EU proposes €150b in defence loans to boost spending
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The news: European Commission President Ursula von der Leyen proposed a package to mobilise almost €800 billion ($1.35 trillion) in defence-related spending on Tuesday, including €150 billion of loans to member states for defence investment.
The numbers: The EU’s proposed ‘ReArm Europe’ package would see the bloc provide €150 billion of loans to member states for defence investment, and activate a mechanism that would allow member states to use their national budgets to spend an additional €650 billion on defence over four years without triggering the Excessive Deficit Procedure.
The context: Von der Leyen revealed the blueprint ahead of Thursday’s emergency summit, where EU leaders will discuss the proposal in efforts to recalibrate following the US’ retreat on defence spending in Europe.
Von der Leyen said that the first part of the ReArm Europe plan is to “unleash the use of public funding in defence at national level.” By activating the national escape clause of the Stability and Growth Pact, EU nations will be able to significantly increase their defence expenditures without triggering the Excessive Deficit Procedure. For instance, “if Member States would increase their defence spending by 1.5% of GDP on average this could create fiscal space of close to €650 billion over a period of four years.”
Secondly, the €150 billion proposed loan would encourage states to “pool demand and buy together” pan-European military equipment for Ukraine, so the EU can “massively step up their support” for the country. Equipment may include air and missile defence, artillery systems, missiles and ammunition drones and anti-drone systems.
The news comes as Ukrainian officials say that the country will probably run out of American military supplies in the coming few months. The White House said it would cut military aid to Kyiv on Monday.
What they said: Von der Leyen said: “In the various meetings in the last few weeks – most recently two days ago in London – the answer from European capitals has been as resounding as it is clear. We are in an era of rearmament. And Europe is ready to massively boost its defence spending. Both, to respond to the short-term urgency to act and to support Ukraine but also to address the long-term need to take on much more responsibility for our own European security.”
“Europe is ready to assume its responsibilities. ReArm Europe could mobilise close to €800 billion for a safe and resilient Europe. We will continue working closely with our partners in NATO. This is a moment for Europe. And we are ready to step up.”
The sources: EU Statement, Reuters
