EU bank, NATO fund partner to support European defense businesses

BERLIN — The European Union’s lending arm and NATO’s venture capital fund will share information and work more closely together to support small and midsized companies across the continent that focus on security and defense, the organizations announced Tuesday.

Under a memorandum of understanding, signed July 2, the European Investment Fund and the NATO Innovation Fund will set expectations for closer cooperation well into the future, including sharing know-how and “raising awareness about potential investments,” according to an information sheet the European Investment Bank provided to Defense News.

The document also noted the two funds “will also exchange information with the European Commission,” when relevant.

However, the memorandum “does not refer to joint investments,” a European Investment Bank spokesperson told Defense News. Both parties will continue to fund projects separately and for their respective member states — 24 countries in the NATO group and 28 in the EU organization.

Founded by the alliance in 2023, the NATO Innovation Fund is an ostensibly stand-alone organization backed by two dozen member states. All NIF countries are located in Europe, but four — Turkey, Norway, Iceland and the U.K. — are not EU members.

The fund has up to €1 billion (U.S. $1.1 billion) to disburse, and it focuses on “deep tech,” which includes artificial intelligence, quantum computing and robotics. The NIF’s relationship with NATO as a whole helps the fund’s stakeholders find potential buyers of innovations among alliance members.

The European Investment Bank, jointly owned by EU member states, supports businesses on the continent with several financial products, including loans. Through its European Investment Fund, the bank claims to have helped 2 million European small businesses access capital over the past 30 years. The fund aims to generate about €145 billion in investments for businesses, according to its website.

“Financing for Europe’s security and defense industry is among the EIB group’s strategic priorities,” the bank said in a news release ahead of Tuesday’s signing. Some prioritized sectors included reconnaissance, spectrum control, cybersecurity, infrastructure and mobility, the bank added.

“[Partnering with] the NATO Innovation Fund affirms the EIB Group’s commitment to step up its support for Europe’s security and defense industry,” said Robert De Groot, EIB’s vice president.

He added that recent revisions to the bank’s lending policies to allow for more security-oriented companies to receive European funding are already bearing fruit. “A few weeks ago, we announced the financing of dual-use satellites in Poland and the dual-use upgrade and expansion of a Danish port,” he said.

Russia’s attack on Ukraine has driven the EU to flex its economic muscle in the military tech space. Key institutions, including the EIB, have revised lending rules and announced fresh strategic priorities to facilitate money going to companies that work on primarily defense-related projects.

Not all EU states are NATO members, although Sweden and Finland recently joined the alliance. Still, the bloc and alliance communicate regularly to discuss common interests. Despite the EU having its collective defense mechanism, the bloc’s treaty specifies NATO as the primary means for collective self-defense for those countries who are members in both organizations.