The EU’s defence chief met with South Korean defence officials on Wednesday as member states are discussing whether foreign countries and their companies should benefit from the EU funds destined for the bloc’s rearmament.
Seoul’s defence ambitions are massive: to become the world’s fourth-largest arms exporter by 2027. The position is currently occupied by China, which carves out around 5% of the market. South Korea ranked 10th over the past five years, behind legacy major arms exporters such as the US, France, Israel, Italy, Germany and Spain.
On Wednesday, Jong Gun Seok, minister of the Defence Acquisition Program Administration (DAPA), in the role of the country’s defence procurement agency, met with the EU executive’s defence chief, Andrius Kubilius.
Topics on the discussion’s agenda included defence cooperation and the ReArm Europe Plan, the financial arm of the Readiness 2030 scheme, which includes a €150 billion financial instrument called Security Action for Europe (SAFE).
“Good exchange on ReArm Europe Plan/Readiness2030,” Kubilius wrote on X after the meeting.
The Commission proposed that for the EU’s urgent arms needs under the €150 billion loans scheme, South Korea and its industry could be included under certain conditions.
Longer term, the EU defence industry programme (EDIP) is meant to rebuild the bloc’s industry and that money is meant for EU-based companies, though most member states argue against such restrictions.
Seoul-sized hole
Seoul has earned an unexpected place in the European debate on whether pan-European funds could be used to buy defence gear from foreign companies. The country became a recurring presence in the bloc’s debates in the past couple of years, next to the controversial giant arms makers in the United States and Turkey.
South Korea has long had an active arms industry, as the country has had its arch-enemy North Korea as a neighbour for the past 70 years. The country has spent more than 2% of its GDP on defence expenditure since the 1990s.
The Europeans’ sudden need for military gear when the war in Ukraine erupted in the winter of 2022 gave the country a massive boost in exports.
Poland has been a key customer in Seoul’s far-reaching market.
Seoul’s Hanwha has plans to produce missiles in Poland, after Hyundai Rotem already established a K2 tank production there. In 2023, Warsaw signed a record €22 billion deal with the country to gear up its military.
South Korea’s production of tanks and 155mm self-propelled howitzers is hitting record speed, Breaking Defense reports, to meet demand that European manufacturers are straining to keep up with.
The long road to accessing EU funds
Warsaw has therefore pushed regularly to allow EU funds to go to foreign companies established on its territory.
Member states have yet to agree on that. Negotiations on the EU defence industry programme are a sensitive topic, especially when it comes to missile production. France is against EU pennies going into foreign pockets.
Seoul could however access the benefits of the €150 billion SAFE programme. Under the proposal, since South Korea signed a Security and Defence Partnership with the EU last November, it is now eligible to negotiate a partnership agreement for its defence industry with the European Commission and access the funds.