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The UK will be expected to pay a fee to guarantee British companies access to a €150bn EU weapons fund to buy weapons, under plans being discussed by diplomats in Brussels.
The EU and UK are set to sign a broad defence and security pact at a May 19 summit, but a second, more detailed agreement will be required before companies such as BAE Systems can win contracts funded by the Security Action For Europe (Safe) fund, according to diplomats and officials involved in the negotiations.
“The pact is a nonbinding instrument. The more difficult hurdle is going to be a bilateral agreement that would include a financial contribution,” said an EU diplomat.
Safe, proposed by the European Commission to help EU countries increase defence spending in response to Russia’s invasion of Ukraine and fears over the long-term US security commitment to Europe, will issue cheap loans to EU governments to collectively spend on weapons.
The €150bn fund can be used to buy weapons from companies in non-EU countries that have a security pact with the bloc. But the draft terms of the fund require non-EU nations to negotiate additional agreements specifically related to Safe before their defence industries get access.
Thomas Regnier, the commission’s defence spokesperson, said third countries must “negotiate specific, mutually beneficial agreements on the participation of their respective industries in procurements”.
“To get your industry in the game, you need a second agreement. The commission will negotiate that, and will first look at what each country has to offer,” said a second EU diplomat involved in the negotiations, adding that the deal was likely to hinge on market access for particular weapons systems.
“Of course, the French will try to complicate it for the Brits,” they added. “I imagine that there will be some form of [financial] contribution involved.”
A third EU diplomat said: “The actual effective association to the programme requires a specific arrangement. We need to discuss the rules, what contribution and so on.”
A senior commission official confirmed that it would require London to pay, but it was unclear whether it was a small administrative fee or something larger.
All of the EU diplomats and officials said they believed a deal would be done, but said it would take some time and could place some restrictions on which British-made equipment was eligible.
The bilateral agreement must “ensure a fair balance as regards the contributions and benefits of the third country,” according to the draft Safe regulation.
It would also require “an increase in the standardisation of defence systems and a greater interoperability between Member States’ and these other third countries’ capabilities” and stipulate the financial contribution
Other countries that already have defence pacts with the EU, such as South Korea and Japan, will need to do the same for their companies to be eligible.
Arms companies from Ukraine, plus the European Free Trade Association and European Economic Area, including Norway and Switzerland, which pay to participate in the EU single market, get automatic access.
Commission officials expect Safe negotiations between EU member states to be concluded next month, after which it will require approval by the European parliament. There is no guarantee that the entire €150bn will be utilised.
Countries must band together and apply for funding for a concrete project within six months of the fund’s launch and each must be approved by Brussels.
Ursula von der Leyen, commission president, told Prime Minister Sir Keir Starmer at a meeting on Thursday that the defence and security pact “might then pave the way to a joint procurement and UK participation in our Safe programme”, hinting that the pact alone was not sufficient.
Downing Street did not immediately comment.
