By Robin Emmott

BRUSSELS (Reuters) - The European Union will unveil its biggest defense research plan in more than a decade on Wednesday to reverse billions of euros in cuts and send a message to U.S. President-elect Donald Trump that Europe wants to pay for its own security.

Part of a broader push to revitalize defense cooperation, the European Commission will propose a defense fund and seek to lift a ban on the EU's common budget and its development bank investing in military research.

The main proposal, to be presented at around 12 p.m. (1100 GMT), is an investment fund for defense, which could allow EU governments that pay into it also to borrow, ensuring funds are always available for joint defense programs such as helicopters or drones.

The fund, which could start on a small scale in 2017, could be backed by the European Investment Bank to finance projects if governments agree to remove the ban on backing military projects.

With the Commission overseeing a common EU budget of about 150 billion euros ($160 billion) a year, France and Germany say it is time to allow it to be used for military research. (For a graphic on EU defence spending, click: http://tmsnrt.rs/2ctbMmP)

The European Parliament has approved a 90 million euro pilot plan for 2017 to 2019 and the Commission could potentially allocate 3.5 billion euros from the budget between 2021 and 2027, officials say.

Defense research spending by EU governments has fallen by a third since 2006, leaving the European Union reliant on the United States for advanced warfighting equipment.

During the U.S. election campaign, Trump questioned whether the United States should protect allies seen as spending too little on their defense, raising fears that he could withdraw funding for NATO at a time of heightened tensions with Russia.

France and Germany rely on aging military transport planes, for example, while some navy helicopters have been grounded because of technical faults related to long years of service.

Story continues

A report by the German military seen by Reuters on Tuesday showed its Tornado jets had a readiness rate of just 44 percent and its newer Eurofighters were ready for use 52 percent of the time, well under the goal of an average 70 percent readiness.

"Europe has to be very careful that the investment gap is not translated into an ever wider technology gap," EU foreign policy chief Federica Mogherini told defense contractors and officials at a speech earlier this month.

"If left unchecked, this could translate into a political gap which would clearly not be in our interest," she said, referring to a potential loss of the EU's foreign policy clout.

BREXIT DILEMMA

An earlier Commission plan in 2003 failed to win over governments. This time around, France, Germany and Italy are seizing on Britain's decision to quit the bloc. They see it as removing an obstacle to deeper defense cooperation, given Britain's fears about a European army run from Brussels.

Britain's departure removes one of the biggest contributors to the EU budget, although it is not clear if Britain would seek to collaborate on defense from outside the bloc.

"We see EU defense as detrimental to NATO, but if there are major collaborative research projects, we would want to be part of them," said Geoffrey Van Orden, a former brigadier in the British army and now a lawmaker with the euroskeptic European Conservatives and Reformists group in the European Parliament.

Germany and France say sharing resources may be the only way to sustain adequate military forces. EU officials point to the merger of missile systems companies in France, Italy and Britain in 2001 to create MBDA, the only European group able to design and produce world-class missile systems.

Waste is also a problem, as European governments champion national defense contractors. According to EU data, the bloc has 19 types of armored infantry fighting vehicle, compared with one in the United States.

(Additional reporting by Andrea Shalal in Berlin; Editing by Robin Pomeroy)