EU Excludes the US, UK, and Turkey from €150 Billion Arms Fund

Companies in the arms sector from the US, United Kingdom, and Turkey will be excluded from the new €150 billion EU defense funding package unless their home countries sign defense and security agreements with Brussels.

The planned fund, intended for member states to procure weapons, will only be available to companies from the EU and those from third countries that have signed defense agreements with the bloc, according to a proposal from the European Commission presented on Wednesday.

It would also exclude advanced defense systems over which a third country has ‘design authority’ – that is, control over their construction, use of certain components, or final use, the Financial Times reported.

This would, for example, mean the exclusion of the US defense platform for air and missile defense, Patriot, produced by RTX, as well as other US weapon systems that Washington imposes restrictions on regarding their use.

This policy represents a victory for France and other countries that have advocated for a ‘Buy European’ approach within the European Defense Investment Plan, driven by concerns about the long-term reliability of the US as a defense partner and supplier, particularly after experiences with President Donald Trump.

At least 65 percent of the product costs should be spent in the EU, Norway, and Ukraine, while the remaining amount could be used for products from third countries that have signed a security agreement with the Union.

The EU’s chief diplomat, Kaja Kallas, believes this is an opportunity to ‘build a strong European defense industry,’ adding that the war in Ukraine has shown the importance of possessing weapons without foreign restrictions.

– In crisis situations, your military must have free rein – says Kallas.

The United Kingdom is actively lobbying for inclusion in this initiative, particularly due to its key role in the European ‘coalition of the willing,’ which aims to strengthen the continent’s defense capabilities. British defense companies, including BAE Systems and Babcock International, are deeply integrated into the EU’s defense industry, especially in Italy and Sweden.

If third countries like the US, United Kingdom, and Turkey wish to participate in the initiative, they would need to sign a defense-security partnership with the EU.

Huge Potential, but Also Danger

Discussions between London and Brussels about such a pact have already begun, but have stalled due to demands for a broader agreement between the EU and the UK, which would also include controversial issues such as fishing rights and migration.

– We are working towards achieving a defense and security partnership with the United Kingdom. I truly hope that we will achieve concrete results by the (EU-UK) summit in May… there is an understanding that we need to do more and work together – Kallas said.

The exclusion of the United Kingdom and Turkey could create significant problems for European defense companies that have close ties with manufacturers or suppliers from those countries.

We are ready to cooperate on European defense in the interest of broader European security, to prevent the fragmentation of defense markets and create legal frameworks that allow member states to partner with third countries – said a British official to the FT when asked about the UK’s stance on the new EU fund rules.

This move will raise serious concerns in the British defense sector. A senior official in the British defense industry stated that this is a ‘big problem.’

– We see huge potential and it is right that the United Kingdom is considered part of Europe. However, if the EU – and especially France – approaches this transactionally, it undermines the entire philosophy of a common and united Europe in the context of defense and security – he added.

Previous French attempts to limit defense spending exclusively to EU companies have faced strong resistance from countries like Germany, Italy, Sweden, and the Netherlands, which have close ties with manufacturers outside the EU.

The proposal must be approved by a majority of EU member states.

According to the terms of the plan, EU member states could spend 35 percent of loans on products containing components from Norway, South Korea, Japan, Albania, Moldova, North Macedonia, and Ukraine, officials state.