The permanent structured cooperation on defence agreement (PESCO) was signed on 13 November in Brussels.
PESCO commits countries to increase their defence budgets and devote 20 percent of defence spending to procurement and two percent on research and technology.
The agreement is the fruit of efforts led by Germany and France to reboot the EU after Britain's shock decision last year to leave the bloc, and follows the announcement in June of a 5.5-billion euro European Defence Fund.
The European Commission described PESCO in a Monday statement as "a treaty-based framework and process to deepen defence cooperation amongst EU member states who are capable and willing to do so.
Countries can "jointly develop defence capabilities, invest in shared projects and enhance the operational readiness and contribution of their armed forces," the statement said.
“It is quite a historic day,” said EU Foreign Affairs and Security Policy Commissioner Federica Mogherini at the signing.
PESCO, a 'European army'?
"I don’t think that this would lead to what people call ‘a European army’ in which all European countries bring their forces together under a central command,” says Dick Zandee, Senior Research Fellow with the Clingendael Institute in The Hague, playing down rumours.
But PESCO will increase cooperation on a smaller scale. Member states have so far proposed some 50 projects for joint development.
“One of the projects proposed is a new development of mine countermeasures. Hunting mines under water would only involve maritime nations that have a navy."
Other projects may involve geographical groupings of member states.
“It is like a chess board, there are many pieces on the chess board, but the formations moving around here and there will be of a different composition,” he says.
Brexit, security spur PESCO signing
Several factors sped up the process of signing PESCO, and Brexit was one of them.
“I believe that the Brits have always boycotted any effort for joint security and defence within the EU,” Ana Maria Gomes, a Socialist member of European Parliament (MEP) for Portugal tells RFI.
Gomes says the UK "would sometimes lead missions" in the framework of the EU’s Common Security and Defence Policy, but only "because it suited their own national perspective.” She adds that US President Donald Trump's remarks that NATO is obsolete “obviously left a very important mark."
But PESCO's signing was due first and foremost to Europe's security challenges.
The Russian annexation of Crimea and the emergence of the Islamic State armed group (IS) in the Middle East were “absolutely the most important driving forces behind the creation of PESCO,” says Zandee, adding that “Brexit has made it easier to have this all accepted in Brussels.”
PESCO reinforces legal framework for EU defence
The difference between PESCO and the existing EU Common Security and Defence Policy is that this PESCO consists of a legal framework.
“All the commitments that member states signed up to [on 13 November] can be enforced to a certain extent,” says Zandee.
“Not by a system of punishment, or by going to the European court," Zandee explains. "But the High Representative can raise a yellow card when member states are no longer fulfilling their commitments.”
Five nations opt out
The signing of PESCO was signed by an overwhelming 23 out of 28 EU member states.
Only five members--Portugal, Ireland, Denmark, Malta and the UK--did not sign.
Ireland is concerned that its neutrality may be at stake, but since there’s an opting out clause, it may sign at a later stage after it’s been scrutinised by the government.
And in Portugal, there was a domestic political issue. There, the Socialist party rules with the parliamentary support of the Communist party (PCP).
The PCP has always opposed Portugal being part of any European defence cooperation.
“This is the normal position of the Communist Party,” says MEP Gomes. “They’ve always been against any initiative of the EU on security or defence."
But in the end, she says the ruling Socialists will go their own way.
"The Socialist Party has moved forward. We’ll always be a partner of any initiative of security and defence,” she says.
The agreement will likely take effect in December when the European Council next meets, after the signed agreement is ratified by a majority vote.