Regulation (EU) 2025/2643 of the European Parliament and of the Council of 16 December 2025 establishing the European Defence Industry Programme and a framework of measures to ensure the timely availability and supply of defence products (‘EDIP Regulation’) (Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114(1), Article 173(3), Article 212(2) and Article 322(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Court of Auditors (1),

Having regard to the opinion of the European Economic and Social Committee (2),

Having regard to the opinion of the Committee of the Regions (3),

Acting in accordance with the ordinary legislative procedure (4),

Whereas:

(1) The return of high-intensity warfare brought about by Russia’s unprovoked and unjustified war of aggression against Ukraine has a negative impact on the security of the Union and the Member States and requires a significant increase in the capacity of Member States to reinforce their defence capabilities. The long-term deterioration of regional and global security requires a step-change in the scale and speed at which the European Defence Technological and Industrial Base (EDTIB) is able to develop and produce the full spectrum of military capabilities.

(2) The Heads of State or Government of the Union, meeting in Versailles on 11 March 2022, committed to bolster European defence capabilities. They agreed to increase their defence expenditures, step up cooperation through joint projects and common procurement of defence capabilities, close shortfalls, boost innovation and strengthen and develop the European defence industry.

(3) The Commission and the High Representative of the Union for Foreign Affairs and Security Policy (the ‘High Representative’) presented a Joint Communication on the Defence Investment Gaps Analysis and Way Forward on 18 May 2022, highlighting the existence, within the Union, of defence financial, industrial and capability gaps.

(4) In its conclusions of 14 and 15 December 2023, the European Council, having considered work carried out to implement the Versailles declaration of 11 March 2022 and the Strategic Compass for Security and Defence approved by the Council on 21 March 2022, underlined that more needs to be done to fulfil the Union’s objectives of increasing defence readiness. To achieve such readiness and defend the Union, a strong, resilient, innovative and competitive European defence industry is a pre-requisite.

(5) On 20 July 2023, the European Parliament and the Council adopted Regulation (EU) 2023/1525 (5), aimed at urgently supporting the ramp-up of manufacturing capacities of the European defence industry, securing supply chains, facilitating efficient procurement procedures, addressing shortfalls in production capacities and promoting investments. On 18 October 2023, the European Parliament and the Council adopted Regulation (EU) 2023/2418 (6), aimed at supporting collaboration between Member States in the procurement phase to fill the most urgent and critical gaps in a collaborative way, especially those gaps created by the response to Russia’s war of aggression against Ukraine.

(6) Regulations (EU) 2023/1525 and (EU) 2023/2418 were designed as emergency response and short-term programmes, expiring on 30 June 2025 and 31 December 2025 respectively.

(7) This Regulation should build on Regulations (EU) 2023/1525 and (EU) 2023/2418 and extend their logic in a more long-term and structured perspective, by providing financial support for the period 2025-2027 for the reinforcement of the competitiveness, responsiveness and ability of the EDTIB to ensure the availability and supply of defence products in a predictable, continuous and timely manner. In light of the current security situation, it appears necessary to extend that Union support to incentivise collaboration between Member States in the procurement of a broader scope of defence equipment.

(8) On 23 June 2022, the European Council decided to grant the status of candidate country to Ukraine, which expressed a strong will to link reconstruction with reforms on its European path. On 15 December 2023, the European Council decided to open accession negotiations with Ukraine and declared that the Union and its Member States remain committed to contributing, for the long-term and together with partners, to security commitments to Ukraine, which will help the latter to defend itself, resist destabilisation efforts and deter acts of aggression in the future. Strong support to Ukraine is a key priority for the Union and an appropriate response to the Union’s strong political commitment to support Ukraine for as long as necessary.

(9) The damage caused by Russia’s war of aggression to the Ukrainian economy, society and infrastructure, and in particular damage caused to the Ukrainian Defence Technological and Industrial Base (the ‘Ukrainian DTIB’), means that comprehensive support is required to rebuild the Ukrainian DTIB. Such support is essential in order to provide Ukraine with the capacity to maintain essential state functions, contributing to the fast recovery, reconstruction and modernisation of the country, to the integration of the Ukrainian DTIB into the EDTIB, and to the adaptation of the Ukrainian DTIB to meeting the standards of the North Atlantic Treaty Organisation (NATO) and other relevant standards. A strong Ukrainian DTIB is vital for Ukraine’s long-term security as well as its reconstruction.

