UK Hopes of Quick EU Defense Deal Fade on Weapons Fund Access

(Bloomberg) — The UK’s limited access to the European Union’s new €150 billion ($162 billion) weapons fund has raised concern in London that Prime Minister Keir Starmer won’t be able to secure a breakthrough defense pact with Brussels by May. 

While the UK has sought to seal a preliminary security deal at a “reset summit” in London two months from now, talks could become protracted as a result of the EU’s decision this week to initially allow member states and just a few other countries to directly join the armament fund — but not the UK. 

Britain fears that countries led by France now have greater leverage to attempt to link negotiations on the UK’s participation with fraught post-Brexit issues such as fishing and energy, according to British officials, who asked not be named discussing the deliberations.

That’s because the EU has said a defense pact must be agreed in order to fully access the weapons fund. UK officials have long argued that a security deal should be negotiated separately to avoid it being held-up by more contentious issues like fishing rights.

Britain has been hoping to join the fund, which would allow member states to use EU loans to place orders with UK companies, as well as their own, and Chancellor of Exchequer Rachel Reeves discussed the issue with her EU counterpart, Piotr Serafin, in December. Some in the EU have been pushing for the fund to include like-minded European countries outside the bloc, raising the prospects for cooperation with British defense companies such as BAE Systems Plc and Rolls Royce Holdings. 

It’s a diplomatic blow for Starmer who has tried to rebuild the UK’s relationship with its closest trading partner since entering office last year. The re-emergence of long-standing sticking points — and France’s role as Britain’s chief foil — shows the limits of the bonhomie displayed by Starmer and President Emmanuel Macron in their recent efforts to forge a united European position on Ukraine.  

A senior French official said a preference for the European industry was logical given that the fund is set to be guaranteed by the bloc’s own budget. A UK government spokesperson declined to comment. 

The British premier is expected to speak with Macron in the coming days about a resolution that would allow a security pact to be signed and grant the UK full access to the fund, the people said. British officials believe the French president was a driving force behind excluding it from the weapons program. 

Two British officials said the move made little sense with US President Donald Trump throwing the transatlantic alliance into doubt and opening direct talks with Russian counterpart Vladimir Putin over a truce in Ukraine. The May 19 summit, which was intended to highlight Britain’s renewed interest in Europe, risks passing without measurable achievement, they said.

“I’m very pleased that the EU is signaling their intent to spend more on defense,” Starmer told reporters during a visit to a BAE facility in Barrow-in-Furness on Thursday. “We’re continuing to have those discussions with them, because I do think there’s scope for more joint work.”

Some EU officials have discussed with Britain solutions that would allow a defense and security agreement to be prioritized, with fisheries resolved at a later date, people familiar with the matter said. The UK is still optimistic that the security pact will eventually be agreed to, although it’s become less clear when that will happen, a senior British official said.

Currently, Norway and Iceland — which are already members of the EU’s single market — can directly participate in the fund. Other nations including the UK, Canada and Turkey can provide as much as 35% of a defense product. To boost participation beyond that amount would require a partnership accord.

The British prime minister held a call with leaders from the European Union, Iceland, Norway and Turkey on Friday, in which they discussed “the importance of ensuring military equipment outpaced the threats facing Europe,” according to Starmer’s office. 

One European official described the UK’s partial exclusion from the fund as a consequence of its 2016 decision to leave. UK access will be discussed at the May summit, they said. Another complication is that some senior EU officials believe the UK would need to contribute its own money to the fund to gain access. 

“It’s also the question about the UK share, because obviously EU taxpayers money cannot go simply into British companies,” German Ambassador to the UK Miguel Berger told Times Radio on Thursday. “But we can do it like in the research program Horizon, that the UK can become part of the investment and would pay its fair share in these programs.”

–With assistance from Alberto Nardelli.

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