Beyond the Supply Crisis: Closing the Intra-EDIP Raw Materials Gap through Demand Transparency and Crisis Coordination

The supply shock case – a disruption waiting to happen

Gallium is crucial for the production of GaN semiconductors, integral components in military radar systems, electronic warfare and drone communication (Carrara et al., 2023). The EU’s import dependency for Gallium accounts for approximately 70%, with China as the main exporter (European Commission, 2023). In 2023 and 2025 China implemented a series of export controls targeting the United States, exposing a structural problem for the global economy (Nath & Bean, 2025). Whether rooted in geopolitical interest or other factors, the EU needs a robust mechanism to prepare for supply disruptions. While Gallium serves as the illustrative case in this paper, the structural dependencies it discloses exist across a range of critical raw materials, including Germanium, Magnesium, Tungsten and rare earth elements, equally essential for the European defence industry (European Commission, 2023).

In the event of a formal security-related supply crisis declaration under EDIP, the EC is already vested with the authority to instruct EU-based processors to prioritize supply chains for crisis-relevant defence products, their components and raw materials over non-crisis-relevant supply chains (Regulation (EU) 2025/2643, Art. 66) What is not possible however, is a horizontal raw material allocation between crisis-relevant defence applications.

In the case of EDIP grant beneficiaries, this means that all programs are, by definition, defence-critical and crisis-relevant, as EDIP eligibility criteria require beneficiaries to produce defence products and their related components and raw materials within the meaning of Article 2(9). If a gallium supply disruption affects an EDIP funded drone supply chain program, a defence-sensor project and a missile program, parallel gallium demands of these projects are currently not centrally understood by any EU body, impeding coordinated planning and allocations. Although equal treatment between EDIP projects is appropriate in the absence of a specific security threat, operational urgency, combined with supply disruptions may shift priority towards certain defence applications. Here again, the current EDIP crisis mechanisms fall short of addressing said scenarios. 

This policy brief addresses these distinctive but reinforcing gaps through (1) the Defence Raw Materials Visibility Platform (DRMVP) and (2) the Defence Raw Materials Allocation Mechanism (DRAM). The DRMVP will operate a central database aggregating raw material demands of EDIP grant beneficiaries and the DRAM will convert an arbitrary allocation logic into a rule-based coordination under a verified and crisis-tailored approach. Both mechanisms are designed for short implementation periods drawing on existing legislative frameworks and existing infrastructure. The proposed operational modalities represent pre-legislative implementation pathways, with the intent, that their core concepts are legislatively embedded into EDIP’s successor regulations under the Multi-Annual Financial Framework 2028-2034).

Mechanism 1 – DRMVP

The DRMVP aims to address the structural transparency gap of the EDIP framework. Existing monitoring systems under the Critical Raw Materials Act (CRMA) track supply-side capacities collected on a triennial basis and aggregated from Member States (Regulation (EU) 2024/1252), the DRMVP will collect demand-side, projected defence-specific demand data, on a quarterly basis, sourced directly from EDIP grant beneficiaries. Data generated under the DRMVP can inform defence-specific EU programs, but above all, serve as data input in crisis scenarios, as further illustrated in Mechanism 2. The CRMA monitoring instruments and the DRMVP are therefore complementary.

All EDIP grant beneficiaries using raw materials on the CRMA strategic/critical raw materials list (Regulation (EU) 2024/1252) above a material-specific quantity threshold, are subject to reporting obligations. The threshold is defined by DG Defis and validated for defence-specific applications by the European Defence Agency (EDA) to calibrate disproportional burdens on projects with marginal raw material use. Since comprehensive EDIP-specific raw material data are not yet available, the initial version will be based on informed expert assessment, adjustable against actual DRMVP submissions at a later stage.

The DRMVP has two access tiers. In the beginning, all EDIP grant beneficiaries access the preliminary version/basic tier by transmitting information, whether their projects exceed the material-specific quantity threshold. If this is the case, EDIP grant beneficiaries will need to transmit three data points on a quarterly basis: raw material, quantity as a range and procurement time window. Drawing on this data, DG Defis then compiles a classified comprehensive version, which is accessible exclusively to the Defence Supply Security Board (DSSB) (Regulation (EU) 2025/2643, Art.76), and DG Defis. The EDA and the EU Military Committee (EUMC) receive aggregated data sets for the analysis of defence-critical scenarios. The mentioned reporting obligations will be integrated as standard clauses in new EDIP grant agreements. For the existing EDIP grant beneficiaries reporting remains voluntary, but gets incentivized by participation in the DRAM priority allocation logic in crisis scenarios, which is explained in mechanism 2. The DRMVP operates under a secure EU RESTRICTED portal. In case EDIP grant beneficiaries do not hold EU RESTRICTED IT-infrastructure, data transmission may be facilitated through a national facility or, as a fallback, directly at the DG Defis. DG Defis will transfer the aggregated incoming data to an EU CONFIDENTIAL system, which is hosted on EDA infrastructure in accordance with EU CONFIDENTIAL standards (Council Decision 2013/488/EU). DG Defis exclusively holds decryption keys, ensuring that EDA operates as a paid technical service provider without access to content.

