The European Investment Bank (EIB), the world’s largest multilateral lender, is navigating a complex landscape as it seeks to balance its traditional development mandate with the growing need for investment in European security and defence. While aiming for a total investment of €95 billion in 2025, encompassing crucial areas like clean technology, artificial intelligence, sustainable housing, and climate action, the EIB has earmarked €2 billion specifically for the defence and security sector, a figure double its 2023 commitment. This move, while relatively small compared to the overall investment portfolio, represents a significant shift in the EIB’s approach and has sparked debate about the institution’s role and the potential implications for its financial standing. EIB President Nadia Calviño emphasizes the bank’s proactive stance, carefully assessing market needs and identifying areas where its investments can make the most impact, while firmly asserting that the EIB remains a development bank, not a defence ministry.
The EIB’s increasing involvement in defence and security stems from the European Commission’s call for greater investment in boosting European defence production capacity. While the EIB’s current lending policy excludes purely military projects, Calviño has refrained from definitively ruling out such investments in the future. This ambiguity reflects the delicate balancing act the EIB faces in addressing the EU’s security concerns while maintaining its commitment to its core development objectives and preserving its coveted AAA credit rating. This rating is crucial for the bank’s ability to borrow at favorable rates and maximize its impact, but some member states, especially those with a history of neutrality, worry that financing defence projects could jeopardize this status.
The EIB’s foray into security and defence has involved expanding the scope of eligible projects beyond traditional military hardware to encompass areas with dual-use potential, including border security, military mobility enhancements, space technology, and cybersecurity infrastructure. This broader approach allows the bank to contribute to European security while remaining aligned with its established expertise in infrastructure financing and technological development. The EIB is actively assessing a pipeline of 14 projects in this expanded scope, indicating a growing momentum in its security and defence portfolio. Furthermore, the European Investment Fund (EIF), a subsidiary of the EIB Group, is engaging with various investment funds focused on security and defence, signifying a multi-faceted approach to bolstering the sector.
The EIB’s relatively modest €2 billion investment in defence and security stands in stark contrast to the substantial funding allocated to other priority areas, such as the €1 trillion earmarked for green financing. This disparity has drawn criticism from figures like EU Commissioner for Defence Andrius Kubilius, who argues that investment in defence is inherently an investment in peace and should be prioritized accordingly. The backdrop to this debate is the escalating geopolitical competition, particularly with the United States and China, and the realization that Europe needs to substantially increase its investments in various sectors, including defence, to maintain its competitiveness and security.
The European Commission has urged the EIB to leverage its position to attract private investment and address the significant investment gap that Europe faces in key strategic areas, including defence and decarbonization. The EIB’s 2024 investments demonstrate its commitment to these priorities, with €100 billion mobilized for energy security projects, €38 billion for social and territorial cohesion, and €51 billion for the green transition and climate action. This diversified investment approach underscores the EIB’s ambition to contribute to a more resilient, sustainable, and secure Europe.
Looking ahead to 2025, the EIB plans to prioritize support for innovators and start-ups, recognizing their crucial role in driving economic growth and technological advancement. The bank also intends to enhance its support for agriculture, food resilience, and drought mitigation measures, acknowledging the increasing challenges posed by climate change. This forward-looking strategy reflects the EIB’s commitment to addressing both immediate and long-term challenges, fostering sustainable development, and contributing to a more secure and prosperous future for Europe. The EIB’s evolving role in supporting security and defence, while navigating complex political and financial considerations, highlights the growing interconnectedness of economic development, security, and geopolitical stability in the 21st century.
