Finnish companies can benefit – a seal for the EU’s 1.5 billion defense program

The Council of the EU countries approved the European Defense Industrial Program (EDIP) on Monday, so it can enter into force on December 17.

The reform is motivated by concern about Europe’s vulnerability in a rapidly deteriorating security situation: the war in Ukraine revealed how strongly European states depend on the United States for key military support, ammunition and strategic capabilities.

EDIP, which received the seal on Monday, offers a new defense industry financing instrument of 1.5 billion euros for the years 2025–2027.

If the program is implemented effectively, then EDIP can increase Europe’s ability to produce munitions, drones and high-tech systems on a large scale and reduce strategic dependence on the United States.

The program can also contribute to Ukraine’s integration into the EU, as 300 million euros out of 1.5 billion have been earmarked for the modernization of Ukraine’s defense industry and its harmonization with European systems.

European conditions

In the defense industry program, European joint procurements must be carried out by at least three countries, two of which must be EU countries, because the purpose is to promote joint procurements and development, and not fragmented national projects.

According to the program, the share of components from outside the EU must not exceed 35 percent of the costs of the final product, and components must not be procured from countries that conflict with the EU’s security and defense interests.

The program focuses on increasing industrial capacity, especially in critical defense products. It is also intended to make it easier for SMEs and startups in the defense sector to enter the market.

Finland’s benefits

Finland can apply for a share in EDIP joint projects, such as joint programs for armored vehicles or ammunition production, in which case domestic defense companies can receive funding through multinational projects.

Secretary General of Defense and Aerospace Industry PIA ry Tuija Karangon according to EDIP brings opportunities to many kinds of companies, but more to those who manufacture physical systems than software.

EDIP finances the increase of industrial capacity, especially in critical defense products, such as ammunition, electronics and component production, which can benefit, for example, ammunition manufacturers Nammoa.

The EDIP program is financed from the EU’s Multiannual Financial Framework (MFF) and possible additional voluntary contributions from member states or third parties.

“In terms of euros, this is not very big when we are talking about the end of the budget financing period,” says Karanko.

According to Karango, participating in the program requires companies to have “sufficient know-how to use the instrument”.

Finland’s largest defense company Patria has already been a key player in European joint projects. Patria is involved, among other things, in the EU’s joint CAVS and FAMOUS armored vehicle development programs. EDIP financing can speed up these projects and bring more orders to the company.

The program also includes separate SME support, which makes it easier for Finnish defense SMEs to enter the EU defense market.

EDIP also has a safety and supply framework that improves supply security in times of crisis, which is important for Finland, which emphasizes security of supply. For example, Patria can apply for funding to improve security of supply, which is one of its core tasks in Finland.