EU to invest $550M to boost defense industry

The EU Commission proposed a €500 million (about $552 million) fund on Wednesday to beef up European defense industry capacities in response to the Russia-Ukraine war.

The so-called Act in Support of Ammunition Production (ASAP) is part of EU foreign policy chief Josep Borrell's "three-track approach" meant to "urgently deliver ammunition and missiles to Ukraine and to help Member States refill their stocks," the executive body said in a statement.

The fund will help the industry set up new production capacities and modernize existing ones, establish cross-border partnerships, and train their workforce.

In addition to the financial support, the EU Commission also suggested a mechanism to monitor production capacities and send early warnings on shortages.

The act would set up a new regulatory framework that paves the way for common EU procurements and allows member states to request assistance in emergencies.

If adopted, the fund will start working in 2025.

At a summit in March, EU leaders endorsed Borrell's three-track approach to support Ukraine with ammunition and replenish European stockpiles.

Under the plan's first step, EU nations approved a €1 billion fund last month to reimburse member states that send ammunition to Ukraine from their own supplies or reprioritize orders.

As part of the second track, EU countries will launch joint procurements through the European Defense Agency.