Ian Bond and Luigi Scazzieri, Centre for European Reform – Written Evidence (RUI0005)

1. How would you assess the EU’s overall foreign and security policy response to the Russian invasion of Ukraine?

a. To what extent does the EU’s response represent a departure from its previous approach to foreign and security policy? Is this likely to be a durable shift?

A few days after Russia’s invasion of Ukraine, the EU’s High Representative for foreign and security policy, Josep Borrell, hailed the EU’s response to the conflict as a ‘geopolitical awakening.’ The EU’s unity during the war has been remarkable, particularly when it comes to sanctions. While agreeing on sanctions packages has sometimes been a lengthy process and the end result has not always been as tough as the most hawkish member-states wished, ultimately the EU has adopted and maintained a sweeping set of sanctions on Russia, including on Russian hydrocarbon revenues.

At the same time, the EU has broken several taboos in the course of its response to Russia’s aggression. Notably, the EU has provided extensive military assistance to a country at war, providing Ukraine with billions in aid through the European Peace Facility. The Facility, which has grown in size from 5.7 billion in 2021 to a ceiling of 12 billion in June 2023, has been used to reimburse EU states for their weapons donations to Ukraine and to jointly procure 1 million ammunition rounds for Ukraine.

The war has also prompted the European Commission to further deepen its involvement in the defence industrial field, including by becoming more closely involved in the procurement of military equipment. The EU has adopted several measures which are designed to assist defence firms in ramping up defence production and to push member-states to jointly procure military equipment. Specifically, in June 2023 the Council and the Parliament reached a preliminary agreement on the European Defence Industry Reinforcement through Common Procurement Act (EDIRPA), a 300 million tool that is meant to incentivise member-states to jointly procure urgently needed military equipment. In early October the Council gave its approval to EDIRPA. In July 2023, the EU formally adopted the Act in Support of Ammunition Production (ASAP), a 500 million tool through which the Commission will support firms in expanding ammunition production capacity.

The degree to which these developments represent a durable shift in the EU’s approach to foreign policy is not fully clear. Though the EU’s defence industrial tools are small for now, it seems likely that they will grow and that funding from the EU budget will play an increasingly significant role in supporting defence industrial production in the EU. And the expansion of the European Peace Facility means that the Union will have greater ability to support partners across the world with military assistance.

However, it is too early to assume that the EU will respond as robustly to other conflicts as it has to Russia’s invasion of Ukraine. Despite plans to move away from unanimity in foreign policy, the EU’s decision-making mechanisms have not yet changed and there is no guarantee they will. As a result, the Union’s willingness to impose sanctions on adversaries or to support partners in need will continue to depend on the circumstantial alignment of member-states' interests. Notably, the European consensus that has been on display in the case of Russia’s war on Ukraine may not be so evident in the case of a conflict in which the United States does not take as strong a position. The EU’s response to the conflict may not have been as robust if the US not set the broad framework within which the EU’s response unfolded. Moreover, future conflicts – for example in the Middle East or the Sahel – might also have a lower degree of moral clarity than the Ukraine conflict, leaving member-states divided on how best to respond.

b. How would you assess the overall state of cooperation between the EU, UK and other partners in relation to Ukraine? Is there a need for cooperation between the EU and the UK to be increased further? If so, in what way?

So far, there has been good co-operation between the EU and its partners, including the UK, on many aspects of support for Ukraine. The EU as an institution takes part in meetings of the Ukraine Defence Contact Group – the so-called Ramstein Group, which co-ordinates military aid to Ukraine – alongside all the member-states and many other countries, including the UK.

The EU has also been actively involved, along with the UK and others, in efforts to support Ukraine’s recovery. European Commission President Ursula von der Leyen attended the Ukraine Recovery Conference in London in June 2023, and Executive Vice President of the Commission Valdis Dombrovskis, who also took part, signed agreements with the European Investment Bank, European Bank for Reconstruction and Development and International Finance Corporation worth over €800 million to mobilise private investment for the recovery and reconstruction of Ukraine's economy. The Commission, with the US and Ukraine, is a co-chair of the Multi-Agency Donor Co-ordination Platform for Ukraine, in which the UK takes part (along with other G7 countries).

