The EU’s ‘buy European’ defence spending plan is protectionist and short-sighted. And it really just means ‘buy French’, writes Eliot Wilson

The message from President Trump that Europe can no longer rely on American military power and must look to its own resources seems finally to be filtering through to the continent’s chancelleries. The European Commission has proposed a €150bn loan mechanism, Security Action for Europe (SAFE); this would be raised on the capital markets and would fund member states’ investment in urgently needed capabilities like drones and missile defence.

It is a substantial sum of money, though Germany is now contemplating an additional €500bn just for its own defence budget after the Bundestag agreed to modify the country’s constitutional “debt brake”. But this is Brussels: not only is the “free lunch” illusory but every bite can have a ripple of consequences.

What is the new EU defence spending plan?

SAFE as currently proposed would only be available to be spent with manufacturers which are wholly within the EU, Norway or Ukraine (65 per cent) and countries which have signed security agreements with the EU (35 per cent).

That stipulation would exclude not only American companies but also those in the UK and Turkey, as well as any weapons systems over which a third-party country had “design authority” or control over their use. That means it could not be spent, for example, on Patriot air and missile defence systems (made by RTX, formerly Raytheon) or any of BAE Systems’ uncrewed air systems.

In fact, 39 of the world’s top 50 defence manufacturers are excluded, but – by purest coincidence, no doubt – the rules place no limitations on products from four French companies (Thales, Naval Group, Safran and Dassault) or on Amsterdam-based KNDS, which is fifty per cent owned by France’s state holding agency, l’Agence des participations de l’État, which also happens to control shares in Thales, Naval Group and Safran.

Anyone surprised that the EU is using this loan mechanism as a protectionist and political device is naive. Brussels has come a long way from the Treaty of Rome which in 1957 sought “​​the progressive abolition of restrictions on international trade”. It now believes in frictionless trade within the EU’s ramparts but a Common Customs Tariff protecting Fortress Europe from without.