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In the upcoming weeks, the UK is gearing up to engage in discussions regarding the participation of British companies in military projects supported by EU defence loans. The European Commission is gearing up to issue billions of pounds in loans to EU countries to facilitate joint weapons acquisitions. British officials are eager to finalize an agreement that will enable UK-based firms to partake in contracts financed by these loans, while also imposing restrictions on their involvement and requiring an entry fee for participation.
One of the key initiatives driving this endeavor is the Security Action for Europe (SAFE) scheme, introduced in March, as part of a broader EU effort to bolster military capabilities in the aftermath of Russia’s invasion of Ukraine. Through this scheme, the European Commission aims to borrow up to €150bn to provide long-term loans for collaborative defence projects. Eligible projects will necessitate partnering with another EU nation or countries like Ukraine, Iceland, Liechtenstein, Norway, and Switzerland.
Although the UK is not eligible for these loans, a defense agreement reached with the EU in May laid the groundwork for British defense companies to contribute to projects supported by the scheme. Negotiations have been officially authorized by EU ministers, with a focus on determining the extent of British participation, including contribution limits and the entry fee. Talks are also expected to address the concerns of countries like France, which are wary of non-EU entities benefiting significantly from EU-backed loans.
Defense Secretary John Healey has expressed the UK’s willingness to pay its fair share for access to the scheme and underscored the importance of retaining intellectual property rights. With applications for the loans due by the end of November, Minister for EU relations Nick Thomas-Symonds is eager to have a deal in place to allow British companies to partake in the initial round of bids. As talks progress, the UK government remains optimistic about the potential benefits of collaboration, emphasizing the importance of leveraging unique capabilities and expertise to enhance security and prosperity in Europe. Additionally, Canada is also in discussions to facilitate the involvement of its companies in the scheme
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