REPORT on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU)[...]

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

(COM(2025)0188 - C10-0070/2025 - 2025/0103(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

- having regard to the Commission proposal to Parliament and the Council (COM(2025)0188),

- having regard to Article 294(2) and Articles 114, 164, 172, 173, Article 175, third paragraph, Articles 176, 177 and 178, 182, 183, 188, 192(1) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C10-0070/2025),

- having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

- having regard to the budgetary assessment by the Committee on Budgets,

- having regard to the opinion of the European Economic and Social Committee of 18 September 2025[1],

- after consulting the Committee of the Regions,

- having regard to Rules 60 and 58 of its Rules of Procedure,

- having regard to the opinions of the Committee on Security and Defence and the Committee on Transport and Tourism,

- having regard to the report of the Committee on Industry, Research and Energy (A10-0172/2025),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Amendment 1

AMENDMENTS BY THE EUROPEAN PARLIAMENT[*]

to the Commission proposal

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Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 114, 164, 172, 173, Article 175, third paragraph, Articles 176, 177 and 178,182 183, 188, 192(1) thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee[2],

Having regard to the opinion of the Committee of the Regions[3],

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) The unprecedented geopolitical instability and the rapid deterioration of regional and global threat levels, in particular Russia's war of aggression against Ukraine launched in 2014, its continued aggressive rhetoric toward the Union, and the threat of its conventional military attack against the Union's Eastern Flank, as well as the instability in the Middle East and in the Southern Neighbourhoodrequire an urgent and significant step up of the Union spending on research and development, industrial capacity and development of infrastructures connected with resilience,security and defence. As identified in the Joint White Paper for European Defence Readiness 2030, the Union should do more to support the urgent need to increase European defence-related investments with the Union budget.

(1a) In addition, Member States are to increase their defence spending to strengthen the Union's deterrence and defence posture not only by modernising armed forces and replenishing military stockpiles, but also by investing in critical infrastructure, joint capabilities, and defence technological innovation. Sustained and increased defence expenditure is indispensable for the safeguarding of European sovereignty, upholding collective security commitments within the North Atlantic Treaty Organization (NATO), and ensuring the Union's capacity to respond swiftly and decisively to the full spectrum of military and hybrid threats.

(1b) As was stated in the reports of Enrico Letta[4], Mario Draghi[5]and Sauli Niinistö[6], the lack of an internal market for defence is hindering the ramp-up of much-needed industrial production and innovation regarding military and dual-use products. In order to reduce unnecessary fragmentation, to strengthen the European Defence Technological and Industrial Base (EDTIB), and to enhance European strategic autonomy and readiness the Union should further stimulate the Union-level cooperation of their defence industry and the development of joint projects. The industry would benefit from an inclusive approach within the internal market and its accelerators for research, development and innovation. The leveraging of Union funding programmes to support defence-related technologies and products is therefore intended not only to serve as a stepping-stone towards a genuine Defence Union, but also to enhance civil-military cooperation across Member States in light of mutually beneficial spill-overs.

(1c) Given the Union's intention to open existing programmes to provide more support to defence-related investments with the Union budget, the funded projects should be aligned with the Union's strategic security interests and take into account the European security architecture. This encompasses an alignment with the priorities set out by the Joint White Paper for European Defence Readiness 2030 and with the collective commitments within NATO, which remains a cornerstone of Europe's collective defence. In light of the persistent Russian threat, Russia's full-scale aggression against Ukraine, and the intensifying use of hybrid, cyber and subversive tactics against the Union, the latter must strengthen practical cooperation with NATO, NATO members, and trusted, like-minded partners, particularly in defence research, capability development, and military mobility. Closer coordination between the Union and NATO not only avoids duplication and enhances interoperability but also reinforces a united transatlantic response to common security challenges.

(1d) Investing in the development of cutting-edge dual-use capabilities should be promoted as it contributes to the Union's broader societal resilience, security and competitiveness objectives. While noting the necessity of ensuring equitable geographic distribution of defence-related investments for Union-wide cohesion and resilience, specific consideration should be given to the Union's external border regions due to their unique security challenges, such as Europe's Eastern flank bordering Russia, Belarus, and Ukraine. These areas are at the frontline of potential conflicts and are vulnerable to external threats, making it crucial to enhance local defence capabilities and foster resilience within communities.

(1e) Given that Ukraine's sovereignty, resilience, and industrial capacity are essential to European security, efforts should be undertaken to explore pathways for the future integration of Ukraine's defence industry into relevant Union programmes, and to support its efforts to modernise, innovate, and align with European standards. Such cooperation would contribute to strengthening Ukraine's resilience and the Union's broader security and industrial objectives.

(1f) Recognising the strategic importance of fostering efficiency, reducing unnecessary duplications and fragmentation of the Union's defence industry, the Commission should, where appropriate, prioritise projects that promote cross-border cooperation, facilitate technology transfers between different Member States, the establishment of interchangeable or common frameworks, or further advance the integration of the defence industry, including by demonstrating Member States commitments to jointly own, use, and manage final products in a coordinated manner.

(2) The Strategic Technologies for Europe Platform (STEP) established by Regulation (EU) 2024/795 of the European Parliament and of the Council[7]is an initiative aimed at boosting Union competitiveness by mobilizing funds from 11 existing Union programmes towards critical technologies in 3 strategic sectors: digital technologies and deep tech innovation, clean and resource-efficient technologies, and biotechnologies. As such, it is a good vehicle to mobilise, in a coordinated and synergetic manner and by enhancing civil-military cooperation,Union resources towards defence and security technologies, including key digital frontier technologies required for the development of defence products and technologies.

(3) While support to technologies having defence implications is possible today under the 3 existing strategic sectors identified in STEP, it appears necessary to increase the potentialities of development of research, industry and innovation in the defence and securityarea by setting out a fourth strategic sector in STEP focussed on defence and securitytechnologies, without compromising Union's intended technological leadership in the existing sectors. The added fourth strategic sector should include those enhancing societal resilience, understood as ability to withstand, adapt to, and recover from natural and human-caused disruptions, shocks and stresses - while maintaining core functions, structures, and values, including trust and participation of citizens in democracy and democratic institutions and strengthening integrity of elections and checks and balances. This new strategic sector should ensure that the STEP incentives are used to increase Union funding in innovative defence securitytechnologies with the aim to respond effectively to current and emerging threats and enhance the Union's strategic autonomyand contribute to European competitiveness in line with STEP objectives. Defence technologies should be understood as those referred to in the Annex to Directive 2009/43/EC and include, in particular, technologies in the areas identified by the European Council on March 6th2025, namely: air and missile defence, artillery systems, including deep precision strike capabilities, missiles and ammunition, drones and anti-drone systems, strategic enablers, including in relation to space and critical infrastructure protection, military mobility, cyber, artificial intelligence and electronic warfare. Security technologies should be understood, but not limited to, technologies intended to support the prevention of, detection of, protection against, response to, and recovery from, security threats, such as terrorism, hybrid threats, critical infrastructure protection, cybersecurity and disaster-resilient societies. The development of such technologies is essential to enhancing the Union's internal security, safeguarding its strategic interests, and ensuring the resilience of Member States' societies and economies against destabilisation attempts. The Commission should issue guidance on the interpretation and understanding of defence and security technologies, including those enhancing societal resilience, to ensure consistent application of relevant legal provisions.As regards artificial intelligence, AI Gigafactories should become key infrastructures to expand rapidly the power of AI in defence technologies.

(4) In addition, in order to optimise the capacity of the programmes covered by STEP to mobilize Union's resources towards defence's needs, it is necessary to clarify that these programmes can pursue objectives and activities that are related to improving the competitiveness and resilienceof the European Defence Technological and Industrial basis (EDTIB) as well as research and development activities in the defence field.

