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A proposed €150bn injection into the EU’s defence industry has become a new flashpoint in a long-standing battle between France and Germany over the continent’s rearmament drive and whether it should include countries outside the bloc.
Spooked by US President Donald Trump’s threats to end generations of American protection, Europe has pledged to increase defence spending dramatically and scale up their domestic capabilities that have withered since the cold war.
Last week the European Commission proposed to raise €150bn that would be lent to capitals to boost their military production. While the broad idea has received unanimous political backing, the details are still being fleshed out, with heavy lobbying over whether the cash could be spent on arms made outside the bloc.
During an EU summit on Thursday, several leaders including German Chancellor Olaf Scholz said the initiative should be open to like-minded non-EU partners. “It is very important to us that the projects that can be supported with this are open to . . . countries that are not part of the European Union but work closely together, such as Great Britain, Norway, Switzerland or Turkey,” Scholz said.
However French President Emmanuel Macron, who has long supported increasing European autonomy and boosting domestic industrial production, said that “spending should not be for new off-the-shelf kit that is once again non-European”.
For the gaps in Europe’s critical capabilities — including air defence, long-range strikes, intelligence, reconnaissance and targeting — “the method is to identify the best businessmen and businesses we have”, he added.
He also said each EU member state would be asked to “re-examine orders to see if European orders could be prioritised”.
Brussels diplomats are concerned that the €150bn initiative will get derailed by the same argument that has delayed agreement for more than a year on the European Defence Industry Programme, a €1.5bn fund disbursing grants for defence. Efforts to implement it ground to a halt this winter after Paris demanded a cap on what proportion could be spent on extra-EU components and a ban on products with IP protection from third countries.
Senior commission officials tasked with drafting the detailed proposal in the next 10 days have been urged to liaise closely with Paris, Berlin and other capitals to make sure it is not blocked when put forward for approval by member states.
“There’s a lot of work that needs to be done on this. It didn’t exist a week ago and needs to be ready in less than two weeks,” said an EU official. “There will be compromises made.”
Commission president Ursula von der Leyen said the loans, which will target seven key capabilities including air and missile defence, artillery and drones, will “help member states to pool demand and to buy together,” and also to provide “immediate military equipment for Ukraine”.
The Polish government, which currently holds the rotating presidency of the EU and is tasked with chairing the bloc’s ministerial meetings, will be under pressure to work out a rapid agreement. The initiative can be approved by a majority of the EU’s 27 states, but French buy-in is seen as essential even if the country can be outvoted — as the EDIF precedent shows.
“We’re at a stage where this just needs to be sorted in the name of speed, not perfection,” said an EU diplomat involved in the negotiations. “But if there was reluctance to ram €1.5bn past French objections, how are we expected to do €150bn?”
The commission declined to comment.
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