Defense innovation

The European Commission (EC) and the European Investment Fund (EIF) have just announced the establishment of the 175 million EUR (191.57 million USD) Defence Equity Fund (DEF) to promote innovation in the field of security and defence.

DEF aims to raise around EUR 500 million ($548 million) through attracting capital from private equity and venture capital funds. Accordingly, over the next four years, DEF will focus on projects developing technology for civil and defense applications. The establishment of DEF is part of the European Union's (EU) efforts to increase its role in defense policy decisions and control investment and business activities in this field.

The DEF will facilitate the participation of small and medium-sized enterprises in the defense supply chain and expand cross-border industrial cooperation, thereby helping the EU boost competition. Observers consider this an important step towards building a stronger Europe. The DEF was launched in the context that the total defense spending of EU member states in 2023 is expected to be 270 billion EUR (296.08 million USD), an increase of about 30 billion EUR (32.9 million USD) compared to 2022.

In recent years, Europe has continuously increased its defense spending budget, but the region's manufacturing companies do not have a supply of components, weapons and high-tech systems to meet the EU's needs and future threats. Moreover, the EU also wants to ensure that the continent is not too dependent on countries with large defense industries such as the US. According to statistics, the purchase of defense-related items from non-EU countries accounts for 70% of total purchases in the period 2022-2023, of which 63% is from the US.

As a result, there has been criticism within the bloc that each arms deal weakens the bloc's defence industrial base, depriving EU defence businesses of a core market.

THANH HANG

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