(5) Horizon Europe established by Regulation (EU) 2021/695 of the European Parliament and of the Council[8]is the Union's key funding programme for research and innovation, playing a pivotal role for global scientific and technological leadership of the Union. The European Innovation Council (EIC) Accelerator established by that Regulation provides support, in particular, for innovations with breakthrough potential and of a disruptive nature with scale-up potential that may be too risky for private investors. SMEs, start-ups and some small mid-cap enterprisesoperating within the defence sector require financing for the commercialization of innovative products. However, these companies face higher barriers to access finance compared to entitiesin other sectors. Whereas the support to defence research and development is done through the European Defence Fund (EDF), which is a specific programme of Horizon Europe, it is appropriate to open the EIC Accelerator to support breakthrough and disruptive innovation for civil applicationswith potential dual-use, provided that suchapplications are primarily designed for civil use. Support to scale-up under the EIC Accelerator should also be extended to non-bankable SMEs, including start-ups and non-bankable small mid-caps, including entities which have already received support from the Accelerator carrying out breakthrough and disruptive non-bankable innovation, including defence and security technologies, referred to in Article 2(1)(a)(iv) [of the STEP Regulation], provided they demonstrate dual-use potential. This justifies a targeted exception to the principle set out in Article 7(1) of Regulation (EU) 2021/695 of the European Parliament and of the Council according to which research and innovation activities under Horizon Europe have an exclusive focus on civil applications while not undermining the objective of ensuring unnecessary duplications. The Commission should ensure proper oversight of the application of the targeted exception, including through the collection and reporting of appropriate data, without creating additional administrative burdens for applicants and beneficiaries.

(6) Moreover, to ensure that appropriate resources are directed to the funding of dual-use and defence applicationsunder Horizon Europe it is appropriate to derogate to Article 212(3) of the Financial Regulation in order to ensure that repayments, including reimbursed advances, revenues and unused amounts net of fees and costs of EIC blended finance investment component of the EIC pilot under Horizon 2020 are not directed to the Union budget but reinvested in the EIC Fund in order to finance additional ▌dual-use and defence applicationsbenefitting from the amended scope . The timeframe set out in Article 212(3) of the Financial Regulation should also be adapted, by inserting a derogation, to allow for that possibility.

(7) The European Defence Fund (EDF) set out in Regulation (EU) 2021/697 of the European Parliament and of the Council[9], is the leading programme for enhancing the competitiveness, innovation, efficiency and technological autonomy of the Union's defence industry. The EDF also aims at supporting actions that are conducive to developing disruptive technologies for defence. In order to better address the specificities of such actions,and in particular technologies demonstrating rapid deployment capability, such as their small scale or their need for a quick support, it is appropriate to significantly shorten andsimplify the procedures to decide on the support of these actions while in the same time framing the conditions for the decision on such a support in the work programme and without undermining the principle of excellence.

(8) It is also necessary to exploit synergies between EDF and other Union programmes. To that purpose, it should be possible for Member States, European Union institutions, bodies and agencies, third countries, international financial institutions or other third parties to provide voluntary contributions to the Programme, as external assigned revenues. Voluntary transfers of resources allocated to Member States in shared management to the EDF and the combination of contributions from EDF with other Union programmes for specific actions should be possible, provided that the cumulative Union support does not exceed the total eligible costs of the action.

(9) The Digital Europe Programme (DEP) established by Regulation (EU) 2021/694 of the European Parliament and of the Council[10]aims to support and accelerate the digital transformation of the European economy, industry and society and to improve the competitiveness of Europe in the global digital economy. In this context, the programme should also aim at supporting, in particular, projects, services and competences with potential dual-use application under all its specific objectives. This would contribute to strengthening Europe's societal and democratic resilience in the face of ongoing hybrid attacks, foreign interference and emerging threats in the digital domain - an escalation that has intensified markedly since Russia's invasion of Ukraine.

(10) To enhance technological sovereignty and competitiveness, the Union needs the computing, cloud and data infrastructures that AI leadership requires. As part of the AI Continent strategy, the AI factories and Gigafactories are essential for the Union to be able to compete on the global level and ensure its strategic autonomy and competitiveness in science, dual-use research and in critical industrial sectors, including the defence industry. Such next-generation models require extensive connected computing infrastructure for breakthroughs in specific domains including defence. It is therefore appropriate to add, in the Specific Objective 1 - High Performance Computing of DEP, a supplementary operational objective dedicated to the deployment and operation of AI Factories and new generation of IA Gigafactories specialised in developing, training, and running the most complex, very large, AI models and applications, including hardware and software necessary for such deployment. In line with the Union's ambition towards strategic autonomy, technological leadership and improved competitiveness, and to mitigate the environmental footprint of digital technologies, it is important to ensure that the deployed digital infrastructure and technologies, including AI, aim to be resource-efficient and follow circularity principles.

(11) In the specific Objective 5 of DEP - Deployment and Best Use of Digital Capacity and interoperability, it is also necessary to add, in the operational objective defined to support the public sector and areas of public interest, a reference to defence in order to clarify that the financial contribution of the Union under such an Objective can be extended to that sector. Support for the public sector should be accompanied by measures that strengthen the capacity of Union-based companies to supply, develop, and innovate in the field of digital infrastructure services.

(12) It is also necessary to adapt the eligibility rules that might be set out in the work programme of DEP so that it is possible to provide,for duly justified security reasons,that legal entities established in associated countries, other than Ukraine or members of the EFTA which are members of the EEA,and legal entities that are established in the Union but are controlled from third countries,other than Ukraine or members of the EFTA which are members of the EEA, are not eligible to participate in all or some actions focused on technologies with dual-use potential under any specific objective. In such cases, calls for proposals and calls for tenders should be restricted to legal entities established or deemed to be established in ▌ and controlled by Member States,Ukraine or members of the EFTA which are members of the EEA,or their nationals This beneficial treatment strengthens Europe's overall digital ecosystem by fostering shared security interests, enhancing mutual resilience to existing and emerging technological threats, and deepening strategic partnerships that benefit the stability and competitiveness of the continent.

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(14) The Connecting Europe Facility (CEF) set out in Regulation (EU) 2021/1153 of the European Parliament and of the Council,[11]aims to accelerate investment in the field of trans-European networks, enabling synergies between the transport, energy and digital sectors. In order to support the connected computing infrastructure required by defence products and technologies and beyond these areas, the objectives of the CEF digital sector within that Regulation should be extended to the deployment and provision of digital capacities such as cloud, AI and AI Gigafactories. In order to minimise environmental impact, optimise the use of scarce materials, and ensure long-term sustainability in line with the Union's climate and circular economy objectives, it is important that the deployed capacities aim to be resource-efficient and follow circularity principles.

(15) Military mobility is also one of the objectives of the CEF programme. The Joint White Paper for European Defence Readiness 2030 recognised military mobility as an essential enabler for European security and defence and stressed the Union added-value in supporting dual-use infrastructure for mobility. The Trans-European Transport Network (TEN-T) policy serves as a key strategic instrument in building the Union's cross-border transport infrastructure. Although originally intended for civilian purposes it also holds a remarkable potential for dual-use, military and civilian. In line with the Strategic Compass, the Union aims to strengthen the dual-use transport infrastructure of the Trans-European Transport Network (TEN-T) in close cooperation with NATO and other like-minded partners. The objective to complete the TEN-T core network by 2030 remains unchanged.

(15a) Actions financed under CEF should contribute to the improvement and acceleration of the Trans-European Transport Network (TEN-T) and be designed for interoperability and compatibility with civilian use. Investment in dual-use infrastructure benefits both military readiness and civilian connectivity. Given the 94% overlap between the military mobility corridors and TEN-T dual-use infrastructure, funding of military mobility will benefit civilian use.(15b) The Niinistö report specifically refers to the need to intensify further work on priority dual-use transport corridors for military movements and the extension of fuel-supply chains for the armed forces along those corridors, as well as stockpiling and strategic reserves of energy. This position is echoed in NATO statements, which note that major infrastructure gaps remain particularly along its Eastern Flank. Estimates indicate that the Union requires an initial investment of at least EUR 70 billion to adapt its transport and logistics infrastructure for the rapid movement of troops and equipment across Union territory in the event of conflict. The Union should give special consideration to the necessary development of dual-use fuel infrastructure, whose core task is to ensure civilian needs, such as ensuring supplies to civil aviation, and that switches to military mode in wartime. This development should contribute not only to civil logistics and military mobility but also to transition towards a more sustainable transport and energy system in line with objectives of AFiR and ReFuelAviationEU.

(15c) Furthermore, in relation to military mobility, there is a need to increase the protection of European territories from conventional military threats. Adapting the TEN-T to dual-use infrastructure requirements may, where appropriate, include measures to safeguard assets intended for civilian-defence use with regard to military counter-mobility and related risks, by designing, reinforcing, and protecting the infrastructure so that it is less vulnerable to disabling, blocking, or destruction by hostile acts, hazards, or sabotage.

