Author: Nicholas Watt
*This article was written in a personal capacity and does not necessarily reflect ED policy
The November edition of Commentary (edition no. 2) focussed on the importance of the UK and our EU neighbours securing a good relationship in the light of a new Westminster government. Events have moved on, but it might be opportune to re-visit this subject, owing to the way matters are developing.
The idea of European Strategic Autonomy has been further underlined by the recent actions of the US government. The Draghi paper of September 2024 looks to be a prescient piece of analysis, the recent promulgation of the European Commission’s ‘White book’ on the future of European defence industry provides policy makers with a framework to develop some of the Draghi reports ideas.
Despite the efforts of the UK’s prime minister to gather a coalition of the willing to support any cease fire in Ukraine, it seems that his reward is to be cold shouldered by our European partners. Perhaps this was to be expected, but it is disappointing never the less. There are two elements to the recent European proposal, and it may yet be possible for the UK to persuade our European partners on the merits of allowing the UK to participate more fully.
ReArm Europe
The joint white paper was published on the 19 th of March, under the rubric of Readiness 2030. It borrows a lot of the arguments advanced in the earlier Draghi Report on EU competitiveness. This paper is a discussion document, not the finished product. In the politics of the EU, the European Commission publishes papers which are then discussed by the Member States, prior to their adoption and subsequent enactment.
Amidst the language of the White Paper for European Defence – the white book, is reference to the closer involvement of Ukraine for the purposes of EU instruments. As presently proposed, Ukraine will not be eligible for any SAFE loans, but would be eligible to participate in some other EU funded measures.
SAFE
As part of the announcement on the 19th March the European Commission brought forward a proposal for a new financial instrument – the Security Action for Europe (SAFE) loan plan. This proposed instrument is based on the European Commission issuing up to EUR 150 billion of loans, until the end of the decade to help EU states increase expenditure on common defence procurement.
It is part of a broader package that includes exempting defense spending from EU budget limits, and channeling private funding toward the defense industry. The EC outlines its ambitions as:
“The pillars of the ReArm Europe Plan/Readiness 2030 are designed to utilise all immediately available levers to mobilise up to €800 billion for defence investments, structured around the following:
- Unleash the use of public funding in defence at national level
- A new dedicated instrument for Security Action for Europe – SAFE – to carry out urgent and massive defence investment through common procurement
- Leveraging on the EIB Group and mobilising private capital by accelerating the Savings and Investments Union”
A lot of the language of these proposals relates to EU funding mechanisms, and internal market barriers to transfers of equipment between EU Member States. The EC is acting as an ‘enabler’ with ultimate spending decisions remaining with Member States who have the competency to deal with matters of national defence.
Context
On the 6 th March the European Council conclusions devoted themselves to the matter of European defence. Beginning with a reminder of the Versailles Declaration of March 2022, which outlined the EU’s proposed response to the Russian invasion of Ukraine; fast forward to the present and we see the results of this activity in the Defence White book and the SAFE package.
In September 2024, the EC published the Draghi report on European competitiveness, much of which was concerned with making Europe less reliant on imported defence equipment, most of which comes from the US. This report helps to shape the politics of the recent announcements. The ambition is understandable; to respond to Russian aggression, to answer the calls from the Trump administration about European fee riders. Also to enable European defence contractors to respond to the new demands for increased defence expenditure without distorting national defence budgets.
Capability gaps
The white paper identifies the following capability gaps:
- Air and missile defence:
- Artillery systems:
- Ammunition and missiles:
- Drones and counter-drone systems:
- Military Mobility:
- AI, Quantum, Cyber & Electronic Warfare:
- Strategic enablers and critical infrastructure protection:
The white book’s reference to the UK repays some study:
“The United Kingdom is an essential European ally with which cooperation on security and defence should be enhanced in mutual interest, starting with a potential Security and Defence partnership. Building on the set of solid agreements in place, bilateral security and defence cooperation can expand, ranging from external crisis management to defence industrial policies.”
This would appear to leave the door open to co-operation in the near future, if the EU & the UK can agree on the rights terms for the UK to participate in future European defence projects. Concerning the eligibility of UK based companies to participate in projects funded by the SAFE arrangement the language currently states that;
“The cost of components originating in the Union, in EEA EFTA States or Ukraine shall not be lower than 65 % of the estimated cost of the end product. No component shall be sourced from another third country that contravenes the security and defence interests of the Union or its Member States.” [Article 16.8]
Furthermore:
“The Union may conclude bilateral or multilateral agreements with like-minded countries, namely acceding countries, candidate countries other than Ukraine and potential candidates, and other third countries with whom the Union has entered a Security and Defence Partnership…. in order to open the eligibility conditions referred to in Article 16 to the possibility to fulfil the criterion of location, origin or place of establishment to those countries and their territories, in accordance with paragraphs 2 and 3, whenever these countries participate in a common procurement under the SAFE instrument.” [Article 17.1]
Comment
Politics is the art of the possible. It ought to be possible for the EU and the UK to find enough common ground to conclude a security and defence agreement in the near future. The urgency of the situation requires both engagement at the highest level, as well as a measure of statesmanship from prime ministers and presidents.
In the first instance, any agreement should focus on joint efforts to address the capability gaps identified by the white book. This will demonstrate the UK’s ability to ‘add value’. At present it would seem that 35% of the value of eligible projects to be funded by the SAFE instrument can come from non EU sources, including the UK. This could be enhanced if agreement can be reached.
Reports that the French government wish to use this programme as a bargaining chip to secure concessions from the UK government on access to UK fishing grounds sound plausible. It must be hoped that wise heads will prevail, and that the UK government will remind its EU partners of the seriousness of the matter in hand. Good fences may make for good neighbours, but there is no need to build a fence that is too high.