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24.2.2026

24.02.2026

Mr Johan Van Overtveldt

BRUSSELS

Subject: Opinion on thegeneral guidelines for the 2027preparation budgetof –the 2027 budget, Section III – Commission (2025/2246(BUI))

Dear Mr Chair,

Under the procedure referred to above, the Committee on BudgetarySecurity Controland Defence has been asked to submit an opinionOpinion to your committee. AtOn its21 meetingJanuary of2026, 24SEDE FebruaryCoordinators 2026,decided theby committeewritten decidedprocedure to send the opinionOpinion in the form of a letter.letter, which SEDE adopted at its meeting of 24 February 2026 .

I would be most grateful if you would incorporate the attached SEDE opinion appropriately into your motion for a resolution.

Yours sincerely,

Andreas Schwab Daniel Freund

Marie-Agnes STRACK-ZIMMERMANN

CONT Chair CONT Member

Rapporteur for the Commission Discharge 2024

OPINION

1. Reaffirms its strong commitment to the fundamental principles and values enshrined in the Treaty on European Union and the Treaty on the Functioning of the European Union;

The Committee on Security and Defence calls on the Committee on Budgets, as the committee responsible, to incorporate the following into its motion for a resolution:

2. Recalls that respect for the rule of law and fundamental rights is an essential prerequisite for the sound financial management and effective use of EU funds; highlights, therefore, the importance of ensuring, in line with the applicable EU legal framework, including the Rule of Law Conditionality Regulation, that access to EU funds is linked to respect for the rule of law; stresses that this is crucial for safeguarding citizens’ trust in the EU and for ensuring that EU funding delivers tangible benefits across all Member States in an effective and results-oriented manner;

1. Stresses that the 2027 budget, as the final year of the 2021–2027 multiannual financial framework (MFF), must consolidate the Union’s shift towards security, defence readiness and resilience, while ensuring continuity into the next MFF; underlines that the end-of-MFF context is characterised by extremely limited margins, requiring a focus on delivery, prioritisation and impact, relying primarily on flexibility, targeted redeployments and gap-filling instruments rather than the creation of new large-scale budgetary envelopes.

3. Notes with serious concern that shortcomings affecting the rule of law, anti-corruption frameworks and institutional checks and balances in some Member States pose risks to the protection of the financial interests of the EU and the sound management of EU funds; recalls that the Commission has a wide range of instruments at its disposal to address such risks and protect the EU budget; stresses that these instruments should be used in a coherent, consistent and transparent manner; underlines, therefore, the importance of clear benchmarks, verifiable implementation steps and effective monitoring when applying measures under the Rule of Law Conditionality Regulation, the Common Provisions Regulation and the RRF Regulation, as well as any other EU funding instruments, in order to ensure legal certainty and alignment with the Commission’s annual Rule of Law reports;

2. Stresses that, in 2027, budgetary choices should prioritise capability-driven outcomes and mature actions with demonstrable European added value that plug the most urgent gaps in European military capabilities and reduce dependencies that undermine European strategic autonomy.

4. Emphasises that EU funds must be used in full compliance with EU values and must not support activities that undermine democracy and the rule of law; stresses, moreover, the importance of guaranteeing adequate and predictable EU funding to all relevant stakeholders that play a crucial role in safeguarding and promoting the rule of law, democracy and fundamental rights, in accordance with clear eligibility criteria and oversight mechanisms;

3. Highlights the evolution of the Union’s defence policies including defence industrial policy to achieve the full spectrum from research to deployable capabilities; stresses the importance of ensuring continuity between the European Defence Fund (EDF), crisis-driven industrial instruments such as ASAP, and the European Defence Industry Programme (EDIP), which serves as a structural bridge for the period 2025–2027; underlines that this evolution implies a strengthened role for the Commission in defence industrial coordination, working closely with the European Defence Agency, while recalling the essential role of the European Parliament as budgetary authority and its responsibility for democratic scrutiny, transparency and accountability of Union expenditure.

5. Recalls that the EU budget should be implemented in line with the principle of transparency; stresses that budgetary control, safeguards and transparency requirements must be applied in a neutral, proportionate and evidence-based way and that effective scrutiny requires the application of equivalent standards to all beneficiaries;

4. Draws attention to the constraints affecting the scale-up of the European Defence Technological and Industrial Base (EDTIB), noting the tension between growing Union-level political ambition, including flagship defence industrial projects and coordinated capability initiatives, and the limited financial resources available in the final years of the current MFF; recalls that the EDIP envelope amounts to EUR 1.5 billion for the period 2025–2027, which while politically significant, remains insufficient to finance multiple large-scale industrial priorities simultaneously; recalls, in this regard, the agreement reached by the co-legislators on the EDIP Regulation to invite the Commission, without prejudice to the prerogatives of the budgetary authority in the framework of future annual budgetary procedures, to explore as a matter of priority options to reinforce the budget for EDIP and the Ukraine Support Instrument in line with point 18 of the IIA on budgetary discipline without reducing similar EU programmes and funds; underlines that in view of the potential pivotal role of the Fund Accelerating the defence Supply Chains Transformation (FAST) in enhancing defence manufacturing capacities of SMEs and small mid-caps, additional financial contributions should be allocated as a priority to FAST, with the aim that the overall indicative amount for that particular fund under the Programme will reach at least EUR 150 million.