(15d) The mid-term review of the European Regional Development Fund (ERDF) and the Cohesion Fund both established by Regulation (EU) 2021/1058 of the European Parliament and of the Council[12]introduced the possibility to invest in defence or dual-use infrastructure to foster military mobility benefiting from a pre-financing of [30%] of the amounts programmed and the possibility to apply a Union financing of up to 100 %. In cases where Member States transfer resources allocated to them in shared management to CEF, they should benefit from the same conditions on pre-financing and co-financing for dual-use transport infrastructure projects as introduced in the ERDF and Cohesion Fund. In such a case, these amounts should be reserved to projects developing the Military Mobility corridors as identified by the Member States in Military Requirements for Military Mobility within and beyond the Union as well as digital connectivity and capacities, including the availability of appropriate logistics hubs for the deployment and subsequent redeployment of forces to and from the Union.

(15e) In order to accelerate the swift and seamless movement of personnel, material and assets within the Union, Member States are encouraged to cooperate closely to achieve a swift upgrading of the "hot spots" infrastructure within the four military mobility corridors, and particularly focus on the cross-border sections of these corridors, including rail, ports, and airports of these corridors, which have an impact in the short term. Priority investments on these corridors, their cross-border sections and the hot spots identified by the Commission should be carried out in cooperation with NATO.

(15f) In light of the increased European defence-related investments with the Union budget, it is essential to ensure that such resources are allocated transparently, aligned with the Union's strategic interests, and protected from misuse or diversion. The Commission should develop appropriate measures, if duly justified to safeguard the Union's strategic interests, to enhance transparency, including clear identification of beneficiaries and ownership structures, while duly protecting confidential information. These principles should guide future instruments supporting Union defence objectives.

(15g) Taking into account the urgency of the situation, the necessity to boost financially defence-related projects in Europe, and the expiry of the Recovery and Resilience Facility (RRF) established by Regulation (EU) 2021/241 of the European Parliament and of the Council[13]in August 2026, Member States may consider to use the already existing possibility to amend their National Recovery and Resilience Plans to reallocate resources to their financial contributions towards Union defence industrial instruments. This would follow the already existing logic of using RRF funds in innovation within the space sector with nearly half of the Member States mentioning space-related actions in their RRF plans, including both traditional space nations and newer actors. Such reallocated Member State contributions are to be used for the benefit of the Member State concerned for the purpose of contributing to the achievement of one or more of the objectives set out in Article 4 of Regulation (EU, Euratom) No 2021/241.

(15h) In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council[14]and Council Regulations (EC, Euratom)No 2988/95[15], (Euratom, EC) No 2185/96[16]and (EU) 2017/1939[17], the financial interests of the Union are to be protected by means of proportionate measures, including measures relating to the prevention, detection, correction and investigation of irregularities, including fraud, to the recovery of funds lost, wrongly paid or incorrectly used, and, where appropriate, to the imposition of administrative penalties. In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) has the power to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. The European Public Prosecutor's Office (EPPO) is empowered, in accordance with Regulation (EU) 2017/1939, to investigate and prosecute criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council[18]. In accordance with the Financial Regulation, any person or entity receiving Union funds is to cooperate fully in the protection of the financial interests of the Union, to grant the necessary rights and access to the Commission, OLAF, the Court of Auditors and, in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, the EPPO, and to ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(16) Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153▌and (EU) 2024/795 should therefore be amended accordingly.

(17) Given the urgent need to enable crucial investments in defence in the context of pressing geopolitical challenges, this Regulation should enter into force on the day following that of its publication in the Official Journal of the European Union.

(18) Since the objective of this Regulation, namely to strengthen research and development activities in dual-use and defence, improve the competitiveness of the Union's defence industry and therefore contribute to the Union's defence by refocusing investments of these critical priorities, cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

(18a) This Regulation has implications for the Union budget. Accordingly, the European Parliament's Committee on Budgets adopted a budgetary assessment, which forms an integral part of Parliament's mandate for negotiations,

HAVE ADOPTED THIS REGULATION:

Article 1

Regulation (EU) 2021/694 [Digital Europe Programme] is amended as follows:

(-1) in Article 3(1), the first subparagraph is replaced by the following:

'1. The general objectives of the Programme shall be to support and accelerate the digital transformation of the European economy, industry and society, to bring its benefits to citizens, public administrations and businesses across the Union, and to improve the competitiveness of Europe in the global digital economy while contributing to bridging the digital divide across the Union and reinforcing the Union's strategic autonomy and societal resilience, through holistic, cross-sectoral and cross-border support and a stronger Union contribution.'

(-1a) in Article 3(1), second subparagraph, point (b) is replaced by the following:

'(b) in the private sector and in areas of public interest, to widen the diffusion and uptake of Europe's key digital technologies, promoting the digital transformation and access to digital technologies, and increasing the resilience against hybrid threats in the digital domain;'

(1) in Article 3(1), second subparagraph, the following point is added:

'(c) to support and acceleratedual-use projects, services, competences and applications, strengthening societal resilience.';

(2) in Article 4(1) the following point is added:

'(d) deploy and operate AI Factories and new generation AI Gigafactories specialised in developing, training, and running the most complex, very large, AI models and applications, including hardware and software necessary for such deployment.';

(2a) in Article 5(1), point (b) is replaced by the following:

'(b) make the capacities referred to in point (a) accessible to businesses, especially SMEs and start-ups, as well as civil society, not-for-profit organisations, research institutions, universities and public ▌sector, including the armed forces,in order to maximise their benefit to the European society and economy;'

(2b) in Article 6(1), point (b) is replaced by the following:

'(b) support the building-up and best use of European knowledge, capacity and skills related to cybersecurity, combatting hybrid threats in the digital domain,and the sharing and mainstreaming of best practices;'

(2c) in Article 6(1), point (e) is replaced by the following:

"(e) improve resilience against hybrid threats,cyberattacks, contribute towards increasing risk-awareness and knowledge of cybersecurity processes, support public and private organisations in achieving basics levels of cybersecurity, for example by deploying end-to-end encryption of data and software updates;"

(2d) in Article 6(1), point (ga) is added:

'(ga) support the development of advanced threat intelligence and cyber-defence capabilities tailored to defence-related infrastructure, including secure-by-design hardware, intrusion-resilient systems and cryptographic technologies.'

(3) in Article 8(1), point (a) is replaced by the following:

'(a) support the public sector and areas of public interest, such as health and care, education, judiciary, customs,civil protection,defence, transport, mobility, energy, environment, cultural and creative sectors, including relevant businesses established within the Union, to effectively deploy and access state-of-the-art digital technologies, such as HPC, quantum, AI and cybersecurity;';

(4) in Article 12, paragraph 5 is replaced by the following:

'5. The work programme may also provide that legal entities established in associated countries, other than Ukraine or members of the EFTA which are members of the EEAand legal entities that are established in the Union but are controlled from third countries, other than Ukraine or members of the EFTA which are members of the EEA,are not eligible to participate in all or some actions under Specific Objectives 2 and3 for duly justified security reasons, and particularly in actions focused on technologies with dual-use potential under any specific objective. In such cases, calls for proposals and calls for tenders shall be restricted to legal entities established or deemed to be established in ▌and controlled by Member States, Ukraine or members of the EFTA which are members of the EEA, or their nationals▌. Such restrictions may be applied to access to the capacities deployed under such calls. The restrictions shall be proportionate and applied only where strictly necessary.';

(4a) in Article 20 the following point 2a is added:

'2a. For calls for proposals intended to support dual-use technologies, services, competences or applications, projects with a trans-European dimension, as referred to in paragraph 2, point (d), shall be given priority where multiple applications are submitted.';

(4b) in Article 24 the following point 3a is added:

'3a. The Commission shall, where appropriate, include in its work programme actions and activities designed to favour the cross-border cooperation of entities, aimed at ensuring broad geographical coverage across the Union and at promoting integrated and Union-wide supply chains.';

(4c) in Annex I, Specific Objective 5, point I, point 4 is replaced by the following:

'Deploy decentralised solutions and infrastructures required for large-scale digital applications such as connected automated driving, unmanned aerial, ground, surface and underwatervehicles, smart mobility concepts, smart cities, smart rural areas or outermost regions, in support of transport, energy and environmental policies and in coordination with the actions for digitalising the transport and energy sectors under Connecting Europe Facility.';

Article 2

Regulation (EU) 2021/695 [Horizon Europe] is amended as follows:

(1) in Article 46, the following paragraph 4a is inserted:

'4a. By derogation from Article 212(3) of the Financial Regulation, repayments including reimbursed advances, revenues and unused amounts net of fees and costs of EIC blended finance of the EIC pilot under Horizon 2020 shall be considered to be internal assigned revenues in accordance with Article 21(3), point (f) and Article 21(4) and (5) of the Financial Regulation and the time restriction of two years set out in the second subparagraph of Article 212(3) of the Financial Regulation shall apply as from [date of entry into force of this Regulation].'

