The European Investment Bank (EIB) signed a Cooperative Financial Mechanism (CFM) to improve defence project funding.
The EIB has signed a new CFM to improve defence project funding and facilitate collaborative research and development. The signing took place during a meeting with Jorge Domecq and ten member states including France, Portugal, and Hungary have either signed up or expressed an interest in the project.
The CFM was negotiated over three years and is designed to overcome unsynchronised defence budgets that can hinder projects. The CFM is voluntary and will act as a platform offering mutual inter-state help.
Alexander Stubb, EIB Vice-President, said: “Europe has to be at the forefront of the development of key strategic defence technologies, including AI and digitalisation. With cooperation we can improve EU efficiency and innovation ability and strengthen EU capacity to prevent and respond to hybrid threats. A lack of access to suitable financing solutions allowing to better synchronize joint resources is seen as one of the major impediments to the launch or implementation of defence related cooperative projects.”
“This is where the EU bank comes into play. Via the CFM, the EIB can strengthen its lending in support of public sector projects, with, inter alia, potential investments in the fields of dual-use RDI of defence or cybersecurity technologies, including projects envisaged under the EU’s Permanent Structured Cooperation PESCO.”
The first pillar foresees the European Investment Bank (EIB) as the sole lender through the conclusion of bilateral framework loan agreements between EIB and the interested Member State having joined the CFM arrangement (CFM Member). The EIB involvement is supported and facilitated by the EDA which will act as the ‘Facility Agent’ on behalf of EIB under its instructions and responsibility, serving as a primary point of contact between the EIB and the beneficiary CFM Member in the technical assessment of the feasibility of each project.
The second pillar provides for a State-to-State support facility, through a system of reimbursable advances and deferred payments. Within that pillar, any CFM Member can submit a request for financial support to other CFM Members who are part of the same collaborative project.
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Post written by: Ciara Houghton
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