The European Union has been clambering to produce more weapons in a bid to continue the flow of arms and ammunition to Kyiv and keep Europe's own stocks in good health.
"The European Investment Bank is invited to adapt its policy for lending to the defence industry and its current definition of dual-use goods," the leaders said in conclusions after a summit in Brussels.
The EIB is the world's biggest multilateral public lender and has ploughed in billions of euros to help Ukraine after Russia's 2022 invasion.
But according to long established policies, the Luxembourg-based bank should not directly fund the production of arms and ammunition, and the dual-use goods it finances must have a primarily civilian purpose.
The states' call comes after more than half of the bloc's members urged the EIB to bolster financing for Europe's defence industry as war rages on the continent.
In a letter signed by 14 countries including the EU's powerhouses, Germany and France, they said Sunday the lender should expand its investments in defence beyond a small number of "dual-use products" that can have both military and civilian functions.
Since its establishment in 1958, the EIB has invested more than a trillion euros in projects covering a range of sectors including the environment and social cohesion.
The EIB also plays a strong role in international development. Its EIB Global branch is active in 160 countries and has poured 10.8 billion euros in loans in 2023.
Franco-German defence group KNDS to produce arms in Ukraine
Berlin (AFP) Mar 22, 2024 -
Franco-German arms group KNDS, which focuses on making tanks, will produce military equipment and munitions in Ukraine, the countries' defence ministers said Friday in Berlin.
"We are going to work together to produce weapons and munitions in Ukraine", said German Defence Minister Boris Pistorius during a press conference with his French counterpart Sebastien Lecornu.
KNDS "will set up a subsidiary in Ukraine", the initial aim of which will be to train Ukrainians and "rapidly produce spare parts, particularly for systems that have already been delivered", said Lecornu, without giving a timeframe.
Ukraine has been suffering from serious ammunitions and weapons shortages in its fight against Russia, which has been making battlefield gains in recent months.
This agreement follows a recent announcement by German Chancellor Olaf Scholz and French President Emmanuel Macron of an initiative for military production in Ukraine.
Such a facility has "enormous value, since production capacity is closer to the front line, which means fewer logistics and greater reliability of supply", said Lecornu.
KNDS is a tie-up between Nexter from France and Germany's KMW, and has a particular focus on producing battle tanks, other armoured vehicles and artillery systems.
German arms maker Rheinmetall is also setting up operations in Ukraine.
In February, it announced an agreement with a Ukrainian company to manufacture artillery shells in Ukraine.
Last week, the company said it plans to set up at least four factories in Ukraine for producing shells, military vehicles, gunpowder and anti-aircraft weapons.
EU agrees to move ahead on using Russian assets for Ukraine
Brussels, Belgium (AFP) Mar 21, 2024 -
EU leaders on Thursday agreed to "take work forward" on a plan to use the profits from frozen Russian central bank assets to arm Ukraine, as Kyiv pleaded for more ammunition for its outgunned forces.
More than two years into Moscow's war against its neighbour, Kyiv's troops are struggling to hold back the Russian army as Western deliveries of weapons have faltered.
Meanwhile, Putin has tightened his iron grip over his country by winning a new six-year term at elections after opposition was crushed.
The proposal, at the heart of talks between leaders at a summit in Brussels, could unlock some three billion euros ($3.3 billion) a year for Kyiv -- once given a final green light.
"I'm glad that leaders endorsed our proposal to use the extraordinary revenues from immobilised Russian assets. This will provide funding for military equipment to Ukraine," European Commission chief Ursula von der Leyen told reporters.
The EU froze around 200 billion euros of Russian central bank assets held in the bloc as part of punishing sanctions imposed on Moscow for sending troops into its neighbour in February 2022.
The push by the EU to find more funds for Ukraine comes as a $60 billion support package from the United States, Kyiv's other major backer, remains blocked in Congress.
Addressing the EU's 27 leaders via video link, Ukrainian President Volodymyr Zelensky told them the shortfall in ammunition facing his troops was "humiliating" for Europe.
"Europe can provide more -- and it is crucial to prove it now," he said, also calling for additional air-defence systems in the wake of a large-scale strike on Kyiv.
- Kremlin threatens retaliation -
EU leaders insisted the plan to target the interest being made by the frozen assets was legally sound.
But the Kremlin warned it would use legal and "other methods of retaliation" to hit back.
Alongside the efforts to get more weapons to Kyiv, the leaders debated ways to boost Europe's defence industry to be able to arm Ukraine and build up its own forces.
Brussels has put forward a raft of proposals aimed at ramping up capacity but there are complaints that Europe is still not moving fast enough.
While Russia has put its economy on a war footing, the EU has fallen well short of a promise made last year to supply Ukraine with a million artillery shells by this month.
But the Czech Republic has spearheaded its own initiative aimed at getting hundreds of thousands of shells available around the world to send to Kyiv.
France and Estonia pitched the idea of using joint borrowing -- similar to the massive package of support the EU came up with during the Covid pandemic -- to fund defence spending.
But a majority of member states, led by so-called "frugal" countries such as Germany, have flatly rejected going anywhere near that far.
Instead, the leaders issued a call for the EU's lending arm, the European Investment Bank, to expand its funding for the defence sector.
At the moment, the bank is limited to investing in only a small number of "dual-use products" that can have both military and civilian functions.
- Call for Gaza truce -
While the response to the conflict in Ukraine dominated the summit, EU leaders managed to put on a rare show of unity on the war in Gaza.
In a joint statement they called for an "immediate humanitarian pause" in Israel's offensive and warned it not to launch a ground operation in Rafah.
The leaders -- split between staunch supporters of Israel and those who are more pro-Palestinian -- said they were "appalled by the unprecedented loss of civilian lives and the critical humanitarian situation".
Closer to home, they also gave a green light to opening membership talks with Bosnia, as Russia's war has sparked a push to expand the bloc.
But they tempered the good news by saying that the negotiations could only begin in earnest once the Balkan country has completed more reforms.
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