Ms Lenka Filipkova:

I thank the committee for the invitation to this meeting and ask it to accept the apologies on behalf of Ms Riso, the Director General, who could not be here today. I will represent the European Commission at today’s meeting. I am the director responsible for the expenditure side of the European budget and the negotiations of the annual budgets between the European Parliament and the Council. I am accompanied by Mr. Christopher Galand, head of unit responsible for the implementation of the internal policies, Ms Rosa Garcia Calera from the directorate general for defence and Space and Mr. Carlos Arsuaga, who used to work in the directorate general office and is now working in the directorate general for budget.

Support to the defence industry is one of the areas where the EU budget has most evolved in the past five years and the war of aggression against Ukraine has further increased the need for the EU budget to expend in that area. The European Union has to adapt to the threatening security landscape by strengthening its strategic autonomy and stepping up its industry for defence readiness.

Let me recall that the member states’ armed forces have been tailored during the past decades to perform expeditionary, peacekeeping and-or peace enforcement missions. The planning and procurement of defence systems has been tailored according to this operational reality with the subsequent impact on the capacities and capabilities of the European defence industrial and technological base. The industry has not developed large production capacities and is seen as sub-scale for today’s challenge. It is also a very scattered industry with national producers supplying domestic armed forces. It did not go through the consolidation process we have seen in other industrial sectors.

Since 2021, the EU budget is supporting the collaborative research and collaborative development of defence products by and between EU firms through the European Defence Fund programme. It encourages the defence industry firms to work together instead of developing separately the same costly products. It is a programme with a seven-year budget of more than €7 billion. The member states have recently decided to reinforce it with €1.5 billion in the framework of the mid-term review of the multiannual financial framework, MFF, for 2021 to 2027.

Besides the European Defence Fund, the EU set up in record time in 2023 two short-term defence initiatives to strengthen the European defence technological and industrial base after the invasion of Ukraine. These are ASAP, which supports the scaling up of production capacity of industry, and EDIRPA, which supports joint procurement by member states.

The European Council called on the Commission on 20 March 2023 to urgently deliver ammunition to Ukraine and refill member states' stocks. In response, the Commission proposed ASAP in May 2023. It was adopted in urgent procedure by July of the same year. The total budget of this short-term instrument is €500 million - €157 million in 2023 and €343 million in 2024. It is fully financed from the amounts initially earmarked for EDIRPA and was put in reserve pending the adoption of the legal basis. In line with the legislative proposal for ASAP, the draft amending budget 3/2023 created a new budgetary structure for ASAP and put the corresponding amounts still in reserve to the new budget lines for EDIRPA.

Once the ASAP legal base was adopted on 20 July 2023 and the amending budget No. 3 of 2023 was adopted on 18 October, the corresponding amounts were made available. The amounts for 2024 were included in the amending letter to the draft budget 2024, which was finally adopted on 22 November for the respective appropriations of 2024. As such, the draft amending budget No. 3 of 2023 and the budget 2024 were merely translating into the budget the decision of the co-legislators to set up the ASAP programme with a total budget of €500 million over two years. This draft amending budget is mechanical and does not present any new discretionary decision not yet discussed at the time of the agreement on ASAP.

Before I conclude, I will add some information on the state of play of the implementation of ASAP. The implementation of ASAP is progressing very quickly. In October 2023, we launched one single call for proposals and the results of the evaluations were announced in March 2024 for the total available envelope. The grants for the awarded projects will start to be signed in June 2024. On that basis, up to 35% pre-financing will be paid. In order to do so, in April, we transferred an amount of €100 million in payment appropriations from EDIRPA to ASAP. This was possible because the processing of the calls for EDIRPA is taking some more time, which is also due to the fact that the legal base was adopted later.

I thank members for their attention. We are happy to take any questions.