(2) in Article 48(1), the second subparagraph is amended as follows:

(a) in point (a), the following sentence is added:

'As an exception to Article 7(1), such support may include civil applications withpotential dual-use, provided that suchapplications are primarily designed for civil use';

(b) in point (b) the following sentence is added:

'As an exception to Article 7(1), such support may include civil applications withpotential dual-use, provided that suchapplications are primarily designed for civil use';

(c) in point (c), the following sentence is added:

'As an exception to Article 7(1), such support may include civil applications withpotential dual-use, provided that suchapplications are primarily designed for civil use.';

(d) in point (d), the following sentence is added:

'As an exception to Article 7(1), such support may include defence and securitytechnologies referred to in Article 2(1)(a)(iv) [of the STEP regulation], provided they demonstrate dual-use potential';

(2a) in Article 50, the following paragraph 1a is added:

'1a. The Commission shall guarantee the proper oversight of the application of the exceptions to Article 7(1) provided for in Article 48, including by tracing, monitoring and reporting it in an appropriate publicly available manner, and by providing additional information to the European Parliament concerning support for dual-use applications and critical technologies upon request.'

Article 3

Regulation (EU) 2021/697 [European Defence Fund] is amended as follows:

(-1) in Article 2, point (15a) is added:

'(15a) 'small mid-cap enterprise' or ' small mid-cap' means an enterprise fulfilling requirement established by Commission Recommendation on the definition of small mid-cap enterprises [C(2025) 3500 final]';

(-1a) Article 5 is replaced by the following:

'The Fund shall be open to the participation of Ukraine andmembers of the European Free Trade Association which are members of the EEA, in accordance with the conditions laid down in the Agreement on the European Economic Area (associated countries).'

(1) Article 6 is replaced by the following:

'Article 6

Support for disruptive technologies for defence

1. The Commission shall support actions that are conducive to developing disruptive technologies for defence in the areas of intervention defined in the work programmes referred to in Article 24.

2. The work programmes shall lay down the most appropriate forms of funding, selection and award criteria and procedures, and implementation for disruptive technologies for defence.';

(2) the following Article is inserted:

'Article 8a

Cumulative funding and transfers of resources

1. An action that has received a contribution from another Union programme may also receive a contribution under the Programme, provided that the contributions do not cover the same costs. The rules of the relevant Union programme shall apply to the corresponding contribution to the action. The support from the different Union programmes may be calculated on a pro-rata basis in accordance with the documents setting out the conditions for support.

2. Resources allocated to Member States under shared management may, at the request of the Member State concerned, be transferred to the Programme subject to the conditions set out in the relevant provisions of Regulation (EU) 2021/1060 for 2021-2027. The Commission shall implement those resources directly in accordance with point (a) of the first subparagraph of Article 62(1) of the Financial Regulation or indirectly in accordance with point (c) of that subparagraph. Such resources shall be used for the benefit of the Member State concerned, while ensuring the continued adherence to the programme's established standards of excellence set out in Article 12.

Resources transferred in accordance to paragraph 2 of this Article may, by derogation from Article 13(2) of this Regulation, be used for the purpose of contributing to the funding of eligible actions under Article 10 of this Regulation up to 100 % of the eligible costs.

3. Where the Commission has not entered into a legal commitment under direct or indirect management for resources transferred in accordance with paragraph 3 and at the latest by 30 September 2027, the corresponding uncommitted resources may be transferred back to one or more respective source programmes, at the request of the Member State concerned, in accordance with the conditions set out in the relevant provisions of Regulation (EU) 2021/1060.

4. Member States, European Union institutions, bodies and agencies, third countries, international organisations, international financial institutions or other third parties, may provide additional financial contributions to the Programme. Such financial contributions shall constitute external assigned revenue within the meaning of Article 21(2), points (a), (d), or (e) or Article 21(5) of the Financial Regulation.';

(2a) in Article 10 (3), a new indent is added:

'(ia) activities that foster collaboration between European and Ukrainian DTIBs around the development, prototyping, or testing of new products or technologies, including disruptive technologies for defence, and that facilitate progressive integration of industrial bases and technology transfers';

(2b) Article 13( 2) is replaced by the following:

'2. By way of derogation from paragraph 1 of this Article:

(a) for activities referred to in point (e) of Article 10(3), support from the Fund shall not exceed 20 % of the eligible costs, except where such activities are undertaken by a consortium composed exclusively of SMEs or small midcaps, the support, by derogation from first subparagraph of paragraph 3 of this article, may amount to up to 40% of the eligible costs,

(b) for activities referred to in points (f), (g) and (h) of Article 10(3), support from the Fund `shall not exceed 80 % of the eligible costs, except where activities referred to in Article 10(3), point (f), are undertaken by a consortium composed exclusively of SMEs or small midcaps, the support may amount to up to 100% of the eligible costs.';

(2d) in Article 13( 3), the following point (d) is added:

'(d) an activity may benefit from a funding rate increased by an additional 10 percentage points where at least 15 % of the total eligible costs of the activity are allocated to entity established in Ukraine';

Article 4

Regulation (EU) 2021/1153 [Connecting Europe Facility]is amended as follows:

(-1) in Article 3, paragraph 1 is replaced by the following:

'1. The general objectives of the CEF are to build, develop, modernise and complete and make resilientthe trans-European networks in the transport, energy and digital sectors and to facilitate cross-border cooperation in the field of renewable energy, taking into account the long-term decar­bonisation commitments and the goals of increasing European competi­tiveness; smart, sustainable and inclusive growth; territorial, social and economic cohesion; and the access to and integration of the internal market, with an emphasis on facilitating the synergies among the transport, energy and digital sectors.';(1) Article 3(2) is amended as follows:

(a) in point (a), indent (ii) is replaced by the following:

'(ii) to adapt parts of the TEN-T for the dual-use of the transport infrastructure with a view to improving both civilian and military mobility,including through the development of dual-use fuel infrastructure;';(b) point (c) is replaced by the following:

'(c ) in the digital sector: to contribute to the development of projects of common interest relating to the deployment of and access to safe and secure very high capacity networks, including 5G systems, to the set-up and deployment of digital capacities such as cloud, AI and AI Factories, including AIGigafactories, to the increased resilience and capacity of digital backbone networks on Union territories by linking them to neighbouring territories, as well as to the securedigitalisation of transport and energy networks.';

(2) in Article 8(4), the following point (f) is added:

'(f) projects of common interest contributing to the set-up and deployment or significant upgrade of digital capacities, including cloud, AI and AI Gigafactories shall be prioritized according to the extent they significantly contribute to improve the performance, resilience and security of transport, energy and digital infrastructures that are critical for the implementation of the internal market.';

(2a) in Article 9, paragraph 2, point (c) is replaced by the following:

'(c) under the specific objective referred to in Article 3(2), point (a)(ii), and in accordance with Article 12, actions or specific activities within an action, supporting parts, new or existing, of the TEN-T suitable for military transport, in order to adapt the TEN-T to dual-use infrastructure requirements, including through the development of dual-use fuel infrastructure;';

Such actions or specific activities within an action [pursuant to the first subparagraph of this point] may include, where relevant, measures to safeguard the infrastructure for civilian-defence dual-use with regard to military counter-mobility and related risks."

