The EU is nearing a deal to create a new defense investment fund.

EU countries are nearing a deal to create a new €1.5B defense fund that will help strengthen both the bloc’s defense industry and Ukraine’s over the next three years. The agreement to develop the European Defense Investment Program (EDIP) is likely to be signed by the end of the year. It will allow the purchase of military equipment, 35% of which consists of components from outside the EU.

The agreement to create the EDIP resulted from a balancing act between the ambitions of developing the European defense industry in the long term and the ability to purchase ready-made equipment to help Ukraine immediately. Another factor is the EU’s fear of angering incoming US President Trump, who has repeatedly expressed frustration with insufficient European defense spending and the fact that the bloc does not buy enough American defense products.

The EU is working to identify flagship projects with a common interest that could benefit from (EDIP) funds in areas such as air and missile defense.