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No profits for UK as European Union increases spending on arms to aid Ukraine

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No profits for UK as European Union increases spending on arms to aid Ukraine

According to a leaked proposal revealed by the Guardian, Britain’s defence sector will not be allowed to profit from the EU’s enormous rise in spending on weapons for Ukraine. A “huge order” of ammunition, including 155mm artillery rounds and small weapons rounds, is being readied in Brussels, but only producers from the EU and Norway will be able to benefit.

The main arms producers in Europe, France, Germany, and Italy, stand to gain the most, at the expense of the UK, which is the world’s seventh-largest exporter of weapons. “Essentially, this is a zero-sum game and the proposal will bolster European defence industry at the costs of those outside the union,” a diplomatic source in Brussels said as reported by The Guardian. 

The EU is almost ready to approve its historic decision to jointly purchase weaponry to support Ukraine in its conflict with Russia and restock member stockpiles. As part of “a big and forceful signal to EU industry”, the plan calls for immediately transferring ammunition reserves and “rapidly” delivering fresh joint orders to meet EU and Ukrainian needs.

The paper calls for a “fast-track” agreement with suppliers

Hanno Pevkur, the defence minister of Estonia, said on Monday he believed ministers would reach a “political consensus” on joint procurement when they are scheduled to meet in Stockholm on Wednesday, The Guardian reported. 

The leaked discussion paper that will be presented to ministers claims that member states are initially being urged to offer over their extra stocks of ammunition to Kyiv, with the possibility that Brussels will cover up to 90% of the cost. A seven-year plan that will begin this spring will also push European business to increase manufacturing to fulfil both the needs of Ukraine and the member nations.

The leaked discussion paper that will be presented to ministers claims that member states are initially being urged to offer over their extra stocks of ammunition to Kyiv, with the possibility that Brussels will cover up to 90% of the cost. A seven-year plan that will begin this spring will also push European business to increase manufacturing to fulfil both the needs of Ukraine and the member nations.

The document claims that 25 EU members, including Norway, have expressed interest in taking part. The paper proposes that contracts be finalised “between end-April and end-may” and calls for a “fast-track” agreement with suppliers in the EU and Norway regarding the volume and price of these purchases.

The UK has promised to match the GBP2.3 billion in military aid to Ukraine

There may be problems with the current ability of European business to satisfy the expectations placed upon it, according to the EU policy debate document known as a non-paper. The solution, according to the study, is to develop new industrial strategies that might lead to a “quick ramp-up of manufacturing capabilities,” rather of looking to other large global suppliers like the UK.

For UK businesses, the loss of the European market for its ammunition exports will be a serious setback. The British armaments business has a yearly revenue of roughly GBP25 billion, employs about 133,000 people directly and a comparable number indirectly, according to the defence trade organisation ADS. According to the Stockholm International Peace Research Institute, the US, Russia, France, China, and Germany were the top five countries exporting armaments from 2017 to 2021. 

In 2023, the UK has promised to match the GBP2.3 billion in military aid it has already provided to Ukraine. With a total commitment of GBP3.2 billion, the EU has provided both lethal and non-lethal weapons through the European Peace Fund (EPC). However, the maximum amount the EU can spend through the EPC through 2027 has been increased to EUR5.5 billion.

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