Why Europe wants Britain back at the EU defence industry party

Good morning. News to start: Former German Chancellor Angela Merkel has called for the country to relax its “debt brake”, joining the chorus of politicians calling for the end of an economic straitjacket that she implemented.

Today, our Berlin correspondent reports on last night’s bonhomie between EU and British defence ministers, and our finance correspondent profiles the frontrunner to lead Europe’s new anti-fraud watchdog.

On December 12 I will be at the FT Tech and Leadership Forum in Brussels, moderating a series of panels and keynotes about the intersection of technology, leadership, and geopolitics: check out the agenda and participation options here.

Brothers in arms

More joint arms production and procurement: that was the message from Berlin as five European defence ministers met to discuss how to beef up the continent’s domestic defence industry and maintain support for Ukraine ahead of Donald Trump’s return to the White House, writes Laura Pitel.

Context: The group of Europe’s five biggest defence spenders hastily came together as part of a continental drive to formulate a response to the re-election of Trump, who has threatened to pull US military protection from Nato allies that fail to spend enough on their own security. Yesterday was their first meeting.

Speaking alongside his British, French, Polish and Italian counterparts, German defence minister Boris Pistorius said that closing gaps in Europe’s defence capabilities was even more important than securing more money.

“Regardless of whether we spend 2 per cent, 2.5 per cent or 3 per cent [of GDP] on defence in the future, we must close the capability gaps,” Pistorius said, pointing to weapons such as long-range missiles and long-range land systems. “That is the priority . . . We must develop, produce and procure more weapons systems together. We agreed on that today.”

Though France has for years been notoriously protective of its own weapons industry, the country’s defence minister Sébastien Lecornu showered London with praise as he said that Britain should play a role in contributing to the European Commission’s White Paper on industrial policy for the defence sector expected in the next few months.

Speaking after the FT revealed that Paris had dropped its opposition to non-EU companies accessing EU-funded financial incentives for defence procurement, he said: “No security concept can be developed without partnership and close, trusting co-operation with Great Britain.”

UK defence minister John Healey told the FT after the meeting that the need for greater European self-sufficiency was “concentrating minds”. He said: “There is a real will and determination to strengthen our ability to co-ordinate as the European defence industry, not within the institutions of the European Union, but within Europe [as a continent].”

Chart du jour: Hot shit

The European Commission has raised a stink over the Netherlands allegedly pursuing manure protectionism by trying to force energy suppliers to only use domestic dung and food waste to produce biogas.

Fraud buster

Bruna Szego is set to lead the EU’s first anti-money laundering agency, pending confirmation from the European parliament and EU countries, writes Paola Tamma.

Context: The EU recently overhauled anti-money laundering (AML) and counter terrorism financing regulation, including giving new powers to itself. AMLA, a new agency to be set up in Frankfurt, will directly supervise 40 high-risk bodies, as well as apply sanctions and co-ordinate national enforcement agencies.

The race to lead the agency was down to three candidates, Italy’s Szego, Germany’s Marcus Pleyer and Dutchman Jan Reinder De Carpentier. 

Szego is a longtime employee of Italy’s central bank where she held a number of roles, most recently heading the bank’s AML work. Her vision for the agency is to ensure effective co-operation among the various levels of enforcement, from financial intelligence units embedded in the financial sector to national supervisory authorities and AMLA itself.

Scandals such as Danske Bank’s money laundering scheme — the largest-ever uncovered in Europe — which came to light in 2017, were enabled by a lack of co-ordination among national agencies and EU-level oversight, so AMLA has the potential to be a game-changer, in her view.

Szego faced off the other candidates in a closed-door hearing in the economic and monetary affairs and the civil liberties, justice and home affairs committees of the European parliament last night in Strasbourg, after which MEPs made their selection.

Szego needs to be formally proposed by the European Commission, brave a public hearing in the European parliament, win a majority of MEPs’ votes, as well as obtain the backing of a majority of EU countries. That process is set to be finished by early next year, allowing for AMLA to become fully operational late next year.

What to watch today

1. Nato secretary-general Mark Rutte visits Greece, meets prime minister Kyriakos Mitsotakis.

2. France’s National Assembly debates proposed EU-Mercosur trade deal.

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