News from Europe 14 May 2023

Defence: €500 million and new measures to urgently boost the European defence industry's munitions production capabilities 

The Commission has approved support for ammunition production in order to deliver ammunition to Ukraine as a matter of urgency and to help Member States renew their stocks. The measures include funding for financing, capacity building in the production of ammunition and missiles and their components. The Commission seeks to strengthen the European defence industry to ensure the EU's independence. The proposal aims to strengthen several points: 

• an instrument to financially support the strengthening of the Union's industrial production capacities 
• a mechanism to map, monitor and better anticipate the existence of bottlenecks in supply chains; 
• the introduction of a temporary regulatory framework to address the shortage of ammunition supplies. 

The Commission proposes to allocate a budget of 500 million euros. This budget comes from the redeployment of different instruments, in particular the European Defence Fund and the future instrument to strengthen the European defence industry through joint procurement (EDIRPA). The Union's aim is to act on several specific points: to optimise and strengthen production capacities, to develop new capabilities, to set up cross-border public/private industrial partnerships to develop new value chains in the field of armaments. The main objective is to have predictability on stocks and the time needed to replenish them in case of conflict. Another important point is to ensure the security of supply of the raw material needed to produce these munitions. 

The Commission expects a rapid adoption before summer 2023 in order to be able to support the strengthening of the European defence industry's ammunition and missile production capabilities.

Next Generation EU: European Commission approves Estonia's amended €953 million recovery and resilience plan, including a REPower EU chapter 

The European Union has given Estonia a €953 million grant package to help finance its energy transition and reduce spending on fossil fuels. Estonia has added five investments to its original plan, building a health centre in the town of Viljandi, strengthening the development of offshore wind farms, supporting businesses to improve energy security, building viaducts for rail transport between the Baltic States and the rest of Europe, and a hydrogen-powered ship. Estonia has added a REPower EU chapter to its plan to move away from Russian energy imports and cover its energy needs locally with sustainable biogas and biomethane, as well as streamlining the authorisation procedures for these systems and infrastructure. 

Estonia has also requested the mobilisation and transfer of the Brexit adjustment reserve of EUR 6.6 million for its funding. Estonia will allocate 59 % of its available funds to achieving the climate neutrality goal. The plan also aims to strengthen the country's social and digital resilience. Reforms in the social and health care fields remain largely unchanged. 

The Council now has, in principle, four weeks to approve the Commission's assessment. 

Humanitarian aid: EU releases €8 million for the Philippines, Nepal and South East Asia 

The Commission has announced the release of €8 million in humanitarian and disaster preparedness aid to the Philippines, Nepal and other South East Asian countries to help people affected by natural disasters. 

The funding will be allocated as follows

• 3.5 million for the Philippines (€1.5 million in humanitarian aid for people affected by natural disasters and the long-running conflict in Mindanao, €2 million for disaster preparedness actions); 
• 2 million for Nepal; 
• 2.3 million for the whole of South East Asia 

Countries in South East Asia are frequently subject to natural hazards, such as typhoons, floods and droughts. The EU's main objective is to improve the resilience of these countries. The European Commission has provided over €158 million in humanitarian aid to the Philippines since 1996. Armed conflict in Mindanao and natural disasters have taken a heavy toll on the humanitarian situation in the country. For Nepal, climate change is increasing the risk of disaster. It is one of the most disaster-prone countries and its population density, in addition to the difficulty of delivering humanitarian aid, amplifies the intensity of the aftermath of crises. The EU has already allocated over €118 million in humanitarian aid to the country since 2001. 

Recovery plan repayment: EU 2024 budget under pressure 

Members of Parliament are "Deeply concerned that, without the necessary measures, the increased borrowing costs of the European Union Recovery Instrument (EURI) may seriously limit the capacity of the EU budget to finance the Union's priorities and policies and to respond to emerging needs". 

12.9 billion in 2018 prices over seven years, i.e. before inflation and the ECB raising its rates from 0.55% in 2021 to 1.15% in 2027. This prospect was swept away by the Covid crisis and the war in Ukraine, plus inflation, which caused the ECB to react with rates over 3%. 

Programmes such as Erasmus+, EU4Health, Citizenship, Equality, Rights and Values, Creative Europe are likely to have cuts in their spending. Moreover, additional resources are already being used up due to their mobilisation on crises such as the conflict in Ukraine or the Covid-19 crisis. MEPs argue for

a rapid response and reform of EU finances to "effectively manage the costs of repaying the EURI, while preserving the necessary levels of funding for programmes and policies". In addition, MEPs call for the introduction of new own resources. 

The resolution by rapporteur Johan Van Overtveldt (ECR, BE), Chair of the Budgets Committee, was adopted on Wednesday by 434 votes to 99 with 89 abstentions. The Commission is expected to present the draft annual budget for 2024 at the end of May and to propose a review or revision of the MFF in June, as well as a new set of EU revenue sources by the end of 2023. 

Parliament backs new rules for sustainable products and fights greenwashing 

The proposal for a new directive, adopted in plenary by 544 votes to 18 with 17 abstentions, aims to empower consumers to act in favour of the ecological transition. The Parliament plans to ban generic environmental claims, 

as "environmentally friendly", "natural", "biodegradable", "climate neutral" or "environmentally friendly", if these are not accompanied by detailed evidence. In addition, claims based on carbon offsets will also have to detail how they work and how they repair the environmental damage. 

To simplify product information, MEPs are considering allowing only sustainability labels based on official certification schemes or established by public authorities. 

MEPs also want to combat "planned obsolescence" and extend the life of objects. Parliament also wants to ban products with features that limit or cause premature failure of certain objects. The last point supported by MEPs is the introduction of a guarantee label indicating the duration of the guarantee provided for by the regulation, but also the duration of any extended guarantees offered by producers. The aim of this regulation is to highlight

quality products and to encourage companies to invest in the sustainability of their product.