The EU, UK and US have been instrumental in co-ordinating Western sanctions implementation since the war began, including through participation in meetings of sanctions co-ordinators from a wide range of like-minded countries inside and outside the EU. The EU sanctions envoy, David O’Sullivan, has paid joint visits with his UK and US counterparts to various countries of concern including the United Arab Emirates and Georgia.

On the whole, current informal co-operation mechanisms are working, though more institutionalisation would give them a firmer basis in the event of an international crisis in which UK and EU views were not as aligned as they are in relation to Ukraine. One small step forward would be an agreement with the European External Action Service on mutual secondments of staff – something which all the UK’s Five Eyes partners, for example, already have.

The one area in which lack of formal EU-UK structures could have a significant negative impact is in relation to defence industrial co-operation, as explained in the next section.

c. What implications, if any, does the EU’s response to the Russian invasion of Ukraine have for the UK-EU relationship in foreign, defence and security policy?

The EU's response to the Russian invasion of Ukraine makes the Union a more capable ally for the UK, especially in terms of providing support for partners like Ukraine. The EU’s deepening involvement in the defence industrial field also has implications for the UK-EU relationship. EU funding under ASAP will strengthen the ammunition production capacity of EU member-states and the incentives on offer in EDIRPA will probably lead member-states to procure more military equipment jointly, generating economies of scale and increasing the efficiency of European defence expenditure. That would strengthen the European pillar of NATO and benefit European security more broadly.

However, EU funding and EU programmes in the defence industrial field are not open to significant participation by non-associated third countries like the UK. ASAP funding only benefits firms located in the EU, and EDIRPA funding comes with strict conditions on buying equipment from outside of the EU. Specifically, equipment must in principle come from companies and contractors in the EU or associated countries such as Norway and must not be sourced from firms controlled by other countries. With a few exceptions, components from outside the EU cannot have any third country restrictions on their use and cannot make up more than 35% of the total value of the equipment.

These strict conditions on non-associated third country participation in EDIRPA and ASAP closely mirror the conditions of the pre-existing European Defence Fund, which is aimed at fostering greater joint research and development, and of Permanent Structured Co-operation capability development projects. Future planned EU defence industrial initiatives such as the European Defence Investment Programme (EDIP), designed to be a long-term successor to EDIRPA, are likely to follow the same logic when it comes to third country involvement. As explained in the answer to question 3 below, that poses a risk for the UK and for British defence firms, who may over time find themselves excluded from defence procurement in the EU. It may also be a cause of friction in the UK-EU relationship.

 

2. How would you assess coordination and cooperation between the EU, the UK and other partners on the imposition, implementation and enforcement of sanctions against Russia, Belarus and individuals from those countries since the Russian invasion of Ukraine?

  a. Witnesses to the Committee’s previous inquiry into the future UK-EU relationship raised some concerns about the effectiveness and enforcement of the sanctions that have been imposed. Do you agree with this? If so, how should this be addressed by the EU, UK, US and other partners?

Sanctions lists can never be comprehensive. It is inevitable that Russia (and Belarus) will look for ways to circumvent them, and that some in the West will assist them. Sanctions can still be effective, however, if they disrupt economic activity in the target country and increase the costs of doing business with it. Sanctions listings therefore need to be kept under constant review, with more individuals and entities added when necessary. Western firms, regardless of whether they are based in the UK, EU or elsewhere, need to face administrative or even criminal consequences if they are negligently or deliberately exporting sensitive goods to suspect purchasers. The EU has already issued guidance to companies on implementing enhanced due diligence to prevent sanctions circumvention. International co-operation can help in sharing intelligence (whether classified or open-source). This could be about entities or individuals involved in sanctions violations, or about items turning up either in Russian weapons or military industrial enterprises. For example, recent open-source research has identified German and American machine tools, apparently supplied in the recent past, in Russian missile manufacturing plants. Where entities or individuals in ‘friendly’ countries seem to be involved, co-ordinated approaches to the local authorities from the UK and its partners could be useful in ensuring that deliveries are disrupted and law enforcement action is taken. As noted above, the UK, US and EU sanctions envoys have already made some visits to countries of concern.

