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In 2017 EU Ministers agreed to establish Permanent Structured Cooperation (PESCO), as part of a wider package of defence measures intended to strengthen European defence cooperation and capabilities development. 

25 EU Member States have signed up to PESCO and, to date, 47 capability projects have been agreed. 38 of those projects are aligned with NATO priorities. PESCO Member States are also expected to meet 20 specific defence policy commitments, including meeting agreed defence spending targets, the harmonisation of requirements and greater collaboration. 

Although broadly supportive of the initiative, the UK did not sign up to PESCO. As a third country now outside of the EU, the UK could still participate in specific PESCO capability projects, on a case-by-case basis. However, any involvement will be subject to the rules on third state participation which were agreed on 5 November 2020. 

What has been agreed on third state participation? 

Going forward, “third states that can add value to a PESCO project may be invited to participate if they meet a number of political, substantive and legal conditions”. Among other things:

  • A third state must share the EU’s values and must not contravene the defence and security interests of the EU and its Member States. 
  • A state must provide substantial added value. However, participation must not lead to dependency on that third state or allow that state to impose restrictions on the use of developed capabilities. The PESCO Member States will retain full control of the project’s intellectual property. 
  • Participation must contribute to the strengthening of the EU’s Common Security and Defence Policy (CSDP) and the EU’s level of ambition with respect to EU-led military operations. 
  • Participation must be consistent with the 20 defence policy commitments that PESCO member states have signed up to. 
  • A third state must agree a Security of Information Agreement with the EU and an Administrative Agreemet with the European Defence Agency. 

There will be no blanket acceptance of third states into PESCO projects. Participation will be by invitation only and the terms and conditions of participation will be set down in an Administrative Agreement.

The extent of a third state’s decision-making powers within a specific project will be in accordance with its contribution. A third state will have no decision-making powers with respect to the overall governance of PESCO, or the strategic direction of the initiative. 

There will be no reciprocity bewteen PESCO and the European Defence Industrial Development Programme and the future European Defence Fund which are subject to their own rules on third state participation.  

What are the implications for the UK? 

The UK Government favours a flexible ad-hoc approach to future defence cooperation with the EU. Adopting that stance lends itself to participation in specific PESCO projects, on a case-by-case basis. However, the Government will have to find all of the EU’s terms and conditions on third state participation acceptable, particularly with respect to the general conditions related to the strengthening of CSDP and control over intellectual property.

Any determination on future UK participation in PESCO may therefore depend upon how important the Government calculates a specific project to be for the UK’s national interest. 

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