The EU's High Representative for Foreign Affairs and Security Policy, Federica Mogherini called the decision "historic."
European Commission President Jean-Claude Juncker hailed the move on Twitter, posting: "She is awake, the Sleeping Beauty of the Lisbon Treaty: Permanent Structured Cooperation is happening."
A historic step: The deal fulfills a 70-year-old ambition among European nations to integrate their defenses and marks the biggest move in two decades to help match the EU's economic and trade prowess with a more powerful military.
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What is PESCO? The alliance was first set out in the Lisbon Treaty — in effect the EU's constitution. It will allow member states to jointly develop military capabilities, invest in shared projects and enhance their respective armed forces.
Why PESCO is being discussed now: The shift in US policy under President Donald Trump — who berated European partners on military spending at a NATO summit in May — has intensified efforts to reduce an over-reliance on Washington for protection.
The member states involved: Only three EU member states refused to sign up to the pact: Malta, Denmark and the UK, which is set to leave the bloc in March 2019.
What happens next: Money for PESCO could be provided by the European Defense Fund, which is expected to be signed on Tuesday. The initial projects are expected to be formally adopted by the European Council in early 2018.