Experts say extra EU tobacco tax should finance health, not defence
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The United Kingdom is eager for its defence giants to snag a share of Europe's rearmament spending splurge, but figuring out a deal is easier pledged than delivered. Despite optimistic signals this spring, negotiations have yet to start with London over it joining the EU's €150 billion Security Action for Europe (SAFE) lending scheme amid Brussels' summer slowdown and political wrangling. With EU capitals racing to submit spending plans by November, time is running out to strike a deal that ensures British firms aren't left watching from the sidelines. A deal allowing UK contractors to join SAFE could be struck within weeks, Foreign Secretary David Lammy said optimistically in May. By the end of July, however, it was clear that the UK would not receive a formal proposal for at least another month – narrowing the window for London to negotiate favourable terms for its companies. The clock is ticking. EU member states must submit their procurement wish lists by 30 November. If London wants British firms to be considered, it must align with that timeline. But that's without accounting for haggling among EU capitals over what kind of deal to offer London. The stumbling block: the agreement must strike a "fair balance", according to the legal text of SAFE, between the UK's contribution – both financial and industrial – to SAFE and what it stands to gain from the programme. What that balance means in practice has been left open to interpretation by both the European Commission and member states, three EU diplomats told Euractiv. Finding a way in Since signing a Security and Defence Partnership with the EU in the spring, the UK has been permitted to participate in SAFE-sponsored procurement deals. UK firms, however, are currently capped at making a maximum of 35% of the total value of any given project. A supplementary agreement would need to define both the precise eligibility criteria for UK firms and their suppliers, and the scale of London's financial contribution to the €150 billion pot – two politically sensitive issues. France, in line with tradition, is pushing to severely limit UK access to SAFE. Paris argues that EU-level defence schemes should primarily benefit companies based within the bloc. Germany and the Netherlands, among others, take a different view. They see buying from UK firms as a 'win-win', one diplomat said. EU countries, they argue, should be allowed to shop in the UK with SAFE loans. Defence contractors such as Rheinmetall have major production facilities set up in the UK. The Commission's method for calculating the UK's financial contribution is expected to be 'complex', another EU source noted. For one reason, there's no template to calculate the bill, an EU Commission official told Euractiv. An internal Commission document seen by Euractiv – in which the Commission pledges to keep countries in the loop during talks – underscores just how much influence member states will wield over the negotiations. Tight timeline, multiple hurdles Placing the Council at the centre of the process gives EU governments the discretion to treat third countries such as the UK, Canada, or Turkey differently, the EU official suggested. As of late July, multiple hurdles remain for the UK, according to the internal Commission document reviewed by Euractiv. The most immediate challenge is securing approval from all 27 EU member states – not just once, but repeatedly. A qualified majority is technically sufficient for the Commission to begin negotiations based on a proposed mandate. But in practice, defence industry files are almost always agreed by consensus, due to their politically sensitive nature. This makes the negotiations slower and more complex. The European Parliament will also weigh in, needing to give its consent to the final agreement before it returns to the Council – where another unanimous vote is likely to be required. (aw, jp)
