Defense companies from the United States, the United Kingdom, and Turkey will be barred from a new €150 billion EU defense funding initiative unless their countries sign defense and security agreements with Brussels.
According to the Financial Times, the fund, which will allow countries to spend money on weapons, will be open only to EU defense companies and those from third countries that have signed defense agreements with the Union, as outlined in the European Commission’s proposal submitted on Wednesday.
The EU will also exclude any advanced weapons systems over which a third country holds “design rights,” imposes restrictions on their production or use of specific components, or controls their final use.
This would rule out the U.S.-made Patriot air and missile defense platform, manufactured by the defense company RTX, as well as other American weapons systems subject to usage restrictions imposed by Washington.
The fund will be accessible only to defense companies from the EU and third countries with defense agreements in place with the Union.
This policy marks a victory for France and other nations pushing for a “Buy European” approach to the continent’s defense investments, driven by concerns over the reliability of the U.S. as a defense partner and supplier, particularly under Donald Trump.
At least 65% of product costs must be spent within the EU, Norway, and Ukraine. The remainder could be allocated to products from third countries that have signed security pacts.
“We have the opportunity to truly build Europe’s defense industry,” said Kaja Kallas, the EU’s top diplomat, adding that the war in Ukraine has highlighted the importance of equipping forces with weapons free of foreign restrictions. “In critical situations, your armed forces must genuinely have free rein.”
The United Kingdom has been lobbying hard to be included in the initiative, especially given its key role in Europe’s “coalition of the willing,” aimed at bolstering the continent’s defense capabilities. British defense companies, such as BAE Systems and Babcock International, are deeply integrated into the defense industries of EU countries like Italy and Sweden.
If third countries like the U.S., the UK, and Turkey wish to participate in the initiative, they will need to sign a defense and security agreement with the EU.
Negotiations between London and Brussels for such an agreement have begun but have become entangled in demands for a broader EU-UK deal, encompassing contentious issues like fishing rights and migration.
“We are working to secure this defense and security agreement with the United Kingdom,” Kallas said. “I truly hope that by the EU-UK summit in May, we will have results… there is an understanding that we need to do more and do it together.”
Excluding the UK and Turkey would pose significant challenges for major European defense firms with close ties to producers or suppliers in those markets.
When asked on Tuesday about the UK’s stance on the new EU fund’s rules, a British official said: “We are ready to collaborate on European defense for the sake of broader European security, to prevent the fragmentation of European defense markets, and to establish legal frameworks that allow member states to work with third countries.”
The move is expected to raise concerns within the UK’s defense sector. A senior figure in the British defense industry called it “a significant issue,” adding: “We see huge opportunities, and it’s right for the UK to be considered part of Europe. But if the EU, particularly France, approaches this as a transactional relationship, it undermines the entire philosophy of a shared and unified Europe in defense and security.”
Previous French efforts to limit defense spending to EU companies alone have faced strong resistance from countries like Germany, Italy, Sweden, and the Netherlands, which maintain close ties with non-European defense suppliers.
The proposal requires approval from a majority of EU member states.
Under the plan’s terms, EU countries could spend 35% of the loans on products incorporating components from Norway, South Korea, Japan, Albania, Moldova, North Macedonia, and Ukraine, according to officials.
www.telegraph.co.uk
inews.co.uk
www.defensenews.com
www.cfr.org
www.twz.com
www.heritage.org
breakingdefense.com
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www.navalnews.com
www.bbc.co.uk