To prevent exaggerated resource demand by EDIP grant beneficiaries, DG Defis will cross-validate reported demands against customs declarations, funding reports etc. In case of suspected deviations, projects might be requested to provide clarification or correction, final decisions rest with the DSSB as the coordinating body. Projects get evaluated on a random sample basis. Where the EC activates EDIP’s security-related supply crisis mechanism (Regulation (EU) 2025/2643, Art.64), EDIP grant beneficiaries may reevaluate their raw material needs providing an explanation within 72 hours, otherwise the most recent quarterly report is applied. For the EDIP successor negotiations, a statutory reporting obligation for all funding beneficiaries and a standalone DRMVP EU CONFIDENTIAL platform, replacing the joint utilization of existing EDA-infrastructure are recommended targets. An inter-institutional secretariat between DG Defis and the DSSB might further facilitate the operation of this mechanism.

Mechanism 2 – DRAM

The DRAM operates with a graduated set of intervention measures designed to only override market mechanisms in severe forms of market disruptions. Further, classification and prioritization schemes are, as much as possible, developed ahead of crisis-driven urgencies.

Initially, the EDA, EUMC and DSSB, operating under EDIP, will develop a Priority Framework (PF), based on the EDA Capability Development Plan. The PF differentiates between three tiered priorities: immediate operational systems, critical support systems and complementary systems. This structure serves as a crisis prioritization tool. When multiple EDIP grant beneficiaries compete for the same scarce raw material, this allocation system may help to convert trade-offs into rule-based coordination. The PF addresses the horizontal allocation gap within the security-related supply-crisis framework under Article 64 EDIP, which, unlike Article 63(13) for non-defence crisis-relevant products, contains no explicit balancing clause for competing priority requests between EDIP grant beneficiaries. As the EDA, EUMC and DSSB operate under different mandates (Council Decision (CFSP) 2015/1835; Council Decision 2001/79/CFSP; Regulation (EU) 2025/2643, Art. 76) the High Representative could endorse the required institutional collaboration for establishing the PF criteria.

In case a security-related crisis materializes (Regulation (EU) 2025/2643, Art.64) an additional mechanism under the DRAM is activated. Based on the concrete threat situation, the EUMC will assign defence products to the pre-defined PF tiers. This threat-tailored prioritization matrix will be transmitted to the DSSB, where an assignment to the corresponding EDIP grant beneficiary projects can be conducted. To ensure fast actions, a timeframe of 72 hours should be aimed for, given that the EUMC will continuously monitor security threats. Under this scheme, a security-related supply crisis can be coordinated, ensuring that scarce raw materials are prioritized for EU-funded defence projects adjusted to the threat situation. In case the EUMC is unable to make a prioritization, affected EDIP programs will receive equal proportional shares of their reported demand to facilitate project planning.

The proposed scheme is closely oriented towards the existing crisis activation mechanism under EDIP. To implement the DRAM allocation logic as binding procedures, the EC could adopt the technical allocation procedures as implementing acts under the examination procedure, provided the EDIP Regulation confers the relevant implementing power on the Commission (Regulation (EU) No 182/2011, Art. 5), without modifying the existing legislative act. The institutional roles of the EUMC and the High Representative, could be established through an inter-institutional administrative arrangement between the EC, the EUMC Secretariat, the High Representative and the DSSB, which sets clear competences without a legislative procedure.

Priority requests under EDIP (Regulation (EU) 2025/2643, Art. 66) will be directed at EU-based raw material processors who have existing supply relationships to EDIP grant beneficiaries – grounded in the combination of the crisis-relevance (Regulation (EU) 2025/2643, Art.64) and the active EDIP grant relationship as an objective limitation criterion towards other crisis-relevant products.

Political Ecology

The political feasibility of the proposed mechanisms primarily depends on the EC’s readiness to establish the required institutional collaboration between the EDA, EUMC, the High Representative and the DSSB. As the requisite policy design requires no separate legislative act the required coalition remains relatively small, favoring a short implementation timeline. The allocation mechanism is building on the already agreed EDIP logic, operates in a clearly delineated domain of EDIP grant beneficiaries and prioritizes projects only in a narrowly prescribed defence-critical context, which keeps the pool of potential losers limited. The strongest support base probably lies with EDIP grant beneficiaries in the build-up phase for resilient supply contracts. The DRAM in its current form draws exclusively on EU-based raw material processors in its allocation logic, which could be viewed as a contribution to strengthen EU-internal supply chains. Nevertheless, this structure also shows limitations toward third-country dependencies that fall outside this scope. In future, the DRAM could be progressively linked to EU stockpiles that are currently built under frameworks such as RESourceEU (European Commission, 2025) and IMERA (Regulation (EU) 2024/2747), as these mature and expand the available EU-based supply base that the mechanism can draw upon.

Reflection & Outlook

This paper makes an instrumental as well as an conceptual contribution. It frames horizontal raw material allocation between equal EDIP grant beneficiaries as a distinct policy problem that requires dedicated governance solutions. Both mechanisms represent a first operational attempt under real institutional constraints, including voluntary reporting for existing beneficiaries, reliance on EU-based processors, and expert-estimated thresholds are features of these pioneer instruments. That said, their feasibility depends significantly on the EC’s political readiness to introduce priority schemes between EDIP grant beneficiaries as a policy objective. As theoretical drafts, both mechanisms will likely require further adjustment and recalibration once tested against real crisis conditions. Nevertheless, the operational experience gathered under the proposed mechanisms can provide the evidence base to legitimize a fully anchored successor framework under the 2028-2034 Multi-Annual Financial Framework, where interim administrative solutions may evolve into statutory obligations and independent infrastructure.

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