When the European Union (EU) endorsed its Strategic Compass in 2022, it stressed the importance of ‘robust partnerships’ as one of 4 central pillars in reforming its defence and security strategy (p. 1). Thus, when EU Commission President Ursula von der Leyen floated the idea of an Australia-EU defence pact with Prime Minister Albanese in May 2025, an opportunity for increased defence collaboration arose.

What is being proposed?

The EU’s security and defence partnerships (SDP) are non-legally binding documents that provide ‘mutually beneficial frameworks’ to promote defence and security cooperation between like-minded states (p. 2). As at September 2025, eight countries have signed SDPs with the EU: Canada, Japan, South Korea, the UK, Albania, Moldova, North Macedonia and Norway.

An Australia-EU SDP would not constitute a conventional alliance, as there would be no defence deployment obligations for either party. Instead, Prime Minister Albanese argued that the partnership would ‘provide a framework’ for cooperation in the defence, cyber and counter-terrorism domains. It would also likely increase the frequency of joint military exercises and promote closer defence industry ties, seeking to counter threats to the ‘rules-based global order’, particularly in the Indo-Pacific region.

All existing SDPs currently outline a commitment to addressing ‘hybrid threats’ and cyber issues, with 5 of the agreements also making explicit mention of upholding ‘maritime security’. All existing SDPs also outline a commitment to continued dialogue on future ‘non-proliferation and disarmament’.

The majority of SDPs facilitate dialogue through annual meetings between partner states’ political and defence leaders, and their EU counterparts. Each SDP either outlines the upgrading of an existing annual security dialogue, or the establishment of a new annual meeting. The North Macedonia-EU SDP is the only agreement that does not commit to annual meetings.

Why is the EU concerned about the Indo-Pacific?

At the National Press Club in June 2025, the EU ambassador to Australia, Gabriele Visentin, argued that ‘European security and security in the Indo-Pacific are intertwined’. In particular, maritime freedom directly concerns the EU, with the Indo-Pacific being the source of 40% of its trade and the EU’s 2021 Indo-Pacific strategy highlighting Europe’s reliance on the region’s ‘major waterways’ for commerce (p. 2).

Similarly, the EU is also concerned about ‘intense competition’ in the Indo-Pacific, with the region witnessing a major ‘military build-up’, particularly by China. The EU claims that such tensions have widespread impacts and ‘may have a direct impact on European security and prosperity’.

Such security concerns are compounded by pressure from the US on European nations to increase their defence spending. With NATO members committing to spend 5% of GDP on defence by 2035, there is an opportunity for increased investment and collaboration with Australia and the broader Indo-Pacific region.

Strategic considerations

There are several factors that may influence the potential signing of an Australia-EU SDP, including economic outcomes, security alignment and geopolitical strategy.

Economic ties

Firstly, the EU is a significant economic partner for Australia, as highlighted by negotiations underway since 2018 to establish a free-trade agreement (FTA). While Prime Minister Albanese has asserted that efforts to conclude the FTA negotiations will remain separate to SDP discussions, the SDP proposal has coincided with ‘revived attempts’ to finalise the deal.

In 2024, Australian imports from the EU were worth $83.9 billion (13.7% overall) and the EU invested $869.3 billion in Australia. In June 2025, Prime Minister Albanese stated that an ‘investment in our relationships’ can often produce ‘very effective’ economic outcomes, while also outlining the potential for increased ‘joint defence procurement opportunities’.

Security alignment

Secondly, the signing of an SDP with the EU could reaffirm the importance of Australia’s existing security arrangements with member states. In July 2025, France, Germany and the Netherlands joined Operation Talisman Sabre, a military exercise between Australia and the US. The French ambassador to Australia, Pierre-André Imbert, has asserted that Australia’s existing bilateral relationships would be bolstered by an SDP, stating that ‘every step to bring cooperation and a structural framework [with the EU] is always welcome’ (3m 30s).

Conversely, in August 2025, the Australian Government announced that it will spend $10 billion over a decade to purchase 3 Japanese Mogami-class frigates, as part of a broader deal to replace its ageing Anzac-class fleet. This marks the first time that Japan has manufactured frigates for another nation and meant that German firm ThyssenKrupp Marine Systems missed out. Thus, the signing of an SDP with the EU could also help to reassure Europe of the importance of its industrial capability for Australia’s defence sector.

Geopolitics

Third, given that recent years have witnessed an escalation in geopolitical tensions throughout the Indo-Pacific, Australia may welcome further EU support in maintaining a rules-based order. For example, in March 2025, HMAS Sydney embarked on a four-and-a-half month deployment in the Indo-Pacific, conducting multilateral training exercises. In June 2025, this deployment also included a freedom-of-navigation activity alongside the UK in the South China Sea. Yet, these operations were primarily conducted with non-EU states.

In March 2025, political scientist Victor Cha testified before the US Senate Foreign Relations Committee, arguing that there are ‘no Indo-Pacific allies’ that are ‘carrying their fair share’ in terms of financial contributions to maintaining regional security. This was echoed by US Defence Secretary Pete Hegseth in June 2025, who urged Australia to increase its defence spending by an extra $40 billion annually. Considering this, increased defence collaboration with the EU could enable Australia to signal its leadership in bolstering Indo-Pacific security.

Looking forward

Following the G7 meeting in June 2025, Prime Minister Albanese expressed his desire for SDP negotiations to conclude ‘pretty quickly’. Given the recent decisions by Canada, the UK and Japan to sign similar deals, Australia is likely to follow suit. Ultimately, however, the appropriateness of an SDP with the EU will depend on Australia’s strategic considerations and its desire for increased security and defence alignment with its European counterparts.