* Europe lags U.S., Israel in growing sector
* European drone would have military, civilian uses
* Industry pressing for European programme
By Adrian Croft and Sabine Siebold
BRUSSELS/BERLIN, Dec 17 (Reuters) - After many false starts, Europe looks ready to back plans for a drone development programme aimed at cutting its reliance on U.S. and Israeli rivals and bolstering its position in the industry.
European Union leaders meeting in Brussels on Thursday and Friday will throw their weight behind a drive to build a next-generation European surveillance drone by 2020 to 2025, according to a draft communique seen by Reuters.
Large drones operated by European armed forces are mostly based on U.S. or Israeli designs, creating a dependence on foreign technology that some European companies and officials see as bad for European industry and military capabilities.
The EU is starting research into drone technologies and studying needs and it will be a year or more before governments have to pledge cash and companies bid to develop the new drone.
But the summit will be a sign of a new European determination to challenge the U.S. and Israeli lead in a market that U.S. defence consultants Teal Group estimate will be worth $89 billion worldwide over the next decade.
Claude-France Arnould, chief executive of the European Defence Agency, said she expected the leaders to commit to projects on drones, as well as air-to-air refuelling, government satellite communications and cyber defence.
In an interview with Reuters in Paris, she warned that Europe risked losing its defence industry if it did not commit quickly to military cooperation programmes like these.
"It would be a tragedy if we emerged healed from the financial crisis but having lost in the meantime all of our industrial and technological defence capacity," she said.
European countries have worked on a number of previous drone programmes, individually or cooperatively. But they have often failed because of competing national needs, corporate rivalry, technical problems and lack of government support.
Governments will also have to overcome past problems which have seen joint European defence programmes, such as the Airbus A400M military transporter, overrun in time and money.
The German government faced a political storm in June after scrapping plans to buy Euro Hawk drones, made by EADS and U.S. firm Northrop Grumman, because it would cost too much to ensure they met flight safety standards.
Opposition politicians said the fiasco wasted 680 million euros ($900 million).
European aerospace giant EADS' Cassidian defence unit spent 500 million euros developing its Talarion drone but halted work last year after failing to receive an order from the project's instigators, France, Germany and Spain.
An earlier French-led drone project, EuroMALE, failed after efforts to cooperate between Dassault Aviation and EADS broke down.
Public perceptions of drones have been shaped by missile-firing machines that the United States has used against militants in Afghanistan, Pakistan, Somalia and Yemen, a controversial policy that has led to civilian deaths.
Drones also carry out surveillance and wars in Libya and Mali have shown European militaries do not have enough of them, leaving them dependent on the United States for intelligence.
Ludwig Decamps, head of NATO's armament and aerospace capabilities directorate, said it was not too late for Europe to catch up.
"These are huge issues, big investments. But I think the Council (EU summit) will trigger the start of a process to really work on this," he told Reuters.
Some defence experts, including Nick Witney, a former head of EDA, are sceptical, saying past European promises on drones had come to nothing and Europe was running out of time to catch up with the Americans and Israelis.
"Typically, the support of member states for any such collaborative effort would last up to the issue of the communique...Thereafter, national priorities rapidly reasserted themselves," Witney, now with the European Council on Foreign Relations, said on the thinktank's web site.
European leaders are also responding to pressure from industry to boost Europe's defence sector, which has suffered as austerity-hit governments slash military spending.
Just last week, EADS, the maker of Airbus planes, announced plans to cut 5,800 mainly defence and space jobs.
EADS Chief Executive Tom Enders called on European leaders in a Financial Times interview last week to commit money and agree on a timeline for developing a military drone.
The EU's aim is to develop a medium-altitude, long-endurance (MALE) drone, a category that can fly at an altitude of up to 30,000 feet (9,000 metres) for 24 hours.
It wants a flexible surveillance drone that could be used for civilian purposes such as border control, fire-fighting and disaster monitoring as well as a military role.
The EU has launched several projects to test technologies that will allow drones to share airspace with civil aircraft - something they are barred from doing in Europe.
Last month, eight European countries agreed to invest jointly in research into drone components, including collision avoidance technology and automatic take-off and landing.
A spokesman for EADS' Cassidian unit estimated it would take about seven years from getting a contract to completing a new European drone.
EU officials are not prepared to hazard a guess at the cost though experience of past drone programmes suggests it could run into hundreds of millions, if not billions, of euros.
France, Germany and other members of a European drone user group set up last month - Greece, Spain, Italy, the Netherlands and Poland - are seen as potentially interested in backing a European drone programme, the EU source said.
Britain has made clear it will not take part.
"The UK is developing its own strategy for UAS (unmanned aircraft systems) capability beyond 2018, and has no intention of joining an EU programme," a British Defence Ministry source said.
Britain and France, which have both bought Reapers made by U.S. firm General Atomics, agreed in 2012 to work together on developing drones but appear to be concentrating on a future unmanned combat aircraft which could replace piloted fighter aircraft after 2030.
Britain's BAE Systems and France's Dassault are working on combat drones, called respectively Taranis and nEUROn. (Additional reporting by William James and Brenda Goh in London, Emmanuel Jarry and Cyril Altmeyer in Paris, Steve Scherer in Rome, Francesco Guarascio in Brussels)