One fundamental question for the EU and the UK is whether to drop their longstanding opposition to secondary sanctions – that is, sanctions against third countries for undermining the sanctions that the West has imposed. The US has always seen secondary sanctions as a legitimate tool, something which caused serious arguments even between Margaret Thatcher and Ronald Reagan, when the US put pressure on the UK to block the export of equipment for Soviet gas pipelines, in line with US sanctions imposed after the declaration of martial law in Poland in 1981. Trade statistics show that there have been significant increases in Western exports to countries like Kazakhstan and Kyrgyzstan of items with potentially military uses; and investigations have shown that these items are then being re-exported to Russia and have turned up on the battlefield in Ukraine. There is a case for the EU and UK to consider adopting something more like the US approach, particularly in cases where co-ordinated lobbying has not resulted in countries tightening up their export control processes, or where they seem to be actively helping Russia establish illicit supply chains.

 

b. Is there a need for greater coordination and cooperation between the EU and the UK on sanctions? If so, in what ways should this be developed?

So far, the existing level of co-ordination seems to be working well. But since the UK is no longer at the table in the EU, it is harder for it to ensure that its interests are reflected in sanctions packages, or to lobby for particular measures to be taken. If there were regular and structured foreign policy consultations between the EU and the UK, it might be easier for the UK to influence EU thinking.

c. Are there any lessons to be learned for future coordination between the EU and UK on sanctions policy in respect of other states?

 

The most important aspects of effective sanctions co-ordination are:

-          information-sharing – both in advance of sanctions designations, and subsequently as part of the implementation and enforcement process

-          to the maximum extent possible, common lists of sanctioned entities and individuals

-          joint efforts to enforce sanctions and prevent circumvention.

All of these things seem to have worked fairly well on this occasion.

More problems might arise if UK and EU objectives were not as well aligned as they have been in relation to Russia’s attack on Ukraine; or if, for example, the EU and UK did not agree on whether the criteria for lifting sanctions had been met. It would be easier to work round problems of this sort if the UK and EU had a stable foreign and security policy relationship based on mutual trust – which has not always been the case in recent years. Therefore, the main lesson is to lay down the foundations for such a relationship now, and then nurture it until the next crisis.

3. What implications, if any, do developments in the EU’s defence policy and approach to resilience since the Russian invasion of Ukraine have for the UK?

a. Is there a need for greater coordination and cooperation between the EU and the UK on defence policy? If so, what sorts of cooperation should be prioritised?

There is scope for greater UK-EU co-operation in several policy areas. Potential avenues for closer co-operation in defence industrial matters are assessed in answer B below. In terms of support for partners like Ukraine, the UK and EU would both benefit from consulting more closely to ensure that their efforts are as aligned as possible, especially when it comes to efforts to support good governance and economic reconstruction in Ukraine. The degree of co-operation will depend on UK and EU interests on a case-by-case basis. The precondition for deeper co-operation is a formal UK-EU co-operation agreement that would set a floor for frequency and level of dialogue and allow diplomats to build valuable personal contacts.

b. What implications, if any, do EU initiatives to increase its weapons production capacity have for UK defence procurement? Should the UK engage with these initiatives? If so, in what ways?

The tools that the EU has developed in the defence industrial field since Russia’s invasion of Ukraine place strict conditions on the involvement of non-associated third countries such as the UK.

In the case of the May 2023 1 billion joint ammunition procurement for Ukraine funded by the European Peace Facility, participation is only open to entities in the EU or Norway, and carrying out production in the EU or Norway. Non-EU components are allowed and supply chains can involve entities based in, or producing outside of, the EU and Norway. However, final assembly of the products has to take place in the EU or Norway.

