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Source: European Union External Action

The Permanent Structured Cooperation (PESCO) is a framework for deeper defence cooperation among its 25 participating Member States. It allows Member States to develop defence capabilities and be ready to deploy them together.

PESCO acknowledges that partners could bring added value to the success of the projects and contribute to strengthening the Common Security and Defence Policy. To this end, on 5 November 2020, the Council adopted a Decision on the general conditions under which third States could exceptionally be invited to participate in individual PESCO projects. This Decision sets the conditions and the related procedures for such participation.

The adoption of the Council Decision on the general conditions for third States’ participation in PESCO projects is an important step leading to a greater cooperation on defence with EU partners.

What are the general conditions that every third State needs to meet?

The Council has identified several general conditions that a third State needs to meet in order to be invited into a PESCO project. They can be grouped as follows:

1) Political conditions: share the EU values and principles, the objectives of the Common Foreign and Security Policy and contribute to strengthening the Common Security and Defence Policy, while not contravening the security and defence interests of the EU and its Member States, including respect for the principle of good neighbourly relations. The third State must also have a dialogue with the EU, covering also security and defence aspects when it participates in a PESCO project.

2) Substantive conditions: provide a substantial added value to the projects and contribute to achieving its objectives, e.g. providing technical expertise or additional capabilities, including operational or financial support; without being able to hamper progress or prevent the use of the developed capabilities.

3) Legal conditions: require the third State to have a Security of Information Agreement with the EU; and, in case the PESCO project is implemented with the support of the European Defence Agency (EDA), to have an Administrative Arrangement with the EDA[1].

What is the procedure?

Third States that meet these general conditions may be invited by the members of the individual projects according to the following procedural steps:

1) It is first up to the members of individual projects to consider inviting a third State that meets the general conditions.

2) Then the Council will decide[2] whether that third State meets the conditions.

3) Following a positive decision, the project members will enter into an administrative arrangement with the interested third State.

Who decides and how to invite a third State?

It is first up to the project members to consider a request by a third State to participate in a specific project. If they agree positively, then the project coordinator would submit that request to the Council. In accordance with Article 46(6) of the Treaty on the European Union, the decisions in PESCO, other than those provided for in paragraphs 2 to 5 thereof, are to be taken by unanimity by the 25 PESCO participating Member States. Decisions regarding third-State participation will be made in this way.

What arrangements are project members to conclude with a third State?

The administrative arrangements between the project members and a third State should cover among other things:

• the rights and obligations of that third State, including attendance of meeting;

• roles and responsibilities;

• scope of involvement in decision-making within the PESCO project;

• scope and areas of information-sharing;

• as well as the conditions for ending the participation in a given PESCO project.

What if the situation in the third State changes?

The Council Decision covers situations where circumstances have changed and the third State no longer meets the general conditions as decided beforehand. This requires a regular review mechanism, ensuring the Council oversight as well. When one or more EU Member States consider that the conditions are no longer met for the participation of a third State in (a) PESCO project(s), a consultation phase will follow facilitated by the High Representative to decide on this matter.

How about the involvement of companies?

Further conditions and procedures on the involvement of entities (companies) in the implementation of PESCO projects may be established pursuant to a review of the 2018 Council Decision on the common set of governance rules for PESCO projects.

The approach of the Member States regarding the involvement of entities is based on security considerations and following the principle of autonomy of decision-making of the EU. The Council Decision on third-state participation includes certain provisions in this respect. These provisions take into account the security interests of the EU and its Member States and ensure transparency.

What if there is a non-EU company?

If a third State is not invited to participate in a PESCO project then its companies would need to be authorised by the Council to be involved in the implementation of a PESCO project. If the entities’ involvement in the implementation of PESCO projects is not regulated by December 2025, no further entities may be involved in the implementation of PESCO projects except on the basis of contracts concluded or procurement procedures launched before that date.

Furthermore, if a Member State has security-related concerns regarding the involvement of an entity in the implementation of a PESCO project, it may refer the matter to the Council.

Is there a link to the European Defence Fund?

There is no automaticity in industrial involvement between PESCO projects and European defence industrial development programme (EDIDP)/European Defence Fund (EDF) funding, given the different legal basis.

An industrial consortium may apply for EDIDFP/EDF funding for an action implementing a PESCO project – in this case, the EDIDP/EDF Regulation applies as regards eligibility for EU funding of these entities (including a possible “PESCO bonus” of 10% additional bonus if selected).

[1] Norway; Serbia; Switzerland and Ukraine.

[2] In accordance with Art 46(6) of the Treaty on the EU.

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