6. Stresses that the sound and timely implementation of the budget contributes to efficiently and effectively addressing the needs and challenges faced by the EU and its citizens in different policy areas, as well as the EU’s global responsibilities; warns that implementing the budget under time pressure may lead to an increase in errors and irregularities, in particular where complex eligibility rules and multi-layered delivery systems apply;

5. Underlines the imperative to ensure EU-level off-budget instruments, national defence budget increases and EU instruments are maximised for aggregating demand and joint procurement focussed on overcoming capability gaps and the urgent needs of Ukraine; remains seized of the legal basis of SAFE which undermines parliament's ability to ensure that EUbacked loans result in joint procurement of urgent capability gaps and an end to past practices that led to fragmentation and critical capability gaps.

7. Recalls that while existing flexibility arrangements have enabled the EU to respond to emerging priorities, several flexibility instruments were depleted in the early years of the current multiannual financial framework (MFF); reiterates that a certain level of flexibility in the EU budget is necessary to address potential new challenges and crises where EU action could provide added value, while also preserving budgetary discipline; underlines that the flexibility framework is overly complex, lacking a clearly defined and transparent sequence for activating margins below the ceilings and special instruments above them; notes, furthermore, that multiple flexibility tools overlap with one another and with the thematic programmes targeting the same needs, resulting in unnecessary complexity in financial management and decision-making; notes that the headroom in the EU budget is increasingly being used to provide guarantees for the funding to respond to crises, via loans backed by the headroom, and is concerned about the long-term impact of EU commitments on the sustainability of the headroom;

6. Stresses that the EDF remains the cornerstone of Union action in defence research and development, contributing to the competitiveness, innovation capacity and resilience of the EDTIB, fostering cross-border cooperation and reducing fragmentation; notes that EUR 6.4 billion has been committed so far to cooperative defence R&D, with 224 EDF projects completed, involving around 40% SMEs participation; underlines the importance of maintaining predictability and continuity of the EDF, particularly in an end-of-MFF context marked by high demand and a strong project pipeline.

8. Stresses the need to protect the EU budget from any misuse, particularly fraud and corruption, and calls on the Commission to continue to be vigilant and proactive in current and future cases where a lack of respect for EU values and the rule of law affect or threaten to affect the EU’s financial interests; underlines the importance of strengthening the EU anti-fraud architecture and the need to provide increased resources for the European Anti-Fraud Office (OLAF), the European Public Prosecutor’s Office (EPPO), the European Union Agency for Criminal Justice Cooperation (Eurojust) and the European Union Agency for Law Enforcement Cooperation (Europol) in the fight against fraud and corruption and to strengthen the role of these bodies in this regard; stresses the need for effective coordination and cooperation between all these institutions as well as adequate budgets to effectively fulfil their missions;

7. Stresses that military mobility remains a critical enabler of EU security and defence; notes with concern that financing constraints continue to hamper military mobility, as the very limited resources available under the current Connecting Europe Facility and other Union instruments have already been used up or remain insufficient to upgrade strategic transport corridors, in particular military mobility corridors, at the scale required; emphasises that military mobility is essential for contributing to the defence of Europe and enhancing interoperability within the Union and NATO and with partners, notably Ukraine; underlines the need for a more ambitious and forward-looking approach both for 2027 and under the next MFF, ensuring adequate funding and flexibility.

9. Stresses the need for the Commission to remain vigilant with regard to potential conflicts of interest and to ensure that robust, verifiable safeguards are in place to prevent EU funds from benefiting private interests, whether directly or indirectly; underlines that EU funding should only be disbursed where conflicts of interest are effectively and demonstrably resolved, in line with the relevant legal framework; recalls that effective prevention requires not only ex ante declarations but also continuous monitoring, verification and enforcement throughout the life cycle of EU-funded projects;

8. Firmly reiterates its unconditional and unwavering support for Ukraine in its fight for freedom, sovereignty and democracy against Russia’s illegal, unprovoked and unjustified war of aggression; supports the establishment of the Ukraine Support Loan for 2026 and 2027, amounting to EUR 90 billion; regrets that the Council failed to reach an agreement on securing a Reparations Loan for Ukraine against cash balances of frozen Russian assets; remains convinced that the option of using frozen Russian assets should continue to be explored in order to support Ukraine beyond 2027; welcomes the dedicated commitment to twothirds, approximately EUR 60 billion, for urgent military assistance for Ukraine to defend itself against Russia's aggression and also to invest in Ukraine's defence industrial base thereby facilitating its integration into the EU's defence industrial base; welcomes the financing of these costs through this dedicated new thematic special instrument, whilst preparing instruments for longer term support to Ukraine in the MFF, which contributes to the sustainability, predictability and credibility of the Union’s long-term support, thereby helping to preserve Ukraine’s capacity to maintain essential state functions, resilience and defence-related efforts while safeguarding the Union’s ability to provide continued security assistance.