In the case of ASAP, funding can only go towards increasing the production of entities in the EU or in associated third countries in the EEA (mainly Norway). Subsidiaries of UK companies based in the EU or in associated countries are eligible only if there are safeguards relating to the parent company’s ability to impose any restrictions or to extract classified information from the subsidiary.

The conditions to obtain funds from EDIRPA are very similar: equipment bought with EU funding needs to come from firms located in the EU or associated countries and not controlled by third countries. Subsidiaries would be eligible for funding under the condition that their equipment is not subject to third party restrictions. Production will have to take place in the EU or associated third countries, unless that is not feasible. Finally, there is a 35% cap on non-EU components and these should not be subject to third party restrictions on use. However, this rule may be waived in case of “urgent and critical defence products” as long as these were already used by member-states before February 2022 and if those member-states commit to look into phasing them out.

These conditions on the involvement of third countries and third country entities in EU-funded initiatives are premised on the notion that EU taxpayer funding should benefit EU firms. They largely mirror the conditions for third country participation in other EU defence programmes, in particular the European Defence Fund. The involvement of UK entities is difficult, not only because they are ineligible for funding, but also because the EU’s conditions on access to intellectual property and the lack of third-party restrictions makes participation impractical and unappealing to UK firms – at least until it is clear how strictly the EU will interpret its rules in practice.

The UK’s de facto exclusion from the emerging EU defence industrial ecosystem poses risks for the UK and British defence firms. The money on offer is a significant inducement for European firms to work more with each other in research, development and procurement, excluding outsiders. That creates a risk that over time EU initiatives will gain momentum, disrupting existing co-operation between the UK and its European partners and excluding British firms from the European market.

The UK should explore closer association with the EU’s defence tools to minimise the risk of exclusion and allow its firms to be more closely involved. It is unrealistic for the UK to be associated with ASAP and any successors that are aimed at ramping up industrial capacity within the EU’s borders. However, there may be room for the rules on subsidiaries to be eased. The UK could also try to become involved in future joint procurements on the model of that funded through the European Peace Facility. Closer UK involvement in the European Defence Fund, EDIRPA or EDIP is also a possibility.

Greater UK involvement in EU defence tools is unlikely unless the UK first concludes a broader security co-operation agreement with the EU. Another relatively low-hanging fruit would be a UK administrative arrangement with the European Defence Agency (EDA), perhaps on the model of that recently concluded by the United States. That would build trust and pave the way for UK involvement in EU initiatives in which the EDA is involved. British participation in capability projects within the framework of the EU’s Permanent Structured Co-operation, such as the Twister missile programme, would allow the UK to show willingness to engage with EU initiatives and explore the way the EU interprets the rules on third party involvement in its defence initiatives. However, if the UK wants to benefit financially from EU initiatives and unlock something akin to associated status, Britain will have to make a financial contribution to the EU’s tools.

 

c. The communiqué issued following the NATO Heads of State and Government summit in July 2023 stated that for “the strategic partnership between NATO and the EU, non-EU Allies’ fullest involvement in EU defence efforts is essential” and looked forward to “mutual steps, representing tangible progress, in this area to support a strengthened strategic partnership”. As a non-EU Member of NATO what steps, if any, should the UK take to give effect to this?

The language in the communique should be seen as aspirational, as the debate on third country involvement in EU defence tools has been settled for the time being. The EU’s tools are as open to third country participation as the current consensus between member-states allows. The UK can do little to change the EU’s current rules unless it changes its own position in relation to EU defence initiatives. As set out above, this could involve in the first instance signalling a willingness to be more deeply involved by striking a foreign policy agreement with the EU and concluding an administrative arrangement with the EDA. At a later date, the UK may want to consider making a financial contribution to EU tools to unlock greater access.

4. What do you anticipate as being the respective roles of the EU, the individual EU Member States and the UK in the post-war reconstruction of Ukraine?

a. To what extent should the EU, the individual EU Member States and the UK coordinate their policies in relation to reconstruction? Will this require new cooperation mechanisms to be developed?

