This is how non-EU defense companies will be able to obtain European funds
French diplomats in Brussels have given in to a proposal that would allow up to 35% of the cash incentives financed by the European budget to be spent on programs that use at least 65% EU components even if from non-EU companies. All the details
Paris makes a breakthrough in accessing non-EU companies to Brussels' defense funds.
France has abandoned its opposition to the access of non-EU companies to funds from the new European Defense Investment Plan (EDIP). The Financial Times reports it online. According to sources close to the dossier, Paris supports a proposal that would allow up to 35% of the resources allocated from the European budget to be spent on defense products coming from outside the EU as long as the programs use at least 65% European components .
Last February, Brussels proposed the establishment of a new European defense industry program (EDIP) aimed at increasing weapons production and increasing collaboration between producers. To support the Edip, the EU will invest 1.5 billion euros between 2025 and 2027. But to come into force, the Edip must be approved by both the 27 EU capitals and the European Parliament, recalls the FT .
Until now, Paris had opposed allowing defense companies from countries such as the US, UK, Israel and Turkey to participate in EDIP, arguing that the instrument should only promote national companies as part of Europe's "strategic autonomy". .
All the details.
WHAT IS EDIP
From February 2022 to June 2023, EU member states spent more than 100 billion euros on defense acquisitions, almost 80% of which was spent outside the EU, with the United States alone accounting for over 60% was recalled last March by Commission Vice President Margrethe Vestager, underlining that "spending that type of resources outside the bloc is no longer sustainable".
Last March the European Commission therefore presented plans to revive the arms industry of the Old Continent, arguing that Russia's war in Ukraine has shown that member countries should increase joint purchases of weapons and, above all, allocate budgets defense to European companies.
Vestager also acknowledged to journalists that 1.5 billion euros "is not a lot of money when it comes to the defense industry", but said it could still create incentives to convince the EU's 27 national governments – which have responsibility for defense – to work together.
The project is only earmarked for a €1.5 billion fund under the current EU budget until 2027, but many capitals are pushing for it to grow significantly in the future, the FT notes.
THE GOAL
Officials also say its spending rules would likely provide a long-term framework for similar EU defense initiatives.
THE PROPOSAL FOR ACCESS OF NON-EU COMPANIES TO DEFENSE FUNDS
France would change its position this month, officials told the FT , adding that it would be difficult for Brussels to pressure Donald Trump not to reduce American military support for the EU and at the same time keep American companies out of development of a European defense industry. The 65%/35% proposal, drawn up by the rotating Hungarian presidency of the EU, has collected contributions from Italy, France, Germany and Spain, notes the Financial Times.
The latest proposal would allow up to 35% of stimulus money funded by the EU budget to be spent on defense products from outside the bloc.
Politico points out that the Hungarian presidency's proposal suggests that to obtain money from the EU, “the cost of components coming from the Union or associated countries must not be less than 65% of the estimated value of the final product”.
The proposal also includes a clause prohibiting the participation of countries deemed "against" the bloc's security and the principle of "good relations", adds the British financial newspaper.
THE FRENCH BACKFRONT
So Paris has abandoned its opposition to non-EU companies accessing financial incentives financed by the twenty-seven bloc for the European defense industry.
As reported by the FT , the change of pace comes after a year of opposition from Paris to allowing defense companies from countries such as the United States, United Kingdom, Israel and Turkey to participate in the proposed European Defense Investment Plan (EDIP ) of the EU, on the basis that it should promote only domestic companies in the context of a push for European “strategic autonomy”.
Countries such as Sweden which have strong links to the UK defense industry had objected to France's previous position, arguing it could exclude their defense contractors who had British shareholders or relied on British-sourced components, it adds the British newspaper.
THE POSITION OF EUROPEAN COMPANIES
The proposal is in line with what is supported by the majority of European defense contractors, such as MBDA, Saab and Airbus, Politico notes. However, according to the newspaper, French companies including Dassault, Thales and Naval Group wanted the eligibility criteria to include a minimum of 80% EU components.
THE NEXT STEPS
Negotiations will take place in the coming weeks on the initiative which should be presented to the European Parliament at the beginning of 2025. France, according to a senior official quoted by the FT , considers the proposal "a good basis" for a compromise.
As already mentioned, defense funds would only be disbursed once approved by both the Council and the EU Parliament.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/spazio-e-difesa/ecco-come-le-societa-extra-ue-della-difesa-potranno-avere-fondi-europei/ on Fri, 29 Nov 2024 06:49:05 +0000.