Defense, Space, digital infrastructure, cybersecurity and energy will be the most benefited sectors from the arrival of the new European Competitiveness Fund (ECF), being created by the European Union. The ECF is designed within the framework of the new Multiannual Financial Framework (MFF) for the period 2028-2034 and will have a budget of €234 billion. If we add the resources of the “Horizon” program (€175 billion), which has similar targeting with emphasis on research and development, then the new Fund reaches €409 billion.
From these funds, as supported by Deputy Prime Minister Kostis Hatzidakis, €8 to 10 billion could reach Greece. This is a very large amount, as it corresponds to more than 2% of the Fund’s total budget, when Greece corresponds to 1.3% of the EU’s GDP.
It should also be considered that such an amount corresponds to approximately 50% of the grants our country received from the Recovery Fund (€18.2 billion) during the period 2021-2026. Therefore, the new Fund is very significant both for Greece and for other EU countries.
Unlike the Recovery Fund, whose “matrix” was the pandemic, the ECF comes to address Europe’s reduced competitiveness, as well as the absence of defense self-sufficiency. Thus, the main objective of the €409 billion is to strengthen European industrial production with a focus on the defense-technology sector. Essentially, the new Fund is the product of the reports by Mario Draghi and Enrico Letta.
How funding will be provided
Another important difference of the ECF with the Recovery Fund is that the new Fund’s capital will not be channeled through quotas to the 27 member states, but member states, and mainly their companies, will have to compete with each other to acquire them.
In other words, the new ECF will be a competitive Fund, in which those who want to acquire the capital to finance their development will have to submit proposals, plans and enhancement strategies, which must be approved by experts, exactly as applies with the “Horizon” program. Thus, control of aid and subsidies moves away from Athens and other EU capitals and is transferred to Brussels.
In essence, the ECF constitutes the “sum” of 14 EU Funds that existed in the current Multiannual Financial Framework 2021-2027. These are Funds such as InvestEU, Digital Europe Programme, European Defence Fund, EU4Health, European Space Programme, Single Market Programme, European Defence Industry Reinforcement through Common Procurement Act (EDIRPA), Act in Support of Ammunition Production (ASAP), Infrastructure for Resilience, Interconnectivity and Security by Satellite (IRIS2) and others.
Four pillars
These programs in the previous MFF had a budget of approximately €200 billion. Now, to avoid overlaps and with the goal of strengthening industrial production, these Funds are being merged into one European Fund, that of Competitiveness. In this sense, the new ECF does not include new, additional resources, but expanded resources from the past, which come with the aim of strengthening four policy pillars:
- Clean Transition & Industrial Decarbonization, which will be funded with €26.2 billion.
- Health & Biotech, Agriculture & Bioeconomy, which will be funded with €22.6 billion.
- Digital Leadership, with funding of €54.8 billion.
- Resilience and Security, Defense Industry & Aerospace, which will receive the lion’s share, with €131 billion.
It’s worth noting that these policies will also be supported by other European Funds, such as the Innovation Fund, the Social Climate Fund, etc. The logic of the new Fund, as mentioned, is based on the findings of the Mario Draghi and Enrico Letta reports that Europe lags behind the US and China in investments in critical sectors, such as Artificial Intelligence, semiconductors, networks and digital infrastructure, clean technologies, biotechnology, defense and Space.
Thus, within this framework, industrial production is mainly strengthened, while “Horizon” maintains its character, strengthening mainly research and development actions in the same direction. In practice, the new ECF, which will start operating from January 2028, will be targeted by large and medium-sized industries.
What the new Fund means for Greece
For Greece, the new Fund means:
- more funding opportunities for industrial and technological investments
- greater emphasis on defense and space projects
- strengthening of scale-ups and innovative companies
- funding of strategically important projects through grants, loans, guarantees and equity participations.
The beneficiaries in the country will undoubtedly be large defense companies, space applications companies, technology and cybersecurity firms, as well as energy groups.
Published in “Parapolitika” newspaper.
