Canada has become the first non-European country to join the European Union’s €150 billion rearmament fund, days after talks about British membership collapsed. What does this tell us about Keir Starmer’s hopes to reset Britain’s relationship with the EU?
Trapped in the logic of Brexit
The European Union’s Security Action for Europe (Safe) initiative is a €150 billion loan facility that allows member-states to borrow money to buy weapons. Because the EU has a AAA credit rating, it borrows at lower interest rates than most member-states so it can offer loans that are cheaper than those available to most governments on the bond markets.
Seventy-eight per cent of European defence procurement spending in 2022 and 2023 was spent on non-European products, mostly from the US, and part of Safe’s purpose is to reduce that dependency and build up Europe’s arms industry. Arms purchased under the scheme must have at least 65 per cent of their components’ cost made in the EU, the European Economic Area (EEA), the European Free Trade Association (EFTA) or Ukraine.
Over the past few months, the EU has been negotiating separately with Britain and Canada about a deal to allow their arms manufacturers to contribute more than 35 per cent of the value of products covered by the scheme. Talks with Britain collapsed last week after the two sides failed to agree on how much the British government should pay to take part.
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Brussels initially wanted between €4 billion and €6.5 billion but London’s opening bid was a derisory €82 million. Although the EU reduced its demand to €2 billion, it was still too much for Britain.
When Canada announced on Monday night that it had reached a deal with the EU, it gave no details of how much it had agreed to pay. But other elements of Ottawa’s messaging highlighted important differences in its approach from London’s.
From the start, prime minister Mark Carney has made clear that Safe’s appeal lies not only in its expansion of the market for Canadian defence companies but in its potential to reduce the country’s dependency on the US. This chimes with the EU’s ambition for greater strategic autonomy from its increasingly unreliable ally in Washington.
Starmer, on the other hand, has framed the initiative almost exclusively in terms of opportunities for British manufacturers. Instead of reducing Britain’s dependency on the US, the prime minister misses no opportunity to burnish his country’s credentials as what British policymakers refer to as “number one spear carrier” for Washington.
This reflects the strategic cul-de-sac Britain has walked into with Brexit, which has left behind it a political landscape in which a government with an overwhelming parliamentary majority must tiptoe around anything that involves a return to pooling sovereignty with Brussels.
Closer co-operation in support of Ukraine on defence and economic sanctions in recent years should not obscure the fact that if Europe is to pursue meaningful strategic autonomy it will, for now, have to be without Britain.
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