(2b) in Article 9, paragraph 4, point (d) is replaced by the following:

'(d) actions supporting the protection, deployment of new or the significant upgrading of existing backbone networksor their repair, including submarine cables, within and between Member States and between the Union and third countries, such as the actions listed in Part V, point 3, of the Annex, as well as other actions supporting the deployment of backbone networks referred to in that point;';

(3) in Article 9(4), the following point (f) is added:

'(f) actions supporting the set-up and deployment of digital capacities in cloud, AI and AI Factories, including AIGigafactories.';

(3a) in Article 12, paragraph 1 is replaced by the following:

'1. Actions contributing to the adaptation of the TEN-T core network or comprehensive network as defined by Regulation (EU) No 1315/2013, with the purpose of enabling civilian-defence dual-use of the infrastructure, including dual-use fuel infrastructure,shall be subject to the following additional eligibility rules:';

(4) in Article 15 (2), the following point (ba) is added:

'(ba) Subject to the transfer of the necessary resources to the CEF in the context of the mid-term review of programmes supported by the European Regional Development Fund and Cohesion Fund [add legal reference to Regulation adopted pursuant to COM(2025)123, 2025/0084 (COD)], pursuant to Article 4(13), for works relating to the specific objectives referred to in Article 3(2), point (a)(ii), the following conditions apply:

(i) co-financing rates may be increased to a maximum of 100%, in particular for projects related to hot-spots and cross border sections within four priority corridors Military Mobility Corridors identified by the Commission;

(ii) actions are entitled to a pre-financing payment representing at least [30%]of the amount allocated in the grant agreement;

(iii) actions shall be located on one or more of the four EU Priority Military Mobility Corridors identified by Member States in Annex II to the Military Requirements for Military Mobility within and beyond the Union, as adopted by the Council on [18 March 2025 and with reference ST 6728/25 ADD1], including logistic hubs, and prioritising actions applying to hot spots and cross-border sections of these corridors,and shall comply with the infrastructure requirements as set out in Commission Implementing Regulation (EU) 2021/1328.To protect the Union's strategic and economic security interests, where appropriate, preference shall be given to the purchase and use of materials, products and technologies which reduce strategic dependencies on third countries.';

▌

Article 6

Regulation (EU) 2024/795, [Strategic Technologies for Europe Platform (STEP)] is amended as follows:

(1)In Article 2(1), point (a), the following indentis added:

'(iv) defence and securitytechnologies including those enhancing societal resilience';

(2) In Article 2(2), point (b) is replaced by the following:

'(b) they contribute to reducing or preventing strategic dependencies and vulnerabilitiesof the Union."'

Article 7

This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaties.

Done at …,

For the European Parliament For the Council

The President The President

EXPLANATORY STATEMENT

The rapporteur considers that the Defence Mini-Omnibus proposal (COM(2025)0188) presents a necessary, timely and proportionate response to the rapidly evolving European security environment. Russia's full-scale war of aggression against Ukraine, its long-term hybrid destabilisation efforts, persistent cyber threats, foreign interference, and growing geopolitical tensions have exposed Europe's longstanding vulnerabilities. Decades of underinvestment in defence, fragmentation of industrial capacity, and regulatory rigidities have left Europe ill-prepared for the scale of current and future threats. In this context, strengthening the Union's capacity to act under the Common Security and Defence Policy (CSDP), while contributing to the resilience and credibility of the Union as a security actor, is indispensable for ensuring stability and security on European territory and beyond.

The rapporteur stresses that these amendments do not create new funding instruments, but rather introduce targeted, legally coherent adjustments to existing Union programmes under the current Multiannual Financial Framework (MFF). In view of the rapidly evolving security environment and the limited years remaining in the present MFF, it is necessary to adapt priorities and ensure that existing financial instruments are mobilised effectively to strengthen the Union's defence technological and industrial base, build long-term resilience, close critical capability gaps, and reinforce the Union's strategic autonomy, while remaining fully complementary to NATO.

Expanding STEP to Defence and Security Technologies

The rapporteur considers it imperative that STEP's strategic sectors reflect the real and immediate security challenges confronting Europe. Defence technologies, as defined by Directive 2009/43/EC and the European Council conclusions of 6 March 2025, encompass critical capabilities required for territorial defence and deterrence: air and missile defence, artillery, precision strike, drones, anti-drone systems, space-based enablers, electronic warfare, cyber, and artificial intelligence. In parallel, the inclusion of security technologies acknowledges that Europe's security challenges are no longer purely military, but increasingly hybrid, spanning terrorism, organised crime, cyberattacks, disinformation, critical infrastructure sabotage, border threats, and disaster resilience including CBRN, pandemics, and climate-related disruptions. The rapporteur considers that supporting security technologies is an essential element of the Union's wider resilience architecture. STEP must therefore serve as a vehicle not only for strengthening defence production capacities, but also for consolidating the Union's capacity to withstand complex multi-domain threats.Enabling Horizon Europe to Support Dual-Use Research

The rapporteur supports targeted amendments to Horizon Europe to enable controlled support for dual-use research, particularly through the EIC Accelerator. Many disruptive defence-relevant technologies emerge in the civilian innovation space but struggle to attract sufficient investment due to the complexity of dual-use markets and heightened security sensitivities. Supporting SMEs and start-ups working on such technologies helps bridge the innovation-commercialisation gap while securing European leadership in strategically sensitive sectors. In parallel, the rapporteur introduces necessary safeguards, allowing the Commission to restrict participation to entities established in the Union or in trusted NATO and EEA partners, with security screening where justified. This ensures that EU research funding does not inadvertently strengthen the technological capabilities of potential adversaries.

Allowing Voluntary Use of Unspent RRF Resources for Defence Industry Investments

The rapporteur proposes to allow Member States to voluntarily reallocate unused Recovery and Resilience Facility (RRF) resources towards EDIP. The scale of industrial ramp-up required to meet both Ukrainian needs and Europe's defence production capacities far exceeds current allocations. Given that new RRF commitments are only possible until the end of 2026, this measure would enable Member States to make full use of remaining uncommitted resources within the current timeframe. Voluntary reallocations provide additional flexibility to support large-scale joint procurement, production capacity expansion, and technological upgrades, while respecting national recovery plans, fiscal governance frameworks, and Member State budgetary sovereignty. The rapporteur underlines that this option maintains national control while contributing to collective defence industrial strengthening.

Clarifications in CEF: Military Mobility, Energy, and Counter-Mobility Infrastructure

The rapporteur introduces clarifications to ensure that CEF funding reflects military operational needs, particularly along the external borders where large-scale military movements and reinforcement scenarios depend on robust dual-use transport corridors, secure fuel logistics, protected energy grids, and grid protection measures. In addition, the rapporteur highlights the essential role of counter-mobility and territorial defence infrastructure, including dual-use obstacles, fortifications, and rapid deployment systems, which are critical for denying hostile access and supporting border and territorial defence. These upgrades not only support NATO reinforcement plans but also strengthen Union resilience, crisis response and civil protection capacities.

Participation Restrictions for Security Reasons

The rapporteur recognises that security-sensitive projects, especially those involving dual-use technologies, require differentiated eligibility rules. The amendments introduced clarify that while in some programs participation is or may be further limited to EU-based entities, trusted partners from associated countries, established in NATO and EEA countries may continue to participate subject to Commission risk-based security screening. This approach maintains coherence with existing practices under Digital Europe and Horizon Europe, while allowing necessary safeguards to be applied in proportion to security risks.

Strengthening Transparency, Financial Vetting and Beneficial Ownership Requirements

The rapporteur underlines that public funding in the defence sector carries elevated security risks if funds are channelled to entities with opaque ownership or malign foreign control. The introduction of mandatory beneficial ownership verification, AML screening, and a Defence Transparency Register ensures full traceability, transparency, and integrity of EU defence funding.

Reinforcing NATO-EU Coherence

The rapporteur reiterates that NATO remains the cornerstone of Europe's collective defence architecture, providing essential deterrence and security guarantees. At the same time, the Union has a responsibility to strengthen its own defence technological and industrial base, build operational resilience, enhance its capacity to respond to complex hybrid threats, and safeguard the security of its Member States. The amendments strengthen the Union's ability to act, while contributing to NATO coherence, interoperability, and transatlantic security unity as a complementary benefit.

Conclusion

The rapporteur stresses that the geopolitical environment the Union faces today leaves no room for strategic hesitation. The Russian threat and malign influence operations originating from China will remain central security challenges for Europe for years to come. Hybrid operations, cyber sabotage, and military intimidation demand that Europe reinforce its own defence technological and industrial base as a matter of sovereignty and survival.

The rapporteur supports the Commission's approach to adapt existing Union programmes to allow defence-related projects to benefit from Union funding. The amendments introduced build on this approach by proposing complementary, targeted modifications that further strengthen operational relevance, address identified capability gaps and enhance financial integrity and security safeguards.

The Union must assume greater responsibility in securing its territory, safeguarding its populations, and contributing fully to the joint defence effort alongside NATO Allies. These amendments strengthen the Union's readiness, resilience, and credibility in a time where geopolitical competition is intensifying, threats are becoming more complex, and security can no longer be outsourced.

