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Can Korean arms dealers benefit from new EU weapons policy?

Published: 20 Mar. 2025, 18:00

SEO JI-EUN
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High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission Kaja Kallas speaks as she presents the white paper on the future of European defence, in Brussels, Belgium on March 19. [REUTERS/YONHAP]

Korea’s defense industry is growing dubious over whether it can benefit from the European Union’s (EU) newly expanded 150-billion-euro “buy European” arms procurement plan, which now allows limited third-country participation.

Strict conditions and the initiative’s emphasis on strengthening European defense industries are seen as major obstacles.

The European Commission, the EU’s executive body, unveiled details of its framework for loan-supported joint arms procurement — called Security Action For Europe (SAFE) initiative on Wednesday.

The policy was originally designed to prioritize EU-funded purchases of European-made weapons and is a key component of the bloc’s broader 800-billion-euro military modernization plan to achieve European rearmament by 2030.

The policy was interpreted as applying only to weapons sourced within the EU. However, new SAFE regulations allow limited participation from select non-EU countries, specifically those that have applied for EU membership, hold EU candidate status or have signed bilateral security and defense partnerships with the EU.

Under these revised rules, EU member states can procure weapons from defense firms based in these eligible third countries.

Korea became one of these eligible nations after signing a bilateral security and defense partnership with the EU in November 2024 — joining five other countries, including Japan, Norway, Albania, North Macedonia and Moldova. Ukraine, as an EU candidate country, is also eligible.

Despite Korea's eligibility and a track record as one of the top ten defense exporters, Seoul faces major obstacles in accessing the benefits of the policy.

The SAFE regulations allow for third-country participation in joint procurement contracts for weapons intended either for Ukraine’s military support or for stockpiling by EU member states.

Korea maintains a policy of not providing lethal arms to Ukraine, making its participation in EU defense procurement for Ukrainian support unlikely.

Furthermore, when EU member states engage in joint procurement of defense equipment, they must ensure that at least 65 percent of the components, by cost, originate from the EU, European Economic Area (EEA), European Free Trade Association (EFTA) or from Ukraine.

A Polish K2 tank operator gives a thumbs-up in front of a K2 tank on display at the 31st International Defence Industry Exhibition (MSPO) in Kielce, Poland, on Sept. 5, 2023. [KOREA DEFENSE INDUSTRY ASSOCIATION]

Despite such challenges, Korea is not entirely excluded from potential opportunities.

Alongside the SAFE funding program, the European Commission also released its “Readiness 2030" defense white paper, which outlines the EU’s five-year strategy for military buildup.

The document specifically highlights the need to “explore opportunities for defense industrial cooperation with Indo-Pacific partners,” notably naming Korea, Japan, Australia and New Zealand --- offering some room for cooperation.

With the EU working to reduce its dependence on U.S.-made weapons while accelerating its military modernization, some analysts highlighted Korea's reputation for fast production and cost-effectiveness.

The share of U.S.-made weapons in NATO’s European member states rose from 52 percent to 64 percent between 2020 and 2024, according to the Trends in International Arms Transfers 2024 report published by the Stockholm International Peace Research Institute, a Sweden-based non-profit think tank.

French and Korean weapons each accounted for 6.5 percent of NATO’s European arms imports, followed by Germany at 4.7 percent and Israel at 3.9 percent.

“South Korean companies have carved out a niche where they're providing materials that are not necessarily at the highest end technologically, but at a more affordable price,” Euan Graham, a senior analyst at the Australian Strategic Policy Institute, said in an interview with Nikkei Asia in February 2024. “The country has an industrial infrastructure whereby it can quickly provide arms to countries that need them, and buying from Korea is good policy from a value-for-money perspective.”

BY SEO JI-EUN [[email protected]]