Key points
- We must buy more European: Ursula von der Leyen
- Brussels has included some allied countries in its defence programme
- Commission unveils a long-term defence policy proposal
ISLAMABAD: According to defence spending plans released on Wednesday, US arms manufacturers are excluded from the European Union’s large new defence budget to fund EU and allied nations. Also left out — for now — is the United Kingdom.
“We must buy more European. Because that means strengthening the European defence technological and industrial base,” said Commission President Ursula von der Leyen in announcing the Readiness 2030 programme, according to Politico.
To strengthen relationships with allies, Brussels has included countries like South Korea, Japan, and the European Free Trade Association (EFTA) in its defence programme, which could allocate up to €800 billion for defence spending.
We must buy more European. Because that means strengthening the European defence technological and industrial base.” – Commission President Ursula von der Leyen
European Defence Commissioner Andrius Kubilius emphasised the need to address not just Russia as a threat but also broader global geopolitical changes and where the US will focus its strategic attention.
Defence contracts
In recent years, around two-thirds of the EU’s defence contracts have been awarded to US companies.
The Commission unveiled a long-term defence policy proposal, known as a white paper, along with several legislative proposals designed to make it easier for countries to increase military spending and create a more integrated defence market within the EU.
“We’re not doing this to go to war, but to prepare for the worst and defend peace in Europe,” said Kaja Kallas, the EU’s top diplomat.
While the main driver for strengthening the continent’s military-industrial complex is the threat from Russia, changes in US leadership under President Donald Trump have also pressured the EU to act swiftly.
We’re not doing this to go to war, but to prepare for the worst and defend peace in Europe.” – Kaja Kallas, EU’s top diplomat
The danger of relying too much on the US was highlighted by Trump’s sudden decision to undermine allied Ukraine by halting arms deliveries and intelligence-sharing to pressure Kyiv into accepting peace talks with Russia.
Relying on outsiders
Kallas pointed to how Kyiv has been hampered by relying on outsiders. “They use weapons that are not produced in Ukraine [and] sometimes there are limitations on how they can use those weapons … your military needs to really have free hands in this regard,” she said.
The EU strategy underlined that while the United States is “traditionally a strong ally,” it added that Washington “believes it is over-committed in Europe and needs to rebalance, reducing its historical role as a primary security guarantor.”
The most tangible proposal is the Commission’s commitment to lend up to €150 billion to member states for defence spending through the so-called SAFE instrument.
Although the loans will be limited to EU countries, allied nations outside the bloc may also participate in joint weapons procurement.
Joint procurement
Joint procurement under the SAFE proposal is open to Ukraine; EFTA’s Norway, Switzerland, Iceland and Liechtenstein; as well as “acceding countries, candidate countries and potential candidates, as well as third countries with whom the [European] Union has entered into a Security and Defence Partnership.”
By the end of January, the EU had established six defence and security partnerships with Norway, Moldova, South Korea, Japan, Albania, and North Macedonia.
Turkey and Serbia, as EU candidate countries, could also potentially join.
This excludes the US and the UK, although Britain’s status could change. “We are working on establishing a defence and security partnership with the UK and hope to have progress by the May summit,” said Kallas.
Canada’s desire
Canada has also expressed a desire for a closer security relationship with the EU. The Commission also mentioned potential increased defence cooperation with Australia, New Zealand, and India.
“There are many global requests for cooperation with us,” said a senior EU official.
The preferential treatment for European companies aims to satisfy France, one of Europe’s leading arms manufacturers.
In a further effort to restrict non-EU companies, the agreement prohibits foreign countries from accessing classified information.
It also sets a requirement that 65 per cent of the components eligible for funding must be European, which includes Ukraine and Norway.
Joint ventures
The proposed fund will exclude weapons systems where a non-EU country has design authority—meaning control over construction or use—likely covering most joint ventures that produce US military equipment within the EU.
The loans will support joint projects by two or more member states to help build a unified EU defence industry. “We eliminate fragmentation by encouraging member states to collaborate and purchase the same weapons at a better price,” explained an EU official.
To kickstart arms purchases quickly, the Commission will allow EU countries to place individual orders for the first 12 months.
The plans unveiled on Wednesday also enable EU member states to bypass the EU’s strict budget limits. They will be allowed to exceed the public spending cap by up to 1.5 per cent of GDP for a period of four years.
The deadline for loan requests is June 30, 2027, with funds available until the end of 2030. Countries must repay the loans within 45 years.