10. Notes that while the digital transformation is indispensable to increasing the efficiency, control and transparency of the EU budget, this shift has also heightened the risk of cyber-fraud affecting the financial interests of the EU; calls on the Commission to allocate sufficient funds to strengthen EU digital infrastructure and research and development, while ensuring that investments in cybersecurity are impactful and contribute to the overall protection of the EU’s financial interests, including through secure and interoperable data-mining systems;

9. Emphasises the strategic relevance of emerging, disruptive and dual-use technologies, including artificial intelligence, cyber, quantum and space-enabled capabilities, for the Union’s security, deterrence and preparedness; notes that 5.6% of the EDF 2026 budget was dedicated to disruptive innovation; looks forward to the EU establishing, with adequate resources, its first EU-level DARPA-like initiative in the form of the AGILE programme; stresses the need to ensure coherence between defence-specific instruments and related Union programmes, ensuring procedural clarity and timely implementation, particularly where work programmes are amended.

11. Notes that while outstanding commitments have decreased compared to the record high levels at the end of 2023 (EUR 543 billion), at the end of 2024 outstanding commitments amounted to EUR 507.4 billion, of which EUR 166.3 billion related to NextGenerationEU (NGEU) grant funding; takes note of the Commission’s latest estimate for the level of outstanding commitments expected at end of 2027 (EUR 339 billion); considers that the risk of decommitments, and the related reduction of EU added value for the EU budget, remains high; calls for improvements in the forecasting of decommitments;

10. Underlines the need to strengthen the Union’s capacity to monitor and counter hybrid threats originating outside the Union, including foreign information manipulation and interference, cyberattacks, threats to space assets and risks to defence-related critical infrastructure; stresses that hybrid resilience must be treated as a cross-cutting priority in the 2027 budget, with improved coordination, situational awareness and operational support including in complementarity with the EU's CSDP missions.

12. Notes with concern that the exposure of the EU’s budget continued to increase in 2024, reflecting the growing volume of borrowing operations and associated guarantees; underlines that this trend underscores the importance of a robust system to ensure that the EU can meet its debt obligations under all circumstances; further notes that the Commission’s proposal for a financial support package for Ukraine for 2026–2027 would introduce a EUR 90 billion EU support loan for Ukraine though the Ukraine Support Loan instrument, financed through common EU borrowing on the capital markets and backed by the EU budget headroom; notes, moreover, that the EU budget will cover the related debt service costs, including funding, issuance, liquidity management and associated administrative costs;

11. Stresses that cyber defence and the information domain remain critical yet insufficiently addressed components of the Union’s security posture, particularly in the context of EU external action and CSDP missions; underlines the added value of Union-level coordination and analysis in the cyber and information domains, while expressing concern that insufficient and unstable funding continues to limit the sustainability and effectiveness of such efforts; recalls, in this context, the planned establishment of the EU Cyber Defence Coordination Centre (EU CDCC) as the Union’s military cyber coordination hub, and regrets that no dedicated resources have been allocated for its establishment in the EEAS budget for 2026, despite the Centre being foreseen to reach up to 30 staff members; calls, therefore, for the necessary human and financial resources for the EU CDCC to be duly reflected in the EEAS budgetary procedure for 2027.

13. Reiterates the need for sustainable and resilient revenue for the EU budget that matches the expenditure side; reiterates its long-standing call for the introduction of new, genuine own resources, not only for NGEU debt repayment but also to finance the EU’s policies; welcomes, in this respect, the Commission’s MFF proposal of July 2025 and efforts to identify new own resources, as well as the calibrations to traditional own resources it has put forward; supports the broader basket approach proposed by the Commission and calls on the Council to swiftly reach an agreement on a basket of new own resources of at least EUR 60 billion per year in order to provide long-term budgetary certainty;

12. Stresses the importance, in the 2027 annual budget, of strengthening preparedness and resilience against hybrid threats and high-intensity conflict scenarios within existing Union instruments; highlights the strategic value of coordinated stockpiling of critical defence-related components, raw materials and consumables, in order to mitigate supply disruptions, reduce external dependencies and ensure sustained production and operational readiness; calls for targeted support and improved coordination within existing frameworks.

