LDN - Business

EU's executive offers funds for Franco-German defense plans

[June 07, 2017] By Robin Emmott and Gabriela Baczynska

BRUSSELS (Reuters) - The European Union's executive threw its support on Wednesday behind Franco-German plans to integrate Europe's militaries and defense industries, offering money and coordination to build up depleted forces heavily reliant on the United States.

Spurred by Britain's decision to leave the European Union, Brussels has seized on deeper military ties proposed last year by France and Germany to show its citizens the bloc is still relevant and can provide security in the face of Islamist militant attacks and a resurgent Russia.

"Defense and security is one of the fields through which we can re-launch the European Union," EU foreign policy chief Federica Mogherini told a news conferences.

Failings in Europe's bombing campaign in Libya in 2011, when the United States had to step in with refueling planes, and Russia's 2014 annexation of Crimea have reignited EU defense plans that date back to the 1950s but have remained elusive.

Britain had long blocked EU defense integration, fearing a European armed force wearing the same uniforms.

"This is not about creating an EU army," European Commission Vice-President Jyrki Katainen told reporters. "NATO does not have a NATO army," he said, stressing that Western military alliances are formed by national forces working together.

Although the European Union has more than a dozen military missions abroad, the world's biggest trading bloc has never been able to match its economic might with broad defensive power, preferring to rely on the North Atlantic Treaty Organisation.

The EU is not seeking to compete with NATO, Mogherini said.

But U.S. President Donald Trump's sharp criticism of European allies for low defense spending and his refusal to fully back the alliance publicly has added to concerns that without the United States and Britain, the European Union is vulnerable to a host of threats, from cyber to militant attacks.

A year since proposals on an "European Defence Union" from Paris and Berlin, the European Commission said it was willing to provide money from the EU's common budget for the first time for defense research.

The Commission said it would also create a fund to reverse billions of euros in defense cuts to let governments club together to develop and buy new helicopters and planes to lower costs, also opening the door to new drones, cyber warfare systems and other hi-tech gear.

5.5 BLN EURO FUND?

While the amounts of money depend on EU governments' willingness to collaborate, the Commission said it would put forward at least 1.5 billion euros ($1.69 billion) a year from the bloc's budget for the research and purchase of assets.

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European Union foreign policy chief Federica Mogherini arrives for a meeting of European Union defence ministers at the EU Council in Brussels, Belgium May 18, 2017. REUTERS/Eric Vidal

That could generate some 5.5 billion euros a year after 2020 for research and development if enough governments come forward with funds, EU officials said, stressing that national governments would remain the owners of all equipment.

German Defence Minister Ursula von der Leyen welcomed the plan. "It is ambitious and shows how far we have gone over the last 12 months in establishing a defense and security union," she said in a statement, calling for more such steps.

Defense research spending in the EU has fallen by a third, or more than 20 billion euros, since 2006, and while the European Union spends about half as much as the United States on researching and producing weapons, it only has about 15 percent of the assets that Washington can deploy on the battlefield.

EU governments champion national companies, often leading to duplication and wasted funds, according to EU data. In 80 percent of cases, governments award defense contracts to their own firms rather than use European consortiums.

The European Union's defense fund idea, which still needs to be approved by governments and the European Parliament, is part of an emerging network of proposals that EU leaders are set to consider at a summit in Brussels on June 22-23.

The European Union is setting up a military headquarters for training missions abroad. It wants to make it easier to use its EU battlegroups that have never been deployed, and plans to set up a system to better identify weaknesses in equipment.

Paris also wants to set up a system in which coalitions of willing EU countries come together to carry out and pay for military missions together, rather than leaving future peacekeeping operations to bigger countries such as France.

The European Defence Agency, the agency that helps EU governments develop their military capabilities, has also proposed a smaller fund made up of EU states' public money, the so-called Cooperative Financial Mechanism, or CFM.

That would aim to work on smaller, collaborative projects.

($1 = 0.8885 euros)

(Editing by Adrian Croft)

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