Source: Sharecast
The EU General Affairs Council of ministers approved the joint loan programme - known as Security Action for Europe (SAFE) - at a meeting in Brussels on Tuesday. It was backed by 26 of the 27 member states, with Hungary abstaining.
However, the move is not without controversy, in April, the European Commission used an emergency clause to bypass the European Parliament, which meant discussions over the final agreement went straight to ministers.
Ukraine and Norway are included in the SAFE programme, and the final document also creates a mechanism for external nations such as the UK to join provided they meet specific conditions.
SAFE is designed to overcome national barriers by funding joint defence projects across EU nations, with a strong emphasis on supporting the European defence industry. To qualify for loans under the scheme, projects must ensure that at least 65% of the value comes from companies based in the EU, the European Economic Area, or Ukraine.
Britain signed an agreement with the EU earlier this month, which could its large defence industry participate in SAFE-funded projects.
Reporting by Frank Prenesti for Sharecast.com