There is already co-ordination, as evidenced by the Ukraine Recovery Conference in London, which was the latest in a series, and the UK’s participation in the Multi-Agency Donor Co-ordination Platform for Ukraine. There will be a need for in-country co-ordination between donors as recovery programmes get underway – including monitoring the use of funds to ensure that they are being used for the intended purposes. Ukraine is certainly making efforts to strengthen its institutions to combat corruption, and there is a well-organised group of civil society organisations also dedicated to improving Ukraine’s record on good governance. But large-scale in-flows of funds for reconstruction will be an attractive target for less well-intentioned actors. Given the role that lax regulation in the UK and its overseas territories has played in facilitating money-laundering from the former Soviet Union over the last few decades, the UK should work closely with the EU and other international donors to ensure that money intended for projects in Ukraine does not end up here. In that context, the government’s plans for reforms of limited partnerships and Scottish limited partnerships and of the operations of Companies House will need close scrutiny, to ensure that they increase the barriers to criminal activity.

 

b. As a non-member of the EU, what approach should the UK take to Ukraine’s candidacy for EU membership? What implications does this have for the wider reconstruction process?

The UK should support Ukraine’s bid for EU membership, as it is the most promising way to stabilise Ukraine during and after the conflict, ensuring good governance and economic reforms. However, the UK should be nuanced in how it does this. As an outsider, the UK can do little to influence EU member-states' internal calculations on enlargement, and trying to do so may be seen by some EU countries as attempted UK interference in internal Union matters. Instead, the UK should focus on supporting Ukraine’s integration in the EU through bilateral initiatives that seek to promote economic reform and good governance in Ukraine.

5. Some experts have identified a more “geopolitical” EU that is more assertive in its role as a foreign policy and security actor following the Russian invasion of Ukraine. Do you agree with this assessment? If so, what implications does it have for the UK?

a. In what specific ways has the Russian invasion of Ukraine changed the EU’s wider approach to external affairs?

The Russian invasion has had three key effects on the EU’s approach to external affairs. First, it has led the EU to break taboos, in terms of providing lethal support to a country at war through the European Peace Facility, which has grown. The very fact that the Peace Facility is a tested tool and is sizeable should make the EU more willing to provide support to other countries in the future.

Second, the war has prompted greater efforts in the direction of joint procurement of military equipment, both through joint orders funded via the European Peace Facility and through deepening involvement by the European Commission in defence via ASAP, EDIRPA and the planned EDIP.

Third, Russia’s invasion is prompting the EU to re-examine and rethink its dependency on other powers, particularly China, and to some degree also the US. The EU has, and is developing, a number of policy tools to become less dependent on Chinese imports in critical raw materials and to foster greater domestic production in many sectors, including microchips.

While it would be tempting to conclude that all this amounts to the EU becoming a stronger security actor, decision-making continues to depend on unanimity between the member-states. Consensus will continue to depend on the case-by-case alignment of their views. Notably, the EU’s robust response to Russia’s invasion in Ukraine has not pushed the Union to be more assertive when dealing with instability and conflicts to its south. Another critical variable in shaping the EU’s future responses will be what the US does. Indeed, we cannot be sure that the EU’s response to Russia’s invasion of Ukraine would have been quite so strong without the US providing leadership.

b. What is your understanding of the concept of EU strategic autonomy and how it has evolved since the Russian invasion of Ukraine? What relevance does this have to the UK’s relationship with the EU?

European strategic autonomy denotes the EU’s ambition to be able to act more effectively in the security and defence field on its own – that is to say without US support. The notion is controversial in the US, which dislikes talk of autonomy, thinking it equates to protectionism in industrial terms and duplication of what NATO does. Strategic autonomy is also controversial in many eastern EU member-states who fear that pursuing it would prompt the US to disengage from Europe.