(10) Actions supporting the reinforcement of the Ukrainian DTIB should be financially supported by the Union. In particular, the Ukraine Support Instrument under this Regulation should incentivise Member States to cooperate with Ukraine and the Ukrainian DTIB with a view to ramping up the Ukrainian defence manufacturing capacities and to fostering the common procurement of defence products from the Ukrainian DTIB. That support is complementary to the support provided under the Ukraine Facility established by Regulation (EU) 2024/792 of the European Parliament and of the Council (7), and to military support provided to Ukraine under the European Peace Facility established by Council Decision (CFSP) 2021/509 (8) and through bilateral assistance from Member States. It is also consistent with the Union’s continued and unwavering support for Ukraine’s independence, sovereignty and territorial integrity within its internationally recognised borders.

(11) Russia must be held fully accountable and pay for the massive damage caused by its war of aggression against Ukraine, which constitutes a blatant violation of the Charter of the United Nations. The Union and its Member States should, in close cooperation with other international partners, continue to work towards that goal, in accordance with Union and international law, taking into account Russia’s serious breach of the prohibition on the use of force enshrined in Article 2(4) of the Charter of the United Nations and the principle of State responsibility for internationally wrongful acts, including the obligation to compensate for the financially assessable damage caused. In coordination with international partners, progress has been made on how extraordinary revenues held by private entities stemming directly from the immobilisation of Russia’s sovereign assets could be directed to support Ukraine, including the Ukrainian DTIB, in a manner that is consistent with applicable contractual obligations and in accordance with Union and international law. Additional support could be drawn from the transfer to the Union of extraordinary cash balances of central securities depositories arising from the unexpected and extraordinary revenues stemming from the immobilisation of Russia’s sovereign assets or any other relevant Union restrictive measures.

(12) Following the strong commitment of the G7 leaders to helping Ukraine meet its urgent short-term financing needs and to supporting its long-term recovery and reconstruction priorities, on 28 October 2024 the European Parliament and the Council adopted Regulation (EU) 2024/2773 (9) which established the Ukraine Loan Cooperation Mechanism and provided exceptional macro-financial assistance to Ukraine. Regulation (EU) 2024/2773 provides that the Memorandum of Understanding on policy conditions for that macro-financial assistance is to include a commitment to promote cooperation with the Union on the recovery, reconstruction and modernisation of the Ukrainian defence industry, in line with the objectives of Union programmes aimed at the recovery, reconstruction and modernisation of the Ukrainian DTIB and of other relevant Union programmes.

(13) A financing agreement within the meaning of Article 114(2) of Regulation (EU, Euratom) 2024/2509 of the European Parliament and the Council (10) (the ‘Financial Regulation’) should be concluded with Ukraine for the implementation of the actions set out in this Regulation which concern Ukraine or legal entities established in Ukraine receiving Union funding. The financing agreement with Ukraine, along with the contracts and agreements signed with legal entities established in Ukraine receiving Union funds, should ensure compliance with the obligations set out in Article 129 of the Financial Regulation.

(14) To fund the actions that aim to strengthen the competitiveness and readiness of the EDTIB based on Article 173 of the Treaty on the Functioning of the European Union (TFEU) and the actions that aim to contribute to the recovery, reconstruction and modernisation of the Ukrainian DTIB, taking into account its possible future integration into the EDTIB, under Article 212 TFEU, this Regulation should establish a European Defence Industry Programme (the ‘Programme’) setting out the conditions for Union financial support under Article 173 TFEU and a Ukraine Support Instrument setting out the specific conditions for Union financial support under Article 212 TFEU.

(15) The Programme should be consistent with the defence capability priorities commonly agreed by Member States within the framework of the common foreign and security policy (CFSP), Member States’ cooperation within the framework of the permanent structured cooperation (PESCO) established by Council Decision (CFSP) 2017/2315 (11), the European Defence Agency’s (EDA) initiatives and projects and the Union’s civil and military assistance to Ukraine. The Programme should duly take into account the relevant activities carried out by NATO and other partners where such activities serve the security and defence interests of the Union.

(16) This Regulation should lay down a financial envelope for the period 2025 to 2027 which is to constitute the prime reference amount, within the meaning of point 18 of the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources (12), for the European Parliament and the Council during the annual budgetary procedure. It is appropriate to allow for additional financial resources to be made available to the Programme and the Ukraine Support Instrument, including through additional contributions provided by the Member States.

(17) The European Council, in its conclusions of July 2020, stated that the duration of the Multiannual Financial Framework (MFF) sectoral programmes should, as a rule, be aligned with the timeframe of the MFF 2021-2027. After the expiry of the MFF 2021-2027, Union funding to sectoral programmes will be subject to the outcome of negotiations on the next MFF, applicable from 2028.

