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EU divided over defence funding

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Although increasing EU defence production has been on the agenda of EU leaders since the start of the war in Ukraine, the issue has been slow to gain traction.

The most sensitive issue is how to finance further defence investment in the future. EU leaders agreed on Thursday (21 March) to force the European Investment Bank (EIB) to ‘adapt its policy on lending to the defence industry and its current definition of dual-use goods, while maintaining its financing capacity’.

They also made progress on using proceeds from frozen Russian assets to help Ukraine within months, under a plan to use most of the money to buy arms for Kiev.

The European Commission had proposed that 90% of the proceeds from frozen Russian assets be used to finance Ukraine’s defence production and military aid, while the remaining 10% would be given to Kiev as budget support.

European Council President Charles Michel and European Commission President Ursula von der Leyen said the idea of using the proceeds from frozen Russian assets to benefit Ukraine had broad support among EU countries.

Concerns of ‘neutral’ countries

But the use of this money to buy weapons is a problem for some countries, including militarily neutral states such as Austria, Ireland and Malta.

“For us neutrals, it must be ensured that the money we approve is not spent on arms and ammunition,” said Austrian Chancellor Karl Nehammer. Michel said Brussels could find ways to address their concerns.

“Russia must feel the real cost of war and the need for a just peace,” Ukrainian President Volodymyr Zelensky said, urging EU leaders to go further and use the assets themselves, a step the bloc has not yet considered.

Proposal for joint defence borrowing rejected

At the same time, EU leaders disagreed on a broader initiative for European financing of arms for Kiev, such as the ‘Eurobond for defence’ requested by Estonia and France.

Member states such as the Netherlands and Sweden are sceptical about joint borrowing on the financial market for defence purposes.

“The urgency of the issue means we have to consider options we don’t like,” an EU diplomat told Euractiv.

The leaders asked the European Commission to “explore all options for mobilising financing and report back by June”, a choice of words pushed by the Baltic states, Poland and Greece.

Leyen told reporters that the discussion was still at an early stage.

Fear of ‘power grab’

Although there is no coherent plan for new funding, the Commission has recently outlined plans for a European defence strategy.

These include Leyen’s idea of a new defence (industry) commissioner for the next term, more defence funding, an expansion of the bloc’s defence industrial base and the use of frozen Russian assets.

The plan even goes as far as the EU executive being prepared to place arms orders with member states to support joint arms procurement.

But this is where the controversy erupts. Leyen’s plan for a European defence industrial strategy is drawing criticism from some EU countries, including Germany, which supports strengthening the sector but fears the plan involves usurping national competences.

EU diplomats said there was considerable scepticism during Thursday’s summit discussions.

German Chancellor Olaf Scholz told EU leaders that the bloc did not need ‘another state-like structure for defence’ or the creation of new powers that would amount to a power grab, two people familiar with the talks told Euractiv.

While Scholz stressed the need to develop the bloc’s potential for joint procurement, he rejected the idea of the Commission as a mediator that could slow down processes.

“She wants to be a war president but forgets that the EU is not a state,” an EU diplomat said of Leyen, suggesting that critics of her using the defence issue to win a second term were right.

Member states still opposed to investment programme

In recent months, many EU countries have raised concerns about the Commission’s intentions behind the European Defence Investment Programme (EDIP), the bloc’s ambitious framework for strengthening the military-industrial complex.

As the programme will give EU member states and the Commission the power to redirect industrial priorities, finance arms production and give the EU body an overview of production capacities and supply chains, often protected by governments for national security reasons, some measures are considered ‘sensitive’ by member states.

Presenting the text, internal market commissioner Thierry Breton said his organisation was not interested in a ‘power grab’ and rejected a loose interpretation of EU treaties prohibiting the transfer of EU funds to military operations.

To avoid this accusation, the European Commission based its industrial policy proposal on Article 173 of the EU treaty, which allows the bloc to work on industrial competitiveness.

The Commission’s directorate-general in charge of implementing the programme (DEFIS) recently sent envoys to prepare the ground with EU countries to avoid potential problems.

Despite concerns, EU leaders on Thursday instructed their ministers to examine the EDIP text ‘without delay’.

Negotiations on technical details are expected to start in early April, with the European Council due to adopt its position in June, before the new European Parliament convenes in the summer.

MIDDLE EAST

UK adds £75 billion to defence budget

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The UK has pledged to add a further £75 billion to its defence budget over the next six years, taking spending well above the Nato target and putting pressure on its European allies to follow suit.

Prime Minister Rishi Sunak said during a visit to Poland on Tuesday that the new package was ‘the biggest boost to our national defence for a generation’, while his office argued that it ‘sets a new standard for other major European Nato economies to follow’.

The move will enable the UK to spend the equivalent of 2.5 per cent of GDP on defence by the end of the decade.

Speaking at a press conference with NATO chief Jens Stoltenberg, Sunak argued that now was not the time for complacency, saying: “We cannot continue to worry about what price America will pay or what burden America will bear if we are not willing to make sacrifices for our own security.”

The pledge, which Sunak insisted would not require budget cuts or tax rises, would increase Britain’s annual defence spending to £87 billion by 2030-31.

“A game changer for European security”

“If all NATO countries spent at least 2.5 per cent of their GDP on defence, our collective budget would increase by more than £140 billion,” the prime minister’s office said in a statement accompanying Sunak’s announcement.

