The Netherlands’s defense minister, Kajsa Ollongren, called on the European Investment Bank to invest in the defense industry and said the Dutch government is already putting pressure on pension funds to fund the sector as the European Union struggles to supply Ukraine with sufficient artillery munitions.
“We need to have a highly capable defense industry in the European Union and the Netherlands and for that you have to invest, you have to innovate and you need funding,” she said in an interview from her office in The Hague. “If it’s not coming from big pension funds or banks then there is a real issue.”
EU member states are trying to reach an agreement over joint procurement of artillery ammunition to support Ukraine. Ukraine has said it will need 1 million rounds of ammunition this year, and Estonia has estimated that would cost around €4 billion ($4.3 billion).
The potential role of the EIB in financing defense projects was discussed by EU ambassadors this weekend and member states were encouraged to raise the issue with the bank, according to a person familiar with the matter.
“It’s a problem that the European Investment Bank, but also, for instance, our pension funds here in the Netherlands prefer not to invest in the defense industry,” Ollongren said. She added that her government is in talks with pension funds and banks to encourage them to reconsider investments in the defense industry.
The EIB last year decided to back the technology industry and civilian security infrastructure through its Strategic European Security Initiative, which made funding of up to €6 billion available by 2027 for dual-use projects with a chiefly civilian purpose. But unlike goods with both civilian and military use, weapons and ammunition are currently in the list of excluded activities and not eligible for financing.
Changing the list of excluded activities is up to the EIB’s shareholders — EU member states — according to an EIB spokesperson.
Pressure has been mounting for the EIB to change its rules on investing in core defense. In a letter to Internal Market Commissioner Thierry Breton earlier this month, EU lawmakers urged the bloc’s institutions to do more to help defense firms access funding, including calling on the EIB to change its lending practices.
In response, Breton said last week he has been urging the EIB to change its policies but that the matter needs to be addressed with the bloc’s finance ministers. “There is no legal obstacle to do so and such a move is warranted to support the European defense industries, as well as to send a clear signal to the wider lending community,” Breton said.
The EIB starting to invest in weapons and ammunition could risk affecting demand for its environmental, social and governance funding in capital markets, according to another person familiar with the issue. Close to half of the EIB’s bonds sold in 2022 had a sustainable label. The EIB also lacks expertise to fund core defense projects, the person said.
Ollongren, who visited Ukraine earlier this week, said she is also not against the Netherlands investing in ammunition manufacturing but “the quickest way is to use the industry that’s already there in several countries like Belgium, Germany and Spain.”
Source : Yahoo