France faces pushback from 12 EU states over defence industry rules

Twelve EU countries are pushing to keep the bloc’s future defence programmes open to military allies outside the European Union, challenging France’s call for strict European preference rules in the next EU budget.

A non-paper signed by Germany, Austria, Denmark, Estonia, Finland, Italy, Latvia, the Netherlands, Portugal, Romania, Sweden and Slovenia opposes the French position on the European Competitiveness Fund (ECF), a key component of the EU’s proposed 2028-2034 budget.

“Openness for participation of third countries is a very important signal to our allies and partners outside the EU,” the paper, seen by Euractiv, said.

EU member states are facing difficult negotiations over the bloc’s next long-term budget, with competitiveness, defence and security among its main priorities. Third countries are defined as states outside the EU.

“We must cooperate closely to ensure our defence readiness, specifically the interoperability and standardisation of our military equipment,” the 12 countries said.

The paper also argued that cooperation with third countries could increase the impact of EU funding through larger budgets, economies of scale, greater efficiency, stronger supply-chain resilience and innovation. It said flexibility was necessary given the changing security environment.

The signatories further said the EU “should retain the automatic participation of EEA countries and Ukraine in the defence industry section without an association agreement”.

The European Commission has proposed a nearly €2 trillion budget for 2028-2034, including more than €409 billion for the European Competitiveness Fund, of which €175 billion would come from the Horizon research and innovation programme. The EU executive has also proposed €130 billion for defence and space, although the precise allocation remains unclear.

However, the ECF is unlikely to remain at the proposed level. An earlier draft had already envisaged cuts of about 4% compared with the Commission’s initial blueprint.

France, meanwhile, regards strict European preference rules as a core objective of the future budget.

“As for European funds, they must be used to reduce our dependencies by investing jointly to support our innovation ecosystems and our defence and space sectors,” French EU Affairs Minister Benjamin Haddad said earlier this summer.

“The eligibility criteria for SAFE [Security Action for Europe] and EDIP [European Defence Industry Programme] … set a good precedent for the European Competitiveness Fund,” he added.

EDIP is worth €1.5 billion, while SAFE is a €150 billion instrument. Both require at least two-thirds European components and protect the design authority.

One diplomat critical of France’s position said that “Paris is isolated”.

“France simply cannot afford to stall European defence investments,” the diplomat said. “We must not lose sight of the broader geopolitical landscape. We should be strengthening our strategic defence ties with key partners like Canada or the UK, not compromising them for the sake of domestic industrial interests.”

Another diplomat defended the French position, arguing that European preference is the added value of the ECF because it involves EU funds.

“EDIP is supposed to be the precedent. Every country has decided to increase their national defence budget to meet the NATO spending targets, they can use that money the way they want. Here it’s about EU money.”

By Tamilla Hasanova