France has withdrawn its opposition to non-EU companies accessing EU-funded financial incentives for Europe’s defense industry. This decision aligns with Brussels’ ambition to foster a stronger domestic arms industry that is less dependent on the United States.
French diplomats in Brussels have signaled support for a proposal permitting up to 35% of EU budget-funded incentives to be allocated to defense products from outside the 27-member bloc. This shift in stance was revealed by five individuals familiar with the technical discussions, as reported by the Financial Times (FT) last week.
For nearly a year, Paris resisted the involvement of defense firms from countries such as the United States, Britain, Israel, and Turkey in the EU’s proposed European Defence Investment Plan (EDIP). French officials argued that supporting only European defense firms was critical to the bloc’s pursuit of “strategic autonomy”.
Trump’s arrival prompts a policy shift
This position evolved earlier this month; two officials noted. They explained that it would be challenging for the EU to lobby President-elect Donald Trump to maintain U.S. military support for Europe while simultaneously barring American companies from participating in efforts to bolster the European defense industry.
“Since [the U.S. election], everybody is thinking a little bit smarter,” said one official.
Countries with close ties to the U.K. defense sector, such as Sweden, had opposed France’s earlier stance, citing concerns that it might exclude firms with British shareholders or those reliant on U.K.-sourced components.
The 65/35 proposal and negotiations ahead
The 65/35 proposal, drafted by Hungary (the current holder of the EU presidency) with contributions from France, Germany, Italy, and Spain, has emerged as a potential compromise. Negotiations on the plan will continue in the coming weeks, with possible revisions before its presentation to the European Parliament in early 2025.
The proposal includes a clause barring participation by countries deemed contrary to the bloc’s security interests or the principle of “good relations”. One official described the plan as a “good basis” for a compromise.
Boosting Europe’s defense industry
The European Defence Investment Plan (EDIP), first proposed in February last year, requires approval from all EU capitals and the European Parliament. Its primary goal is to fund joint production and procurement of European-made weapons, addressing critical gaps in the continent’s underfunded arms industry.
Key objectives include increasing the availability and supply of essential defense products, and tackling bottlenecks in critical supply chains, including those tied to Ukrainian manufacturers.
Although only €1.5 billion has been allocated to the initiative under the current EU budget (running until 2027), many member states are advocating for substantial increases in funding.
The EDIP is expected to establish a long-term framework for future EU defense initiatives. This effort reflects the EU’s broader push toward defense self-sufficiency, a trend likely to accelerate under Trump’s presidency. Even before the election, Brussels had been encouraging coordinated defense procurement to enhance interoperability, reduce costs, and respond to rising national defense budgets across member states.