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EU launches defense fund amid US pressure to boost spending

Associated Press logo Associated Press 7/06/2017 By LORNE COOK, Associated Press

BRUSSELS — The European Union on Wednesday unveiled a new defense fund to get better value for money on high-tech projects like drones or robotics as European allies at NATO come under U.S. pressure to boost their military budgets.

The European Commission said the fund would provide a total of 500 million euros ($563 million) in EU money in 2019 and 2020 to help buy and develop military equipment.

This would double to 1 billion euros annually from 2020. The Commission says it expects the money to generate about five times that amount for developing defense capabilities, once member countries make their contributions.

The EU money would be used to finance the building of prototypes for cutting-edge technologies, the riskiest phase for investors when projects hang in the balance. The money would only be granted if a minimum of three companies were taking part from a minimum of two EU member countries.

The executive Commission is also offering grants for defense research. EU countries spend around seven times less on defense research and development than the United States.

U.S. President Donald Trump has demanded that NATO's European allies and Canada start spending 2 percent of gross domestic product on military budgets. Twenty-two EU countries are also members of the world's biggest military alliance.

But the Commission insists a big problem is that defense budgets are badly spent. It says more than 25 billion euros is lost annually through poor cooperation and estimates that around 30 percent of expenditure could be saved if nations bought equipment together.

"Two percent of GDP spent separately provides less security than if part of the money is used jointly. As important as the amount of money, is how to use it," Commission Vice-President Jyrki Katainen told reporters.

Alongside its budget plans, the Commission also launched debate on what direction EU defense cooperation should take once Britain leaves in 2019.

While not going as far as to suggest the creation of an EU army, the Commission does encourage countries to cooperate more closely and allow Brussels to have a bigger say in defense matters.

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