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European defence budget to be ring-fenced for EU firms

The European Union (EU) plans to restrict participation in joint-defence projects to companies based in the bloc, setting up potential tensions with the US and post-Brexit Britain over research-and- development contracts.

A proposal due today for a €13bn European Defence Fund will stipulate that, as a general rule, only companies based and controlled in the EU will be eligible to participate, according to an official familiar with the initiative.

At the Oireachtas Finance Committee yesterday, Finance Minister Paschal Donohoe indicated he is not in favour of the boost to common EU defence spending included in the Commission’s proposed budget. Mr Donohoe said Ireland was happy to pay more into the overall budget as one of the EU’s wealthier members, but with a preference for supporting established schemes such as the Common Agricultural Policy, Erasmus student exchange scheme and cohesion funds.

However, the Commission and some big member states favour a military build-up in Europe, wary in particular of the rise of Russia.

The proposed Defence Fund is due to include €4.1bn for research and €8.9bn for equipment development in the period 2021-2027.

Businesses in the EU that are controlled by countries or entities outside the bloc would be eligible for funding only if three conditions are met, a European official said yesterday on the condition of anonymity because the proposal has yet to be announced. The conditions, according to the person, are that:

No risks exist for the supply of materials for the project;

No classified or sensitive information be accessible to the non-EU entity;

The project results, including intellectual property, remain with the beneficiaries in the EU and aren’t subject to outside control or limits.

The planned European Defence Fund is a cornerstone of EU efforts to bolster its military capabilities amid US President Donald Trump’s demands for Europe to spend more on security and the UK’s intention to leave the bloc in March 2019. (Additional reporting: Bloomberg)

Irish Independent

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