ANNEX: DECLARATION OF INPUT

Pursuant to Article 8 of Annex I to the Rules of Procedure, the rapporteur declares that he received input from the following entities or persons in the preparation of the draft report, prior to the adoption thereof in committee:

The list above is drawn up under the exclusive responsibility of the rapporteur.

Where natural persons are identified in the list by their name, by their function or by both, the rapporteur declares that he submitted to the natural persons concerned the European Parliament's Data Protection Notice No 484 (https://www.europarl.europa.eu/data-protect/index.do), which sets out the conditions applicable to the processing of their personal data and the rights linked to that processing.

BUDGETARY ASSESSMENT OF THE COMMITTEE ON BUDGETS (16.7.2025)

for the Committee on Industry, Research and Energy

on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

(COM(2025)0188 - C10-0070/2025 - 2025/0103(COD))

Rapporteur for budgetary assessment: Christian Ehler

The Committee on Budgets has carried out a budgetary assessment of the proposal under Rule 58 of the Rules of Procedure and has reached the following conclusions:

The Committee on Budgets,

A. whereas there is an urgent need for a substantialand sustained increase in European defence investments to strengthen European strategic autonomy, develop the necessary European defence capabilities and military readiness, and credibly deter armed and hybrid aggression - notably in the context of Russia's war of aggression against Ukraine, which is creating increased pressure, in particular on the eastern Member States; whereas such increased defence spending is essential to build a true European Defence Union able to efficiently protect the EU and its citizens;

B. whereas the proposal does not modify existing budgetary commitments and remains within the limits of the overall allocations for the period 2021-2027, and is therefore budgetary neutral; whereas the proposal is to be implemented using existing human resources;

C. whereas the proposal establishes a fourth strategic sector for defence-related technologies under the Strategic Technologies for Europe Platform (STEP), which extends the scope of the programmes included in STEP;

D. whereas the proposal complements the mid-term review of cohesion policy by allowing investment in the manufacturing and development of critical technologies, including investment in the skills needed in this sector, which is to be made through the European Regional and Development Fund (ERDF), Cohesion Fund (CF) and European Social Fund Plus (ESF+) within the framework of the STEP regulation; whereas for this new sector Member States could benefit from a 30 % pre-financing of the amounts programmed under cohesion policy funds and the possibility of applying Union financing of up to 100 %; whereas the Connecting Europe Facility regulation[19](CEF) allows the transfer of part of the resources allocated to Member States under shared management to the CEF; whereas the proposal also introduces the possibility for the Member States to transfer resources allocated to them in shared management to the CEF for projects supporting military mobility to benefit from the same rates; whereas disbursements under the cohesion programmes are subject to the fulfilment of the horizontal and thematic enabling conditions defined in the Common Provisions Regulation[20](CPR);

E. whereas the proposal to amend Horizon Europe will enable support for technologies with potential dual-use applications under the European Innovation Council (EIC) Accelerator, as well as support for defence technologies under the EIC STEP scale-up; whereas the unused amount and potential returns from investment made by the EIC Fund during the pilot phase under Horizon 2020 should be made available for this purpose; whereas they are estimated at EUR 210 million;

F. whereas the proposal extends the scope of the Digital Europe Programme to include dual-use projects and extends the objective of the CEF to include the deployment and operation of digital capacities such as AI Factories and new generation AI Gigafactories;

G. whereas the inclusion of a new strategic sector under STEP entails significant flexibility in the allocation and use of Union resources; whereas it is essential to ensure that such flexibility does not result in a loss of budgetary accountability;

Conclusions of the budgetary assessment

1. Determines that the proposal is compatible with the multiannual financial framework (MFF), in particular the payments ceiling and the system of own resources; notes that the proposed measures do not involve any topping up of the EU budget;

2. Notes that, according to the Commission, the proposal does not require additional use of human resources; stresses that the assessment and implementation of defence sector programmes, particularly in the areas of dual-use technologies, require a specific skill set that the Commission might lack; expresses doubts whether the Commission's assessment of human resources needs took into consideration the scenario in which the Member States would make extensive use of the possibility to transfer cohesion funds to programmes implemented by the Commission; is therefore concerned about the possible lack of funding for human resources in the Commission's proposal; recalls that the margins under Heading 7 are fully exhausted and that this heading relies on the support of special instruments to meet its commitments; calls on the Commission to keep the budgetary authority duly informed of any potential negative impacts on Heading 7 within the framework of the annual budgetary procedure;

3. Deplores the fact that the Commission did not perform an impact assessment of the proposal; highlights that this makes it impossible to comment on the possible consequences of redirecting funds towards the new priority; regrets that the legislative financial statement accompanying the proposal does not provide any estimate of the impact of the introduction of a fourth strategic sector under STEP and of the increase in the pre-financing and co-financing rates for investment in military mobility financed from cohesion funds transferred to the CEF; recalls the importance of preventing double financing in this area too; emphasises the importance of providing clarity to enable willing Member States to fully seize the opportunity offered by cohesion funds to strengthen European defence readiness;

4. Determines that the proposal is compatible with the budgetary principles laid down in the Financial Regulation; welcomes the derogation from Article 212(3) enabling the repayments, including reimbursed advances, revenues and unused amounts net of fees and costs of EIC blended finance of the EIC pilot under Horizon 2020, to be considered internal assigned revenues; recalls, in the light of the introduction of the option of 100 % Union co-funding, the general principle whereby grants must involve co-financing such that full financing from the EU budget must remain an exception and must not undermine the existing limited financing; points out that introducing such flexibility at this time in the MFF could be perceived as penalising the most advanced Member States in the implementation of the cohesion programmes; calls for safeguards to ensure that national co-funding is encouraged wherever feasible;

Recommendations for budget implementation

5. Welcomes the aim of the proposal to increase EU budgetary support to European defence investment without jeopardising the objective of economic, social and territorial cohesion of the Union; acknowledges that the potential efficiency andbudgetary gains from providing defence capabilities at the European scale rather than depending primarily on fragmented national spendingare significant, whileensuring interoperability; regrets, however, that in the absence of fresh resources, existing priorities and long-term investments under the amended programmes will face further budgetary pressure, exacerbated by the limited annual EU budget margins and flexibility available in the final years of the 2021-2027 MFF, in particular for military mobility under the CEF transport envelope; reiterates in this sense the importance of paving the way for the adoption of new own resources to ensure stable and genuine funding for the EU budget, not only to enable repayment of NextGenerationEU borrowing, but to cover its higher spending needs, including those for financing common defence programmes; underlines the importance of including a clear definition of 'defence technologies' in the STEP Regulation to ensure that it remains focused on strategic, rather than general-purpose, defence expenditure, as well as a clear definition of dual-use in the Horizon Europe and Digital Europe regulations; notesthe need to ensure that the reallocation of funds from existing programmes to defence-related investmentsis properly balanced in order to prevent de-prioritisation of existing programmes and minimise the risk of oversubscription of the available funds on account of an unclear scope, which might also lead to unnecessary overlaps with other existing schemes; acknowledges, however, that investments in defence-related technologies can also contribute to regional innovation and industrial capacity, thus helping create and retain a skilled workforce and support cohesion objectives through new types of strategic economic activity; draws attention also to availabilities under the Recovery and Resilience Facility (RRF); notes in this regard, the Commission's proposal to issue guidance incentivising the use of the RRF for common defence projects, particularly under the European Defence Industry Programme;

6. Recalls that the EU spent only 2.24 % of its GDP on research and development (R&D) in 2022, having failed for the last two decades to reach the 3 % target; notes that, representing less than 7 % of the total, the EU budget's contribution to R&D spending constitutes only a minor share of the overall public spending on R&D in the EU; stresses, in this regard that opening up the Horizon Europe Programme to defence-related aspects should not compromise the programme's principles of openness, accessibility, innovation, transparency and proper control and auditing mechanisms, and that full protection of the Union's budget and financial interests must be ensured; stresses that the excellence-driven approach to implementing the programme needs to be maintained, ensuring that defence-related funding does not undermine other financing objectives of the Horizon Europe Programme, particularly for civilian use;

7. Requests that the Commission provide traceable information in the form of timely reports on the transfers referred to in Article 26 of Regulation (EU) 2021/1060 to make the impact of the proposal clearly identifiable for the budgetary authority; calls on the Commission to carry out an ex post budgetary and operational evaluation of the implementation of the amended programmes by the end of the current MFF, and to submit a comprehensive report to the budgetary authority assessing the efficiency, added value and absorption rate of redirected resources towards defence-related objectives of the underlying investment, as well as the impact of the redirection on the EU's overall strategic objectives;

8. Underlines that rule-of-law conditionality is a fundamental principle that must apply to all EU funds without exception; calls on the Commission to maintain consistency in applying conditionality across the EU budget, and to reject any reallocation of cohesion funds that would lead to circumvention of the existing decisions taken in accordance with rule-of-law requirements established in the CPR, as the re-allocation or reshuffling of frozen appropriations to other programmes or objectives would signal to non-compliant governments that losses can be offset elsewhere;

9. Concludes that the proposal is compatible with the elements referred to in Rule 58(3) of the Rules of Procedure.

AMENDMENT

As part of its budgetary assessment, the Committee on Budgets also submits the following amendments to the proposal:

Amendment 1

Proposal for a regulation

Recital [18] a (new)

ANNEX: DECLARATION OF INPUT

The rapporteur for budgetary assessment declares under his exclusive responsibility that he did not include in his budgetary assessment input from interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register[21], or from representatives of public authorities of third countries, including their diplomatic missions and embassies, to be listed in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.