(18) The possibilities provided for in Article 73(4) of Regulation (EU) 2021/1060 of the European Parliament and of the Council (13) could be applied provided that the project complies with the rules set out in that Regulation and the scope of the European Regional Development Fund and the European Social Fund Plus as set out in Regulations (EU) 2021/1058 (14) and (EU) 2021/1057 (15) of the European Parliament and of the Council, respectively. This could, in particular, be the case where the production of relevant defence products faces specific market failures or suboptimal investment situations in the Member States’ territories, in particular in vulnerable and remote areas, and such resources contribute to the achievement of the objectives of the programme from which they are transferred. In line with Article 24 of Regulation (EU) 2021/1060, the Commission is to assess the amended programmes submitted by the Member State and make observations within two months of the submission of the amended programme.

(19) In view of the need to invest better and together in the competitiveness, responsiveness and ability of the EDTIB to ensure the timely availability and supply of defence products as well as in the recovery, reconstruction and modernisation of the Ukrainian DTIB, it should be possible for Member States, Union institutions, bodies and agencies, third countries, international organisations, international financial institutions and other third parties to contribute to the implementation of the Programme and of the Ukraine Support Instrument. Such contributions should be implemented in accordance with the same rules and conditions and should constitute external assigned revenue within the meaning of Article 21(2), point (a), (d) or (e), of the Financial Regulation and should be indicated in the annual budgetary procedure in accordance with the Financial Regulation. Member States should have the flexibility to decide how to allocate the amounts contributed to the Programme or to the Ukraine Support Instrument. It should be possible for Member States to choose to make those funds available to all entities eligible for funding under this Regulation, to benefit only the Member States concerned, or to additionally benefit other Member States or, where relevant, Ukraine. That flexibility is essential to ensure the most efficient use of resources, enabling the allocation of funding where it is most needed.

(20) Member States should be able to use the flexibility in the implementation of their shared management allocations offered by Regulation (EU) 2021/1060. It should therefore be possible to transfer certain levels of funding between shared management allocations and the Programme or the Ukraine Support Instrument, subject to the conditions set out in Regulation (EU) 2021/1060. It should be possible for resources that remain uncommitted by the end of 2028 to be transferred back to one or more respective source programmes, at the request of the Member State concerned, in accordance with the conditions set out in Regulation (EU) 2021/1060.

(21) The objectives pursued under the Programme to increase the competitiveness and readiness of the EDTIB by initiating and accelerating the adjustment of industry to structural changes imposed by the evolving security environment, including with a view to ensuring security of supply of defence products throughout the Union, can contribute to promoting the Union’s economic, social and territorial cohesion as foreseen under Regulation (EU) 2021/241 of the European Parliament and of the Council (16). Therefore, provision should be made to allow for Member States’ contributions supported by the Recovery and Resilience Facility to be used for the purpose of supporting industrial reinforcement actions under this Regulation. That possibility should be used to the extent that it contributes to achieving the objectives set out in Article 4 of Regulation (EU) 2021/241. The application of the principle of ‘do no significant harm’ within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council (17) is essential to ensure that the reforms and investments undertaken under the Recovery and Resilience Facility are implemented in a sustainable manner. All measures supported by the Recovery and Resilience Facility are to be undertaken in compliance with the applicable Union and national environmental acquis, in particular relating to environmental impact assessment and nature protection. At the same time, some defence end-products are, by their very nature, likely to directly or indirectly harm the environment. Therefore, the application of the principle of ‘do no significant harm’ to Member States’ contributions supporting industrial reinforcement actions which concern those products might not be feasible. In addition, it could be appropriate not to apply the principle of ‘do no significant harm’ where the supported industrial reinforcement action concerns defence products, or components or raw materials intended or used wholly for the production of defence products. Indeed, the Union is confronted with a stark deterioration of its security context which has increased the level of threat to the Union. This necessitates immediate and massive investments in and support to the resilience and scaling up of the EDTIB to strengthen its ability to prepare for future supply crises and ensure the timely availability and supply of defence products across the Union. This represents, in the present situation, an overriding objective of public security which takes precedence over other considerations. In this context, it is necessary to prevent any disruption along defence supply chains, in particular by allowing industrial reinforcement actions concerning defence products, components and raw materials to be supported, where appropriate, without restrictions related to the application of the principle of ‘do no significant harm’. Therefore, where Member States use their voluntary contribution supported by the Recovery and Resilience Facility in favour of industrial reinforcement actions under this Regulation, those actions should not be subject to the application of the principle of ‘do no significant harm’, provided that the Member State concerned justifies in the contribution agreement with the Commission that it is not feasible or appropriate to ensure that the type of activities intended to be supported under this Regulation comply with the principle of ‘do no significant harm’.

(22) Third countries which are members of the European Economic Area should be able to participate in the Programme as associated countries in the framework of the cooperation established under the Agreement on the European Economic Area (18), which provides for the implementation of the programmes on the basis of a decision adopted under that Agreement.