EU excludes US, UK and Türkiye from $163.6B rearmament fund

The European Union has moved to exclude arms companies from the U.S., U.K. and Türkiye from its new €150 billion ($163.6 billion) defense funding initiative, unless their home countries sign defense and security agreements with the bloc according to FT.

The move reflects a growing push for a “Buy European” approach to defense spending, championed by France and other EU members.

New defense fund limits participation from non-EU countries

The planned fund, intended to help EU member states purchase weapons and military equipment, will only be accessible to companies based in the EU and third countries that have formal defense pacts with the EU.

This includes an exclusion of advanced weapons systems that are subject to restrictions by third countries, such as the U.S. Patriot air and missile defense system, which is manufactured by RTX, a U.S. defense contractor.

Such restrictions prevent these systems from being used freely by EU countries, limiting their inclusion in the new funding initiative.

“The fund would not be open to products where third countries control their use or destination,” an EU official explained. “It would be problematic if equipment acquired by EU countries cannot be used because a third country objects.”

Victory for France’s ‘Buy European’ approach

The exclusion of the U.S., U.K., and Türkiye marks a victory for France and other countries advocating for greater EU independence in defense procurement.

Concerns about the reliability of the U.S. as a defense partner, particularly following U.S. President Donald Trump’s tenure, have fueled this shift toward EU-based defense spending.

Under the new rules, at least 65% of the cost of the weapons must be spent within the EU, Norway, or Ukraine, ensuring that the majority of the funding benefits local defense companies.

The move also aims to enhance the EU’s long-term security autonomy, particularly in light of shifting global dynamics. The exclusion will complicate efforts for British, Turkish, and American defense companies that are heavily integrated into European defense supply chains, such as BAE Systems and Babcock International in the U.K.

Implications for UK and Türkiye’s defense sectors

The U.K., which has lobbied extensively to be included in the funding initiative, faces challenges with this exclusion. British defense firms play a crucial role in supplying EU countries, including Italy and Sweden, and their exclusion could hinder future collaboration.

A U.K. defense official commented, “We stand ready to work together on European defense to prevent fragmentation in European defense markets.”

Türkiye, which has similarly sought to be part of the EU’s defense efforts, will also be left out unless it signs a defense and security pact with the EU.

The exclusion is expected to create significant complications for large European defense companies with close ties to the U.K. and Turkish defense industries.

Growing political tensions over defense collaboration

The U.K. and Türkiye’s exclusion could further strain relations between EU countries, particularly those with strong historical defense ties to non-EU producers.

Countries like Germany, Italy, and Sweden have expressed concerns that such exclusions may harm European defense collaboration, especially given their long-standing partnerships with non-EU defense companies.

The EU proposal needs the approval of a majority of member states to proceed.

The new rules allow for the inclusion of defense companies from countries such as Norway, South Korea, Japan, Albania, Moldova, North Macedonia, and Ukraine, as long as the products adhere to the EU’s new guidelines for security and control over their use.