London said the new package would include an extra £10 billion investment in munitions production over the next decade and radical reforms to Britain’s defence procurement procedures. It will also create a new ‘Defence Innovation Agency’ to boost military research and development.

“Today is a turning point for European security and an important moment for British defence,” said Sunak.

Responding to Sunak’s announcement, Labour’s shadow defence secretary John Healey said his party would “like to see a fully funded plan” to reach 2.5 per cent, but that “the Conservatives have shown time and again that they cannot be trusted on defence and we will be looking closely at the details of their announcement”.

Sunak urges Europeans to spend more

After Warsaw, he travelled to Berlin and met Chancellor Olaf Scholz.

Rishi Sunak told European countries that they must increase their defence spending to ensure that the United States remains committed to NATO in the future.

The prime minister said the continent must take more responsibility for its defence in an environment where Donald Trump is running for a second term in the White House.

Speaking with Scholz in Berlin, Sunak said US presidents have “reasonably” always demanded that Europe spend more on defence.

He argued that European countries could not ask the US to fund the continent’s security unless they were “prepared to sacrifice” themselves.

The Prime Minister noted that it was important for Europe to show that it was taking on more of the burden ‘to keep the United States committed to NATO’.

British helicopters heading to Russian border for NATO exercises

NATO is planning a training exercise in Finland on Friday in an area close to the Russian border.

The UK is taking part in the exercises. A squadron of nine British Army Apache attack helicopters, worth £40 million each, are heading to Finland to take part in what has been described as ‘the biggest Nato exercise since the Cold War’.

After Finland, four Wildcat reconnaissance helicopters and two RAF Chinook support helicopters will travel to Estonia, where they will remain for an extended period.

The exercise in Finland involving Apache attack helicopters is called ‘Arrow’, while the exercise in Estonia involving all three types of helicopter is called ‘Swift Response’.

The exercises are part of Steadfast Defender 24, which tests NATO’s plans to strengthen its defences in Europe against an “imminent enemy”.

The exercises involve 90,000 troops from 32 members of the military alliance, as well as around 20,000 British personnel.

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UN calls for ‘credible and independent’ probe into Gaza mass graves

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Mass graves found in the southern Gaza town of Khan Younis, where the Israeli army withdrew after months of assault and occupation, have once again exposed Israeli brutality. The United Nations has called for a full and independent investigation.

The Israeli army withdrew from Khan Younis on 7 April after four months of ground occupation. With the withdrawal came the discovery of mass graves in the city and the recovery of bodies from the rubble of houses and roadsides. These efforts, led by civil defence teams, were joined by Palestinians trying to find and identify their lost relatives.

The official Palestinian news agency WAFA, quoting health sources in Gaza, reported that search and rescue teams exhumed 190 bodies of men and women of various ages killed by Israeli soldiers from a mass grave in the Nasser Hospital complex.

The United Nations (UN) said the news of the mass graves in Gaza was very disturbing and that a full and independent investigation should be carried out in the areas where the graves were found.

UN spokesman Stephane Dujarric was responding to questions from journalists at the daily press briefing. Asked about the news that mass graves had been found in Nasser Hospital after Shifa Hospital, Dujarric said: “The news is very disturbing. Stressing the need for a full and independent investigation into the areas where the graves were found, Dujarric also said that this clearly shows why a ceasefire is needed.

Dujarric reiterated the need for greater access for humanitarian workers, the protection of hospitals and the release of detainees.

In a written statement, the Egyptian Foreign Ministry said that “it is regrettable and shameful to see such a blatant violation of international law and humanitarian values in the 21st century before the eyes of the whole world, international organisations and the United Nations Security Council (UNSC)”. The statement condemned Israel’s repeated violations of international law and humanitarian law in Gaza and called on the international community to intervene immediately to stop these violations and to launch the necessary investigations to hold those responsible to account.

The statement noted that the killings, destruction and violence in the West Bank in recent weeks are at least as dangerous and reckless as those in Gaza, and that attacks by Jewish settlers against Palestinian civilians and their property under the protection of Israeli soldiers must stop.

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German CDU/CSU push for ban on agricultural imports from Russia

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The Christian Democratic Union (CDU/CSU) parliamentary group in the German Bundestag wants a complete ban on agricultural and food imports from Russia and Belarus in order to “weaken Russia’s fighting power”.

Albert Stegemann, the CDU’s agriculture expert, told dpa that Russia was financing its war against Ukraine with exports from the agricultural and food sector.

“This must be prevented. Higher tariffs on Russian grain are not enough,” Stegemann said.

The CDU/CSU argues that the SPD has been too close to Putin in the past and has not done enough to support Ukraine.

In addition, the CDU, like the centre-right European People’s Party (EPP) in the European Parliament (EP), is focusing its message on supporting the agricultural sector, which is also on the agenda in Germany, especially after the recent EU-wide farmer protests.

However, the European Commission is considering imposing tariffs to reduce Russia’s income from agricultural imports, arguing that these are outside the scope of sanctions. Food and fertilisers have so far been exempted from EU trade restrictions so as not to ‘undermine global food security’.

Meanwhile, on 12 March, a majority of MEPs in the European Parliament called for a total ban on agricultural and food imports from Russia to the EU.

While Stegemann argued that Germany and Europe are not dependent on Russian grain, the CDU motion, which is expected to be debated in the Bundestag on Thursday, calls on the government to prepare the option of an import ban if an agreement cannot be reached at EU level.

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