PROCEDURE - COMMITTEE ASKED FOR BUDGETARY ASSESSMENT

FINAL VOTE BY ROLL CALL
IN COMMITTEE ASKED FOR BUDGETARY ASSESSMENT

Key to symbols:

+ : in favour

- : against

0 : abstention

OPINION OF THE COMMITTEE ON SECURITY AND DEFENCE (22.7.2025)

for the Committee on Industry, Research and Energy

on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

(COM(2025)0188 - C10-0070/2025 - 2025/0103(COD))

Rapporteur for opinion: Thijs Reuten

SHORT JUSTIFICATION

The European Union is facing an unprecedented geopolitical situation, marked in particular by the return of high-intensity warfare on European soil due to Russia's war of aggression against Ukraine.

Furthermore, based on statements by Russian officials, as well as the analysis of European intelligence organisations and NATO, Europe can no longer ignore a looming military threat emanating from Russia against other parts of the European continent.

This underscores the urgent need for the Union and its Member States to shore up our resilience, deterrence and defence against hybrid threats, military threats and potential for conventional military warfare affecting EU Member States.

The Union requires both long term solutions to create a true Defence Union and accompanying internal market, as well as short-term solutions to rapidly ramp up production, innovation, and industrial and operational collaboration across the defence industrial bases on the European continent and with like-minded partners. This requires both a significant step-up in funding, as well as a change of mindsets in national government and boardrooms.

The Commission proposal to amend the STEP, Horizon Europe, Digital Europe and Connecting Europe Facilities, as well as the European Defence Fund and ASAP regulations makes a small contribution in the right direction. The primary issue remains that funding sources are insufficient to address the needs, that the proposed solutions rely on the discretionary decision-making by Member States to transfer funds from one programme to another, and that through these measures little is done to advance efficiency in spending and reduce fragmentation of the EDTIB.

The rapporteur of the SEDE Committee Opinion does not propose to introduce amendments to the STEP and Horizon Europe regulations. In Connecting Europe Facility, changes are proposed to introduce mainstreaming of counter-mobility and actions that help restore affected critical digital/energy infrastructure using European assets, which addresses current weakness in our resilience. In the Digital Europe Facility, changes are proposed to more comprehensively address hybrid threats in the digital domain, to extend certain training and support activities to include armed forces, and to ensure that restrictions on third countries do not affect cooperation with associated countries, including Ukraine.

In the European Defence Fund regulation, changes are proposed to better include Ukraine and other associated countries, and subject to further agreement, countries with a Security and Defence Partnership. The Rapporteur further proposes to ensure that irrespective of the funding source, the EDF can continue to operate as a truly European program. Furthermore, changes are introduced to focus on identified capability gaps, to ensure faster timelines for projects supporting disruptive technologies, and to ensure appropriate support for SMEs and midcaps.

In relation to ASAP, the Rapporteur proposes not to amend the regulation as it is no longer necessary with the adoption of EDIP. As the European Parliament adopted EDIP regulation under urgent procedure at the request of the Council, it is expected that this regulation is now swiftly finalized, thus allowing the Parliament to avoid unnecessary legislative duplication.

AMENDMENTS

The Committee on Security and Defence submits the following to the Committee on Industry, Research and Energy, as the committee responsible:

Amendment 1

Proposal for a regulation

Recital 1

(The last sentence of recital 1 of the Commission proposal is reproduced in the new recital 1b.)

Amendment 2

Proposal for a regulation

Recital 1 a (new)

Amendment 3

Proposal for a regulation

Recital 1 b (new)

Amendment 4

Proposal for a regulation

Recital 1 c (new)

Amendment 5

Proposal for a regulation

Recital 1 d (new)

Amendment 6

Proposal for a regulation

Recital 1 e (new)

Amendment 7

Proposal for a regulation

Recital 2

Amendment 8

Proposal for a regulation

Recital 3

Amendment 9

Proposal for a regulation

Recital 4

Amendment 10

Proposal for a regulation

Recital 7

Amendment 11

Proposal for a regulation

Recital 9

Amendment 12

Proposal for a regulation

Recital 10 a (new)

Amendment 13

Proposal for a regulation

Recital 11

Amendment 14

Proposal for a regulation

Recital 13

Amendment 15

Proposal for a regulation

Recital 15 a (new)

Amendment 16

Proposal for a regulation

Recital 17 a (new)

Amendment 17

Proposal for a regulation

Article 1 - paragraph 1 - point -1 (new)

Regulation (EU) 2021/694

Article 3 - paragraph 1 - subparagraph 1

Amendment 18

Proposal for a regulation

Article 1 - paragraph 1 - point -1 a (new)

Regulation (EU) 2021/694

Article 3 - paragraph 1 - subparagraph 2 - point b

Amendment 19

Proposal for a regulation

Article 1 - paragraph 1 - point 1

Regulation (EU) 2021/694

Article 3 - paragraph 1 - subparagraph 2 - point c

Amendment 20

Proposal for a regulation

Article 1 - paragraph 1 - point 2 a (new)

Regulation (EU) 2021/694

Article 5 - paragraph 1 - subparagraph 1 - point b

Amendment 21

Proposal for a regulation

Article 1 - paragraph 1 - point 2 b (new)

Regulation (EU) 2021/694

Article 6 - paragraph 1 - point b

Amendment 22

Proposal for a regulation

Article 1 - paragraph 1 - point 2 c (new)

Regulation (EU) 2021/694

Article 6 - paragraph 1 - point e

Amendment 23

Proposal for a regulation

Article 1 - paragraph 1 - point 2 d (new)

Regulation (EU) 2021/694

Article 6 - paragraph 1 - point g a (new)

Amendment 24

Proposal for a regulation

Article 1 - paragraph 1 - point 3

Regulation (EU) 2021/694

Article 8 - paragraph 1 - point a

Amendment 25

Proposal for a regulation

Article 1 - paragraph 1 - point 4

Regulation (EU) 2021/694

Article 12 - paragraph 5

Amendment 26

Proposal for a regulation

Article 2 - paragraph 1 - point 2 a (new)

Regulation (EU) 2021/695

Article 50 - paragraph 1 - subparagraph 2 a (new)

Amendment 27

Proposal for a regulation

Article 3 - paragraph 1 - point -1 (new)

Regulation (EU) 2021/697

Article 3 - paragraph 2 - subparagraph 1 - point b

Amendment 28

Proposal for a regulation

Article 3 - paragraph 1 - point -1 a (new)

Regulation (EU) 2021/697

Article 3 - paragraph 2 - subparagraph 2

Amendment 29

Proposal for a regulation

Article 3 - paragraph 1 - point -1 b (new)

Regulation (EU) 2021/697

Article 5

Amendment 30

Proposal for a regulation

Article 3 - paragraph 1 - point 1

Regulation (EU) 2021/697

Article 6 - paragraph 1

Amendment 31

Proposal for a regulation

Article 3 - paragraph 1 - point 1

Regulation (EU) 2021/697

Article 6 - paragraph 2

Amendment 32

Proposal for a regulation

Article 3 - paragraph 1 - point 2 a (new)

Regulation (EU) 2021/697

Article 10 - paragraph 3 a (new)

Amendment 33

Proposal for a regulation

Article 3 - paragraph 1 - point 2 b (new)

