, totaling 23.8 million euros. The aim is to reach 1.7 million ammunition rounds by year’s end and surpass 2 million by the end of 2025.
“This marks the first time we use EU funds to back industrial defense production capabilities. It is unprecedented. The signal is clear: Europe will produce more, faster, and together as Europeans”, stated Thierry Breton, the Commissioner for Internal Market, in a press release. Vice President Margrethe Vestager added that these steps are about investing more, better, together, and in a European way.
Selected projects span five areas — explosives, propellants, projectiles, missiles, and testing and refurbishing certification — with the main bottleneck in the supply chain centered on the production of propellants and explosives, essential to making projectiles. Three quarters of the program funding will go to these two components. Rheinmetall Expal will receive 19.06 million euros for propellant manufacture and an additional 4.75 million euros for the production of projectile assemblies.
Brussels estimates that the 513 million euros in EU budget support, combined with co-financing, can mobilize a total of 1.4 billion and that grant agreements with the selected firms are expected to be signed in May. The funding will back projects that will raise annual production capacity by more than 10,000 tonnes of propellant and more than 4,300 tonnes of explosives.
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“This proves it can be done. We can shift toward a wartime economy for the industry. We did it for ammunition and we will apply the same approach to other equipment”, say government officials. They caution that while Brussels can incentivize production, governments must subsequently place orders with defense companies. In the near term, the EU has focused on ammunition to address urgent needs for Ukraine, which cannot compete with Russia in projectile volume. Yet the broader outlook emphasizes midterm planning as well.
For this reason, the European Commission has also adopted the work program under the EDIRPA joint procurement plan, dedicating 310 million euros to three domains: ammunition — small arms ammunition, artillery munitions, mortars, and rockets; air defense and anti-missile systems; and platforms and upgrades to replace legacy systems such as tanks, armored vehicles, soldier support systems, and drones to move from Soviet standards to European norms. The deadline for member states to submit proposals will be extended to July 25.
In addition, Brussels announced a call for proposals under the European Defense Fund with an extra 1.1 billion euros, including 225 million to support early-stage defense companies. The initiative targets crucial projects in fields like countering hypersonic missiles, developing a set of unmanned aerial vehicles both in the air and on the ground, and ensuring secure space-based communications. It also aims to lay the groundwork for next-generation defense systems, including medium-size helicopters and cargo aircraft.