LONDON — More than three years after a public vote, Britain finally exited the European Union on Jan. 31, leaving behind a 47-year membership in the organization. Political ties have been cut, but the departure has for the moment left open questions about Brexit’s impact on the British defense industry.
The prospects for joint defense equipment development, market access and security cooperation between London and Brussels are among the issues up for grabs on the sidelines of trade negotiations due to get underway between the two sides in the next few weeks.
Britain wants a new trade deal signed by the end of the year, but the Conservative government said it’s willing to walk away without an agreement if need be.
Paul Everitt, the chief executive of ADS, the leading U.K. trade lobby group for the defense and aerospace industries, said critical issues must be resolved if Britain is to continue to thrive in the sector he represents. One of the big issues for him is whether industry here can gain access to EU defense development funding initiatives like the European Defence Fund or the Permanent Structured Cooperation .
“Listening to Prime Minister Boris Johnson’s speech and various comments we have seen over the last couple of weeks suggests the U.K. is not that bothered from an industrial point of view. It leaves us drawing the conclusion we are not going to access any funding mechanisms like the Defence Fund,” Everitt said in a Feb. 3 phone interview.
Analysts agree Britain is unlikely to be able to negotiate a place at the table when EU funding is being handed out. Centre for European Reform analyst Luigi Scazzieri said in a recent opinion piece for Aspenia Online that while a close defense partnership may emerge at some point, it is unlikely to in the near term.
“Boris Johnson’s government appears cautious of seeking a close relationship with the EU, with Foreign Secretary Dominic Raab arguing that it had other options,” Scazzieri said.
“The withdrawal negotiations showed that [EU] member states have little appetite to grant the U.K. the status of privileged EU partner, in large part because they fear other partners such as the U.S. could then ask for the same close relationship and level of access to European defense initiatives," he continued. “Moreover, many member states remember the U.K. as highly skeptical of European defense, blocking European defense initiatives for years, and therefore see no reason to risk recent progress by giving London a privileged role.”
Whether Britain is entirely locked out of cooperating with the EU on funding and development is unclear.
In Brussels on Feb. 3, EU chief negotiator Michel Barnier said Britain could participate but only when it was in the EU’s industrial and technological interest to do so. Barnier also said Britain would be able to participate in EU missions on a “case by case basis.”
Signs of future challenges already emerged, with the EU blocking British access to military-grade data from the Galileo Global Navigation Satellite System, in which London has been a supplier and investor. Britain is now looking at building its own satellite network, possibly in partnership with allies like the U.S. and others.
Everitt confirmed that if Britain can’t get its foot in the door of EU funding, then it will have to look elsewhere. And the challenge is compounded by more limited access to U.S. programs.
“We need scale in order to be affordable, and if we are not going to be part of a European program, it means we are going to have to do quite a lot of heavy lifting on our own,” the ADS boss said. “If we aren’t able to access two key markets of the EU and the U.S. on what we would see as reasonable terms, then we need to invest much more in sustaining our own defense- and security-industrial base.
“Unless there is some fundamental shift in either the U.S. or EU relationship, we struggle to see where the volumes for our defense developments are going to come from.”
One possible answer is to spread the net wider in the search for partners. The U.K. could, for example, offer Japan, India and South Korea a more appealing option than the traditional foreign sales and engagement models offered by the U.S. or France.
Having already signed up EU nations Italy and Sweden as potential partners in the British Tempest future fighter project, the government has started trying to attract Japan and others to join the study.
“Cooperation is increasingly likely to take place outside of the EU framework,” Scazzieri said, pointing to the EU framework involving Germany, France and the U.K. that helped coordinate policy toward Iran as an example. “The E3 could gain further prominence post Brexit, as long as the U.K.’s foreign policy stance remains aligned with France and Germany.”
For all the long-term uncertainty, immediate impact of the split from the EU will be limited — more so than other markets in fact. But London-based defense consultant Howard Wheeldon said the impact will increase in the longer term unless separate agreements covering aspects of defense are made between the U.K. and EU or through bilateral agreements.
“Undoubtedly U.K. defense and security companies will find it harder to sell to the EU just as they will find themselves no longer eligible to access any form of defense cooperation funding,” he said.
Andrew Chuter is the United Kingdom correspondent for Defense News.
