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

EU Restricts €150 Billion Defense Fund to Member States and Select Partners

The European Union has proposed a €150 billion defense investment fund, excluding arms companies from the US, UK, and Turkey unless their governments sign formal defense and security agreements with Brussels. The initiative, aimed at strengthening Europe’s defense industry, reflects growing concerns over long-term reliance on non-EU defense suppliers, particularly amid political uncertainty surrounding the United States as a security partner under President Donald Trump.

 

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Key Features of the Defense Fund

Funding Restrictions

• The EU defense fund will be limited to European defense companies or firms from third countries that have signed security agreements with the bloc.
• Weapons systems with third-country design authority or use restrictions will be excluded, preventing reliance on non-EU-controlled technology.

Exclusions & US Weapon Systems Impacted

• The US Patriot air and missile defense system, produced by RTX, will not qualify due to American restrictions on its deployment.
• Other US and non-EU weapons with external usage conditions will also be excluded.

The “Buy European” Policy

• At least 65% of spending must remain within the EU, Norway, and Ukraine.
• The remaining 35% may go to trusted non-EU partners such as South Korea, Japan, Norway, Albania, Moldova, North Macedonia, and Ukraine—but not the US, UK, or Turkey unless they sign an EU security pact.

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Political and Industry Reactions

Victory for France, Concerns for Germany & Italy

• France has long pushed for EU-wide defense autonomy, arguing that Europe must reduce dependence on the US.
• Countries like Germany, Italy, Sweden, and the Netherlands, which have strong defense industry ties with the UK and US, are expected to push back against the exclusion policy.

UK’s Lobbying Efforts & Defense Sector Concerns

• The UK has lobbied heavily to be included, given its leadership in European defense coalitions.
• British companies such as BAE Systems and Babcock International have deep industrial ties with EU defense markets like Italy and Sweden.
• A senior UK defense industry official called the exclusion a “considerable concern”, warning that it undermines European defense cooperation.

UK-EU Defense Talks & Stalled Negotiations

• Talks between London and Brussels on a defense and security partnership have stalled due to broader EU-UK negotiations on migration and fishing rights.
• EU Chief Diplomat Kaja Kallas expressed hope that a formal security agreement could be reached by the May EU-UK summit.

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Strategic and Economic Impact

European Defense Companies Caught in the Crossfire

• The exclusion of the UK and Turkey poses challenges for European defense firms that rely on key US, UK, and Turkish suppliers.
• Some major European defense manufacturers fear the policy will fragment the European defense industry rather than strengthen it.

Potential US and UK Response

• The UK government warned that fragmentation of European defense markets could weaken European security overall.
• Washington has yet to formally respond, but US arms manufacturers could lobby against the policy, given their longstanding role in European security.

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Next Steps: EU Approval Process

Majority Vote Needed

• The proposal requires approval from a majority of EU member states.
• Countries with close ties to US, UK, and Turkish defense firms could push for amendments before the final vote.

Future of European Defense Policy

• If approved, this policy could reshape European defense spending, pushing greater self-sufficiency but risking diplomatic tensions with key allies.

Stay tuned for updates as the EU defense funding battle unfolds!