Russia’s invasion of Ukraine has underscored the continent’s continued dependency on the United States and led to the debate on European strategic autonomy losing prominence. Some particularly controversial initiatives, like the drive to strengthen an EU military headquarters or to set up a rapid reaction force, have slipped down the political agenda. And Sweden and Finland joining NATO have underscored how the EU’s security guarantees are not seen as particularly credible.

However, other initiatives designed to advance European strategic autonomy have gained ground. In the defence industrial field, tools such as ASAP or EDIRPA are designed to strengthen the EU defence industry and augment EU military capabilities. The massive expansion of the EPF marks an increasing willingness on the EU’s part to take on a more prominent role in militarily helping partners in its neighbourhood. The EU’s experience of excessive dependency on Russia is also leading the Union to take legal steps to reduce its dependence on other external powers, in particular China, through measures such as the Critical Raw Materials Act

On balance, Russia’s invasion of Ukraine has led the EU to pause the more controversial elements of its drive for strategic autonomy, while at the same time doubling down on less controversial areas. The implications for the UK are mixed. The UK will be reassured that the EU’s plans to take on a role in the harder elements of security have lost momentum, as this will cement NATO’s role as Europe’s pre-eminent security institution. The EU’s growing capabilities to help support partners like Ukraine are positive for the UK, as Britain benefits from having a stronger security partner. Conversely, as set out above, the EU’s involvement in the defence industrial field has mixed implications. On one hand, the UK will benefit if EU tools lead to stronger European armed forces. On the other hand, the UK risks losing out if established relationships with its European partners are eroded and if British firms find themselves shut out of the European defence market.

c. What implications might possible future developments in the EU, for instance enlargement to include current candidate countries in the Western Balkans and Eastern Partnership, have for the EU’s approach to external affairs? What impact would these developments have on UK-EU relations?

Current debates amongst EU member-states and institutions on enlargement strongly suggest that it will take place in a phased manner, with candidate countries being integrated into different policy areas prior to accession. For example, candidate countries might be invited to participate in different Council formations, without voting rights. That might give them an informal say in shaping EU decisions. Such a change could have implications for the UK-EU relationship, making the EU more open to including the UK as a non-voting participant, for example in some meetings of the Foreign Affairs Council. UK involvement in other policy areas would be more challenging as they may affect the single market. In any case, whether the EU is open to involving the UK will depend largely on the state of the broader relationship and on whether the UK can persuade its partners that it is willing to accept decisions in which it may have a voice but not a vote.

Enlargement could change the EU’s approach to external affairs if it sparks a shift in EU foreign policy decision-making from unanimity to majority voting. Currently, France, Germany and several other member-states insist that for enlargement to happen there needs to be a shift in decision-making from unanimity to qualified majority voting in tax and foreign policy matters.

However, it is not a given that such a shift will happen – there is opposition from some member-states such as Poland and Hungary. At the same time, some of the member-states that are currently in favour of removing the veto, such as France, may decide that they are unwilling to give it up after all. Alternatively, a de facto veto may endure in the form of an emergency brake’ that member-states could invoke if national interests are under threat. It is also possible that the EU may opt for a form of qualified majority voting that still allows a relatively small minority of member-states to block a decision.

Any move to water down the requirement for unanimity in foreign policy would mean that the EU was able to reach agreement more quickly, and potentially could be a more nimble and effective player in security policy. The implications for the UK would vary on a case-by-case basis, depending on whether EU interests align with the UK’s.

d. How do you envisage the EU’s approach to foreign and security policy developing in the longer-term, beyond the end of the current conflict?

See answer to question 5A. In summary, Russia’s invasion of Ukraine will probably lead to the deepening of the EU’s involvement in foreign and security policy.

1)   In the defence industrial field, EU initiatives to foster joint research, development and procurement are likely to grow in size and gain momentum.

 

2)   The EU will have a greater range of instruments to assist partners such as Ukraine. However, the EU’s willingness to deploy such tools will depend on whether there is consensus among the member-states – unless decision making has changed.

 

3)   The EU has become more conscious of its external economic dependencies, and that will lead to an ever-greater ‘securitisation’ of economic policy.

