Brussels clears path to spend Covid-19 recovery billions on defence

The European Commission has authorised EU member states to redirect unused Covid-19 recovery funds toward defence projects, marking a major shift from the original climate and digitalisation goals of the program.

Countries now have until August 2026 to meet set targets and access up to €335 billion remaining under the €650 billion Resilience and Recovery Facility (RRF), Caliber.Az reports via foreign media.

Originally launched in 2021 to help pandemic-stricken economies transition to greener and more digital futures, the RRF had earmarked 37% of funds for climate action and 20% for digital upgrades. Defence spending was not included. However, in light of the war in Ukraine and growing geopolitical threats, Brussels is now permitting investment in EU-aligned defence initiatives, such as satellite communications.

Economy Commissioner Valdis Dombrovskis said the updated guidelines would allow countries to channel funds into security-related priorities, including contributions to the upcoming European Defence Industry Programme (EDIP). While the RRF rules don't specifically account for defence, he cited cybersecurity efforts in Spain and broader crisis readiness as compatible with existing goals.

Yet time is running out. Countries must prove they’ve met reform milestones to unlock funds, and several, such as Italy and Spain, the largest recipients, are behind schedule. Despite lobbying to postpone the 2026 deadline, the Commission firmly rejected an extension, warning it would require a politically risky treaty change and 20 national ratifications.

“This is not only a bad idea; it’s costly and dangerous,” an EU official said, urging governments to revise plans toward feasible outcomes. Options include scaling back or modifying projects, using funds to capitalise national development banks, or reallocating money to the EU’s InvestEU initiative.

Countries like Romania, Hungary, and Bulgaria, with ambitious plans and significant delays, face particular pressure. Hungary has yet to request any RRF funds due to unresolved rule-of-law concerns, putting €10.4 billion at risk. Romania, meanwhile, has applied for grants worth 3% of its GDP.

By Tamilla Hasanova