The European Commission proposed a new regulation establishing the European Defence Fund (EDF) under the draft Multi Annual Financial Framework (MFF) 2021-2027. The Regulation has been agreed by the Council and the EU Parliament and funding of approximately €8 billion has been provided for the instrument under the MFF 2021-2027.
The EDF aims to trigger co-operative programmes that would not happen without EU contribution and, by supporting research and development activities, to provide the necessary incentives to boost cooperation at each stage of the industrial cycle, contributing to the European Defence Technological and Industrial Base (EDTIB).
Member State contributions to the EU Budget (Own Resources) are currently calculated annually by the EU Commission in line with the provisions outlined in Own Resources Decision (ORD) Regulation (2014/335). This includes contributions through traditional own resources (primarily customs duties), a VAT-based contribution with a call rate of 0.3% of a notional harmonised rate, and a Gross National Income (GNI)-based contribution, calculated by taking a Member State’s GNI as a share of EU27 GNI.
EU Budget revenue is general, and is not assigned to any particular fund. As such, the European Defence Fund (EDF) does not have a defined cost to the Exchequer; rather, Ireland’s contributions go into the general pool of revenue that funds all EU budget expenditure, including the EDF. The EDF is encompassed within the funding being provided for the MFF which is funded directly by the Exchequer. As such, no charge arises for my Department's Vote as a result of the establishment of the EDF.
It is also important to note that participation in the EDF does not broker any consideration or obligation in respect of a common or mutual defence commitment or participation in a military defence alliance. As such, participation in the EDF will not compromise Ireland’s traditional policy of military neutrality.