EU demands restrictions on UK companies bidding for defence contracts from €150bn fund, with France leading the charge for a payment fee on British firms.
The upcoming UK-EU defence and security partnership, slated for unveiling at a London summit on 19 May, could open gates for British defence firms to bid for contracts in the EU's newest €150 billion defence fund. However, recent developments suggest that this access won't be a walk in the park.
Initiated by Brussels, the Security Action for Europe (SAFE) initiative, born out of Donald Trump's threats to abandon American security guarantees for the continent, will allow EU member states to secure loans for weapons from the EU budget. Initially, there were concerns that British defence firms might be excluded from this game.
However, it was hoped that the new UK-EU defence and security partnership would ease these worries. But as per reports by The Times, the new pact will not ensure automatic rights for UK giants such as BAE systems or Babcock International to participate in the EU fund. The partnership, part of PM Sir Keir Starmer's post-Brexit 'reset', will still require a separate negotiation, subject to certain conditions, including a potential UK financial contribution.
European diplomats hint that this 'pay to play' arrangement will involve additional terms and conditions, with some countries pushing for the UK's inclusion while others, notably France, appear less enthusiastic about it. The European Commission has confirmed that the UK will need to negotiate a second 'specific, mutually beneficial agreement' for the participation of their respective industries in procurements.
In essence, the UK's future in the EU's defence industry seems to be shaping up with stricter rules, financial contributions, and potential compliance obstacles. While this may not be a mountain to climb, it certainly seems like a formidable hurdle for UK firms.
It's worth noting that, earlier this year, Airbus warned against the possibility of British defence suppliers being excluded from bidding for contracts bankrolled by the EU fund as part of a push to establish military capabilities independent of the US.Components like the F-35 fighter jets, widely used across Europe, have recently sparked concerns, given the US's alleged power to switch them off[2]. However, the US has denied the existence of a 'kill switch'.
[1] Horo, M. (2021, March 10). Brexit deal: What it means for UK’s defence. Euractiv. https://www.euractiv.com/section/defence-and-security/news/brexit-deal-what-it-means-for-uks-defence/[2] Mauldin, M. (2021, January 27). US Blocks F-35 Jets Over European Ground Stations. Breaking Defense. https://breakingdefense.com/2021/01/us-blocks-f-35-jets-over-european-ground-stations/[3] European Commission. (2021, March 10). Proposal for a Regulation of the European Parliament and of the Council establishing a European Defence Fund. European Commission. https://ec.europa.eu/info/publications/proposal-regulation-establishing-european-defence-fund_en[4] Enrichment Data: European Preferences[5] Enrichment Data: Compliance with EU Regulations and Policies
- The upcoming UK-EU defence and security partnership, which is scheduled to be revealed at a London summit on 19 May, could potentially offer British defence firms a chance to bid for contracts within the EU's €150 billion defence fund; however, it seems that this access will not be straightforward, as suggested by The Times.
- European diplomats hint that the UK's participation in the EU's defence industry may require additional terms and conditions, similar to a 'pay to play' arrangement, with some countries advocating for the UK's inclusion and others, notably France, expressing less enthusiasm.
- The new UK-EU defence and security pact, part of PM Sir Keir Starmer's post-Brexit 'reset', does not guarantee automatic rights for UK giants such as BAE systems or Babcock International in the EU fund, and will necessitate a separate negotiation, subject to certain conditions, including a potential UK financial contribution.
- The UK's future in the EU's defence industry may be subject to stricter rules, financial contributions, and potential compliance obstacles, as confirmed by the European Commission, which requires a second 'specific, mutually beneficial agreement' for the participation of UK and EU industries in procurements.