 

4)   EU decision-making will continue to reflect the consensus between all member-states until and unless there is agreement on changing the rules to scrap the national veto.

 

6. The UK-EU Trade and Cooperation Agreement does not cover external affairs. In light of developments since the Russian invasion of Ukraine, should the UK and the EU develop more structured arrangements for cooperation in these areas? If so, what form should these take?

Russia’s invasion of Ukraine underscores how the UK and the EU are essential partners. A deeper relationship in external affairs would have advantages for both parties.

a. In your assessment, would the EU welcome developing its relations with the UK in this area? If so, on what terms?

The EU would very much welcome developing relations with the UK in external affairs, especially after the Windsor Framework. The EU is open to closer consultations on foreign policy with the UK if the UK concludes a formal co-operation agreement. That could involve consultations between ministers, senior officials and regional and thematic experts, and would be useful to build networks. Depending on the state of bilateral ties, the EU could also be receptive to the idea of regular UK attendance at sessions of the Foreign Affairs Council or the European Council on issues where the EU thought involving the UK made sense. In the near term, any arrangements on the UK attending FAC or EC meetings would probably have to be informal, as the EU remains wary of formally granting the UK a status that would be significantly deeper than EU relationships with partners such as Canada or Japan.

The EU would welcome greater UK involvement in CSDP missions in which the UK had an interest. That would require the UK to conclude a Framework Participation Agreement with the EU, as Canada and the US have. However, so far there is little sign that the EU is willing to offer the UK a formal say in shaping or running any operation. That is likely to make any British government unwilling to contribute significant numbers of troops. Still, the UK may want to participate in the EU operation in Bosnia, EUFOR Althea, as this is run under the so-called Berlin Plus arrangements, with a senior European NATO officer based at SHAPE as the operation's commander, providing a link to the Alliance (and therefore to the UK). The UK may also choose to participate in EU operations that involve training partners, if it thinks that EU efforts are valuable and wants to have some insight into them.

The EU would welcome a UK financial contribution to specific projects funded by the European Peace Facility, and there may be cases in which the UK judges that doing so is the best way to advance its interests. The EU would also welcome greater UK involvement in PESCO, in addition to military mobility. There are a few PESCO projects that could be of interest to the UK, especially those that are focused on training, interoperability or logistics. British involvement in PESCO projects that aim to develop military capabilities will be more complex because the EU’s rules currently allow for limited participation by third countries and third country firms in EU instruments. The UK could seek clarify how the EU will apply its rules in practice, by joining a PESCO capability project that is of interest to it.

If the EU proves flexible in how it applies its rules, that may open the way for more British participation in EU defence projects – but without British firms being eligible for funding. To persuade the EU to offer greater access to its tools, the UK would probably need to make a financial contribution to them, on the model of the Horizon research programme.

 

b. Can the E3 format (UK, France and Germany), established during negotiations relating to Iran, be extended to cover wider policy coordination on foreign affairs and security? What impact does the UK’s status outside of the EU have on its ability to participate in forums of this sort?

The E3 remains an important avenue for the UK, France and Germany to co-ordinate their policies towards Iran, though its importance has decreased as the gap between US and European approaches towards Iran has shrunk.

The E3 has some potential to be a framework for co-ordination on issues other than Iran. For example, the E3 may have a role in instances where UK, France and Germany all agree while the EU struggles to reach a common position quickly. The E3 may also become relevant in cases where there is a significant gap between the policies of the E3 and US policy.

However, the E3 faces significant challenges that limit its usefulness as a format. First, it is geared to policy co-ordination rather than implementation. Second, France and Germany know that many other EU members resent the E3, because they are not part of it. It is worth remembering that the EU’s great success, the JCPOA, was brought about because the E3 also included the EU High Representative and EU officials, which allowed other member-states to feel included in the process and go along with steps that they may otherwise have objected to. For France and Germany to resort to the E3 they need to believe there is a strong case for not acting through the EU and therefore alienating other member-states.

 

Received 17 October 2023