Regulation (EU) 2021/697

Article 12 - paragraph 1 - point d

Amendment 34

Proposal for a regulation

Article 3 - paragraph 1 - point 2 c (new)

Regulation (EU) 2021/697

Article 13 - paragraph 2 - point a

Amendment 35

Proposal for a regulation

Article 3 - paragraph 1 - point 2 d (new)

Regulation (EU) 2021/697

Article 13 - paragraph 2 - point b

Amendment 36

Proposal for a regulation

Article 3 - paragraph 1 - point 2 e (new)

Regulation (EU) 2021/697

Article 13 - paragraph 3 - subparagraph 1 - point b

Amendment 37

Proposal for a regulation

Article 3 - paragraph 1 - point 2 f (new)

Regulation (EU) 2021/697

Article 13 - paragraph 3 - subparagraph 1 - point c

Amendment 38

Proposal for a regulation

Article 3 - paragraph 1 - point 2 g (new)

Regulation (EU) 2021/697

Article 13 - paragraph 3 - subparagraph 1 - point c a (new)

Amendment 39

Proposal for a regulation

Article 3 - paragraph 1 - point 2 g (new)

Regulation (EU) 2021/697

Article 13 - paragraph 3 - subparagraph 1 - point c b (new)

Amendment 40

Proposal for a regulation

Article 4 - paragraph 1 - point -1 (new)

Regulation (EU) 2021/1153

Article 3 - paragraph 1

Amendment 41

Proposal for a regulation

Article 4 - paragraph 1 - point -1 a (new)

Regulation (EU) 2021/1153

Article 3 - paragraph 2 - point a - point ii

Amendment 42

Proposal for a regulation

Article 4 - paragraph 1 - point 1 a (new)

Regulation (EU) 2021/1153

Article 8 - paragraph 4 - point e

Amendment 43

Proposal for a regulation

Article 4 - paragraph 1 - point 2 a (new)

Regulation (EU) 2021/1153

Article 9 - paragraph 2 - point b - point x a (new)

Amendment 44

Proposal for a regulation

Article 4 - paragraph 1 - point 3 a (new)

Regulation (EU) 2021/1153

Article 10 - paragraph 1

Amendment 45

Proposal for a regulation

Article 4 - paragraph 1 - point 3 b (new)

Regulation (EU) 2021/1153

Article 10 - paragraph 2 a (new)

Amendment 46

Proposal for a regulation

Article 4 - paragraph 1 - point 4

Regulation (EU) 2021/1153

Article 15 - paragraph 2 - point ba - point iii a (new)

Amendment 47

Proposal for a regulation

Article 4 - paragraph 1 - point 4

Regulation (EU) 2021/1153

Article 15 - paragraph 2 - point ba - paragraph 2 a (new)

Amendment 48

Proposal for a regulation

Article 5 - paragraph 1 - point 1

Regulation (EU) 2023/1525

Article 6 - paragraphs 3a to 3d

Amendment 49

Proposal for a regulation

Article 5 - paragraph 1 - point 2

Regulation (EU) 2023/1525

Article 24 - paragraph 2 - subparagraph 2

Amendment 50

Proposal for a regulation

Article 6 - paragraph 1

Regulation (EU) 2024/795

Article 2 - paragraph 1 - point a - point iv

ANNEX: DECLARATION OF INPUT

The rapporteur for opinion declares under his exclusive responsibility that he did not include in his opinion input from interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register[22], or from representatives of public authorities of third countries, including their diplomatic missions and embassies, to be listed in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.

PROCEDURE - COMMITTEE ASKED FOR OPINION

FINAL VOTE BY ROLL CALL
BY THE COMMITTEE ASKED FOR OPINION

Key to symbols:

+ : in favour

- : against

0 : abstention

OPINION OF THE COMMITTEE ON TRANSPORT AND TOURISM (16.7.2025)

for the Committee on Industry, Research and Energy

on the proposal for a regulation of the European Parliament and of the Council amending Regulations (EU) 2021/694, (EU) 2021/695, (EU) 2021/697, (EU) 2021/1153, (EU) 2023/1525 and 2024/795, as regards incentivising defence-related investments in the EU budget to implement the ReArm Europe Plan

(COM(2025)0188 - C10-0070/2025 - 2025/0103(COD))

Rapporteur for opinion: Marjan Šarec

SHORT JUSTIFICATION

The EU's ability to move military assets swiftly and effectively across its territory has become a strategic imperative amid growing geopolitical instability. Military mobility is central not only to security and defence but also to economic resilience and civilian transport development. Upgrading critical cross-border infrastructure is essential to enhance dual-use capabilities, enabling both military deployments and civilian use.

Despite the adoption of the EU Action Plan on Military Mobility 2.0, the current 2021-2027 Multiannual Financial Framework (MFF) allocates only €790 million to military mobility under the Connecting Europe Facility (CEF), far short of what is needed to address bottlenecks and priority corridors.

While the European Regional Development Fund (ERDF) and the Cohesion Fund play a vital role in supporting transport infrastructure, their decentralised, shared-management structure limits their ability to prioritise strategic, cross-border military mobility projects.

To address this shortfall, the European Commission proposes a temporary, voluntary mechanism allowing Member States to transfer Cohesion Fund resources to the CEF. This would be accompanied by amendments to the CEF Regulation, ensuring that transferred resources benefit from the same pre-financing and co-financing conditions as under cohesion policy. This reallocation would allow the CEF to enhance governance, streamline implementation, and ensure strategic alignment with EU defence and transport priorities.

The rapporteur supports this targeted measure as a necessary interim solution for the 2025-2027 period. It would preserve progress made under the Military Mobility Action Plan, maintain investment momentum, and prepare the ground for a more ambitious, dedicated funding approach in the next MFF.

The CEF's direct management model offers clear governance advantages over shared-management instruments. It ensures effective project selection, central coordination, and EU-level transparency. Moreover, investment in dual-use infrastructure benefits both military readiness and civilian connectivity, particularly in peripheral and cross-border regions. These projects support cohesion policy goals while delivering clear EU added value.

Lastly, the rapporteur stresses the importance of transparency and oversight in the implementation of this mechanism. All projects financed through transferred funds must adhere to CEF's monitoring and reporting standards. Regular Commission updates on the use of reallocated resources will be crucial to ensure the efficiency and accountability of this approach.

AMENDMENTS

The Committee on Transport and Tourism submits the following to the Committee on Industry, Research and Energy, as the committee responsible:

Amendment 1

Proposal for a regulation

Recital 6 a (new)

Amendment 2

Proposal for a regulation

Recital 15

Amendment 3

Proposal for a regulation

Recital 15 a (new)

Amendment 4

Proposal for a regulation

Recital 15 b (new)

Amendment 5

Proposal for a regulation

Recital 15 c (new)

Amendment 6

Proposal for a regulation

Recital 15 d (new)

Amendment 7

Proposal for a regulation

Recital 15 e (new)

Amendment 8

Proposal for a regulation

Recital 15 f (new)

Amendment 9

Proposal for a regulation

Recital 15 g (new)

Amendment 10

Proposal for a regulation

Article 4 - paragraph 1 - point 1 - point c

Regulation (EU) 2021/1153

Article 3 - paragraph 2 - point c

Amendment 11

Proposal for a regulation

Article 4 - paragraph 1 - point 4

Regulation (EU) 2021/1153

Article 15 - paragraph 2 - point ba - point i

Amendment 12

Proposal for a regulation

Article 4 - paragraph 1 - point 4

Regulation (EU) 2021/1153

Article 15 - paragraph 2 - point ba - point iii

ANNEX: DECLARATION OF INPUT

The rapporteur for opinion declares under his exclusive responsibility that he did not include in his opinion input from interest representatives falling within the scope of the Interinstitutional Agreement on a mandatory transparency register[23], or from representatives of public authorities of third countries, including their diplomatic missions and embassies, to be listed in this Annex pursuant to Article 8 of Annex I to the Rules of Procedure.

PROCEDURE - COMMITTEE ASKED FOR OPINION

FINAL VOTE BY ROLL CALL
BY THE COMMITTEE ASKED FOR OPINION

Key to symbols:

+ : in favour

- : against

0 : abstention

PROCEDURE - COMMITTEE RESPONSIBLE

FINAL VOTE BY ROLL CALL BY THE COMMITTEE RESPONSIBLE

Key to symbols:

+ : in favour

- : against

0 : abstention