KEY POINTS
- France and Germany clash over including non-EU states in defence investment plan.
- Germany supports involving the UK, Norway, Switzerland, and Turkey, while France insists on an EU-only approach.
- The European Commission’s “Rearm Europe” plan allows increased defence spending.
- EU aims to raise nearly €800bn over four years to boost European arms manufacturers.
- The move follows US uncertainty over continued military aid to Ukraine under Donald Trump.
- European arms firms, including Thales, have seen significant gains amid rising defence spending.
- Some EU states worry Washington may push Europe to buy US-made weapons.
BRUSSELS: A proposed €150 billion investment in the European Union’s defence industry has become a new point of contention between France and Germany, with the two countries divided over whether to include non-EU states in the bloc’s military rearmament efforts.
According to The Financial Times, Berlin is advocating for the participation of partners such as the United Kingdom, Norway, Switzerland, and Turkey in the financing scheme.
However, French President Emmanuel Macron opposes the move, insisting that the initiative should remain strictly European Union.
The disagreement has raised concerns among EU diplomats that the plan could stall entirely, particularly amid broader discussions on enhancing the continent’s defence capabilities in the wake of shifting US foreign policy.
EU unveils defence investment plans
The debate over defence spending intensified after European Commission President Ursula von der Leyen announced the “Rearm Europe” plan on 6 March.
Under the proposal, EU states would be permitted to increase military expenditure, even if it meant exceeding the bloc’s strict budget deficit cap of 3% of GDP.
Von der Leyen suggested that the EU could generate “close to” €650 billion over four years, in addition to a €150 billion loan facility for defence investment, bringing the total to €800 billion.
The initiative is expected to boost European arms manufacturers, enabling them to compete more effectively against US defence contractors.
The proposal has gained traction following US President Donald Trump’s reluctance to continue military aid to Ukraine, which has prompted European nations to consider a more self-reliant defence strategy.
European arms industry
Defence companies across Europe have already seen significant gains. Market data indicates that the share price of French arms manufacturer Thales surged by 50% between the onset of the Russia-Ukraine war on 24 February 2022 and the end of 2024.
A major agreement was recently announced in London, where UK Prime Minister Keir Starmer confirmed a €1.9 billion deal to supply 5,000 Lightweight Multi-role Missiles (LMMs) for use against drones and helicopters.
The contract is expected to benefit Thales Belfast, a UK subsidiary of France’s Thales Group.
The growing European military build-up follows concerns that Washington’s shifting stance on Ukraine could leave the continent vulnerable.
The Financial Times reported that, according to the Kiel Institute for the World Economy, EU countries, the UK, and Norway provided €61.94 billion in military aid to Ukraine between February 2022 and the end of 2024, compared to €64.1 billion from the United States.
Europe’s military future
During a recent EU summit in Brussels, Estonian Prime Minister Kristen Michal posed a critical question: whether Europe could sustain its support for Ukraine without US backing.
The response was met with silence, underlining growing anxieties within the bloc.
French President Emmanuel Macron has been particularly vocal about the need for Europe to take greater control of its security. Speaking ahead of the summit, he stated:
“I want to believe the US will stand by our side, but we must be prepared for the alternative. The future of Europe must not be decided in Washington or Moscow.”
Germany, meanwhile, has signalled a shift in its traditionally cautious approach to military expenditure.
The country is expected to relax its borrowing constraints to accommodate higher defence spending, while France has floated the possibility of extending its nuclear deterrent to cover European allies.
Implications for Ukraine
The European Commission’s defence plan remains vague on the extent of military aid it could provide to Ukraine, but von der Leyen has indicated that the initiative would allow investments in Ukraine’s defence industry and procurement of military equipment for Kyiv.
A separate bid to approve a dedicated military aid package for Ukraine remains stalled due to internal EU divisions.
Hungarian Prime Minister Viktor Orbán, who has expressed support for Trump’s stance on Ukraine, has resisted further commitments to Kyiv, complicating negotiations.
Geopolitical landscape
European leaders are grappling with the implications of a potential US realignment under Trump.
Nathalie Tocci, director of the Rome-based Institute of International Affairs and a former EU foreign policy adviser, told The Washington Post, “It’s wise to assume and plan for the worst-case scenario. The worst case is one in which the US is not just disengaged but actively working against European interests.”
The EU’s defence strategy is further complicated by economic pressures. While some member states, particularly those bordering Russia, favour increased military spending, others with weaker public finances may struggle to meet the new financial demands.
Moreover, there are concerns that Washington could pressure Europe to increase military spending while simultaneously encouraging EU states to purchase US-made weapons, rather than strengthening the European defence industry.