14. Recalls the importance of protecting the EU’s own resources from any fraudulent irregularity; stresses the need to ensure the timely implementation of the EU customs reform, taking into consideration the pertinent recommendations made by the European Court of Auditors in its annual reports concerning the 2024 financial year; considers it imperative to strengthen operational cooperation between the EPPO, OLAF, the customs and tax authorities of the Member States and European law enforcement authorities to detect, prevent and correct fraud affecting EU revenue;

13. Recalls that the current ceiling under Heading 7 is incompatible with the operational needs of an adequately staffed European External Action Service (EEAS), and reiterates its call for an adjustment of this ceiling in line with the EEAS Statement of Estimates; reiterates its call for the reinforcement of staffing of the Military Planning and Conduct Capability (MPCC), in accordance with the PSC-endorsed business case and the growing requirements for EU-level operational defence planning; again underlines the persistent need for the procurement of secure Communication and Information Systems (CIS) to ensure the effective command, control and oversight of all CSDP missions.

15. Notes that the overall error rate fell from 5.6 % in 2023 to 3.6 % in 2024; stresses, however, that this decrease should be interpreted with caution, as it may not necessarily reflect an improvement in the effectiveness of control systems but could also be influenced by contextual factors such as the end of COVID-19 related emergency spending, a comparatively low level of budgetary implementation in 2024 and the early stage of implementation of the 2021-2027 MFF; notes significant variations in error rates across different budget headings, with some areas reporting error rates below the materiality threshold of 2 %, while the error rate for the heading ‘Cohesion, resilience and values’, though less than the 9.3 % error rate estimated for 2023, remains considerably above the materiality threshold at 5.7 %; is concerned about the persistent shortcomings observed by the European Court of Auditors in the work of certain national audit authorities, as reflected in the weaknesses identified in the assurance packages, with a residual error rate above the materiality threshold in assurance packages that account for more than 60 % of the total value of assurance packages audited in 2024; stresses that recurring weaknesses in the prevention and detection of irregularities at Member State level indicate that managing authorities do not effectively prevent or detect irregularities in expenditure declared by beneficiaries, thereby reducing the extent to which the Commission can rely on their work; calls on the Commission to take action to address the systemic issue of non-detection of errors at Member State level in cohesion policy spending, through a proportionate and risk-based combination of preventive measures, including targeted capacity-building, reinforced supervisory action and when necessary, suspensions or financial corrections in the cases of persistent systemic weaknesses;

14. Stresses that increased ambition in security and defence must be matched by adequate implementation and administrative capacity, recalling that new tasks and responsibilities require corresponding human and financial resources; insists that the final year of the current MFF should be used to reinforce evidence-based budgeting, avoid an “absorption at any cost” approach and build a robust foundation for a credible, defence-ready next MFF.

16. Is deeply concerned that the European Court of Auditors issued a qualified opinion on the legality and regularity of the Recovery and Resilience Facility (RRF) expenditure in 2024 for the third consecutive year, following similar conclusions in 2022 and 2023, and that it estimates the minimum financial impact of its findings to be above the materiality threshold; expresses concern that the European Court of Auditors found 6 out of 28 RRF payments made in 2024 were impacted by quantitative issues, with 5 of these payments being affected by material errors, calling into question the reliability of the control framework at this stage of implementation; notes that by the end of 2024, payments under the RRF amounted to EUR 197.5 billion out of EUR 358.9 billion in committed grants, leaving up to EUR 161.4 billion still to be disbursed by the end of 2026; notes that this substantial volume of outstanding payments, concentrated in the final two years of the instrument, increases the risk of implementation bottlenecks and further delays, particularly in Member States facing structural capacity constraints; stresses that the timely absorption of the remaining RRF grants will depend on the quality and maturity of reforms and investments, the stability of national governance systems, and the Commission’s ability to process a high volume of payment requests efficiently within a compressed timeframe; calls on the Commission to support the Member States’ authorities in the implementation of funds, in particular where additional administrative capacity is needed, to stimulate absorption and reduce the occurrence of errors; calls on the Commission to transparently inform Parliament about the progress of implementation and absorption of funds and to provide Parliament with regular, structured and comparable updates on RRF implementation, including on corrections and recoveries;

17. Recalls the EU’s commitments to advancing climate and environmental objectives, in line with the Paris Agreement and the European Green Deal; notes that the Commission tracks EU spending on climate- and biodiversity-related activities by means of dedicated methodologies; encourages the Commission to allocate sufficient funds and resources so that the EU can fully deliver on its international commitments on the climate and environment, in line with the related targets and ambitions set out in the 2020 Interinstitutional Agreement.

ANNEX: DECLARATION OF INPUT