The more crises there are, the more European governments and institutions are turning to the European Investment Bank. “It’s a reflex to which we have become accustomed,” says , vice-president at the institution, responsible for issues relating to security and defence, transport and EU enlargement. He is also responsible for institutional relations with Belgium, the Netherlands and Luxembourg. It’s a reflex that began with the 2008 financial crisis and has become a recurring theme in the context of multiple crises. We then saw it with the Juncker plan, which aimed to revive investment in the EU, which had seized up. We then saw it with covid-19, a crisis during which the bank massively supported the fabric of European SMEs.
And it was at the request of the European Commission that the “bank of the European Union” worked to provide financial support to Ukraine--support guaranteed by the European executive. And it was at the request of the member states--the EIB's shareholders and ultimately the ultimate decision-makers--that the bank opened the credit floodgates, “in the face of the reluctance of commercial banks” to invest more in defence. “We did this on three occasions, in May 2024, in December 2024 and at the beginning of this month when we wrote a letter to the heads of state and government to tell them that we were going to open up even more to investment in defence.”
These requests could continue after the next Nato summit, scheduled for June in The Hague. “With the war in Ukraine, things are changing every day. The next stage is The Hague. European countries, I am sure, will agree on the limit towards which they will have to move with their defence spending.”
New roadmap
On Friday 21 March, following a meeting of the board of directors, the EIB detailed its roadmap. It was decided that its Strategic European Security Initiative will be integrated into a permanent public policy objective aimed at supporting various military projects and, in collaboration with the European Commission and all the stakeholders concerned, that investment in the field of security and defence will be doubled by 2025. The EIB has also pledged that “the scope of excluded activities will be as limited as possible.” In concrete terms, with the exception of arms and munitions, any security and defence project is now eligible for financing. “Any project.” In other words, the previous limit set in the investment policy of only financing projects that enable “dual-use”--meaning infrastructure that can be used for both civilian and military activities--has jumped.
Why not imagine that this restriction on arms and ammunition could also be blown up, especially if the situation were to deteriorate on the front line? “I’m an optimist, so I hope the situation doesn’t deteriorate. But at the end of the day, it’s up to our shareholders to decide,” says de Groot. But is financing arms and ammunition in the very DNA of the bank, a bank which by its very nature finances innovative projects and new technologies? A bullet is not an investment like drones or satellites. It's a dry expense, you might say.
Encouraging joint projects
So which defence projects are eligible for funding under the current definition? “Satellites, transport infrastructure to get people and equipment to the front line, military bases, barracks and hospitals, drones, the fight against biological weapons and secure communications systems,” sums up de Groot. “These are all investments that will make the European Union more resilient.”
Resilience seems to be the key word in the EIB’s current policy. De Groot makes a very clear distinction between defence and security. “Defence is a purely military issue, whereas security is a more global concept that concerns the protection of our citizens in times of war, but also in the face of natural or climatic disasters. The drones we are funding are not weapons. They are used to protect our critical infrastructure. Our water, energy and hospitals are increasingly protected by drones. In this respect, energy is a key issue, determining our resilience, autonomy and security. , one-third went to the energy sector.”
This makes the sum of €2bn somewhat marginal. But this would be forgetting the leverage effect that the bank’s financing generally generates. And, above all, the knock-on effect that de Groot is counting on to accelerate the development of a European defence industry and its entire supply chain. “What I hope to see over the next 12 months is more cross-border defence projects, projects in which each country does not buy its own satellite, but pools the expenditure. Two, 12, 27, it doesn’t matter. I’d like to see a lot more joint projects that are by nature cheaper and better connected, operationally speaking.”
Doubling of defence funding every year since 2023
Two billion may not sound like much. But the momentum is there. “In 2023, we committed €500m in loans. In 2024, it was €1bn and it will be €2bn in 2025. For the past three years, we have been doubling our commitment every year. And I can tell you that this sum will be increased in 2026. This will soon be discussed with our shareholders, the governments of the EU.”
The problem today is not so much a lack of money as a lack of projects. This prompted de Groot to take up his pilgrim’s staff last year and go to every country to present the opportunities offered by the EIB. And it paid off, according to de Groot. “Defence projects by their very nature take longer than many others. Whilst 2024 was very slow from this point of view, things seem to be speeding up. For 2025, the pipeline is well filled.” Fourteen projects, “some at an early stage,” are currently being examined. These are projects that he does not wish to name for reasons of confidentiality, though one project--already made public--concerns the construction of a military base in Lithuania. This is a base that will allow the accommodation of 5,000 German or European soldiers.
In 2024, the billion available eventually found takers. (€300m went to the Polish Investment Promotion Bank to finance two defence satellites. A loan was granted to Denmark to modernise a port so that Nato-sized ships could unload military equipment. Finally, a loan went to Italian company Leonardo, a specialist in search and rescue helicopters.
Some of these projects come from the Benelux. “Luxembourg is the country of space and has very competent companies in this field. We are currently discussing with some of them how we can support them in terms of secure communication systems in Europe. With the Netherlands, we are working on a venture capital fund dedicated to startups and scaleups in the security and defence field. As for Belgium, a new government is taking office. I have no doubt that they will have projects to submit to us quickly.”
This article was originally published in .