EU chief asks member nations to use European, not American defence systems

At a summit last week, the EU's 27 leaders weighed a European Commission proposal for a new loan plan worth $163 bn. It would be used to buy air defence systems, drones and strategic enablers

European Union countries must purchase military equipment made in Europe under a new loan programme meant to help the continent provide for its own security, a top EU official said Tuesday, even though most of its defence materiel currently comes from US suppliers.

At a summit last week, the EU's 27 leaders weighed a European Commission proposal for a new loan plan worth 150 billion euros ( $163 billion).

It would be used to buy air defence systems, drones and strategic enablers like air transport, as well as to boost cybersecurity. 

These loans should finance purchases from European producers, to help boost our own defence industry, Commission President Ursula von der Leyen told EU lawmakers.

Von der Leyen said the contracts should be multiannual, to give the industry the predictability they need and that the priority should be for countries to buy equipment together in groups because we have seen how powerful this can be.

European Nato members have placed about two-thirds of their orders with US companies in recent years, but they are being spurred into action by the Trump administration's warnings that they will have to provide for their own security, and Ukraine's, in future.

France wants the commission to put more money into the loan plan and has also insisted that it should only be spent in Europe. Spain, one of five countries using the euro single currency with a debt level of over 100 per cent, wants free grants rather than loans.

EU leaders are due to endorse the loan plan, which the commission believes would benefit around 20 countries whose borrowing costs would be higher than that of the executive branch, at another summit late next week.

It's part of a package of measures including an easing of budget rules for defense spending and a reshuffling of EU money that the commission hopes could generate up to 800 billion euros ( $874 billion) for security priorities.