500M euro, new measures to boost EU defence industry capacities in ammo production

The European Commission (EC) adopted on May 3 the Act in Support of Ammunition Production (ASAP) as part of “track 3” of a plan to urgently deliver ammunition and missiles to Ukraine and to help EU countries refill their stocks, according to an EC statement.

The EC proposes to allocate a budget of 500 million euro at current prices.

“By introducing targeted measures including financing, the Act aims at ramping up the EU’s production capacity and addressing the current shortage of ammunition and missiles as well as their components,” the EC said.

It will support the destocking from member states (track 1) and the joint procurement for ammunition (track 2).

“In particular, it will strengthen the responsiveness and ability of the Union defence industry to ensure the timely supply of ammunition and missiles in Europe,” the EC said.

“In light of the return of high intensity conflict in Europe, the timely availability in sufficient volumes of these products is critical for our security and for our continuous efforts to support Ukraine.”

This proposal for a new Regulation comprises an instrument to financially support the reinforcement of the EU’s industrial production capacities for the relevant defence products; a mechanism to map, monitor and better anticipate the existence of bottlenecks in these supply chains; and the introduction of a temporary regulatory framework to address the ammunition supply shortage.

The proposed 500 million euro budget comes from the redeployment of different instruments, in particular the European Defence Fund and the future EDIRPA.

The proposed regulation comprises measures to support the industrial reinforcement of ammunition and missiles production in the EU, including their input products, the EC said.

Financial support will be provided in the form of grants to various types of actions contributing to the efforts of the European defence industry to increase their production capacities and tackle identified bottlenecks.

In addition, the Act will facilitate access to finance for EU companies in the ammunition and missile field, potentially through a dedicated facility, the ‘Ramp-up Fund’. This fund would aim to support undertakings in the ammunition and missile supply chains to have access to both public and private financing, to speed up investments needed to increase manufacturing capacities.

“Responding to the urgency of the situation, within five weeks after the agreement on the three-track approach in the Council of the European Union, the Commission has adopted this proposal for a Regulation as a matter of high priority and will transmit it to the co-legislators,” the EC said.

“The Commission counts on a swift adoption, before the summer 2023, to be able to initiate support for the ramping up of the EU’s defence industry production capacities of ammunition and missiles. The instrument will cease to apply in mid-2025.”

(Photo: Teknorat)

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