BRUSSELS — European Commission President Ursula von der Leyen on Tuesday proposed a new common instrument to boost military spending across the European Union.
She suggested allowing EU countries to draw on up to €150 billion in loans as part of a five-part plan to scale up defense spending.
Speaking to reporters, she presented a “Rearm Europe” plan to unlock up to €800 billion of additional defense spending over the coming years. She outlined these ideas in a letter to national governments on Tuesday morning.
Von der Leyen’s announcement came hours after Trump decided to stop all military aid to Ukraine following his disastrous meeting at the Oval Office on Friday with Ukrainian President Volodymyr Zelenskyy.
The bloc’s 27 ambassadors will react to von der Leyen’s ideas during a meeting on Tuesday that will lay the ground for a high-stakes summit of EU leaders on Thursday.
“Europe is ready to massively boost its defense 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 more responsibility for our own European security,” von der Leyen said today.
EU governments are looking for ways to significantly increase their defense spending as U.S. President Donald Trump disengages from Ukraine and Europe.
The Commission wants to make it easier for countries to increase defense spending without falling afoul of the EU’s rules limiting national debt and deficits.
To create more fiscal space, von der Leyen said she will trigger the EU’s national escape clause, under which military expenditure would not be counted toward the bloc’s punishment mechanism for countries breaching the EU’s spending limits.
This clause can be activated when “exceptional circumstances outside the control of the Member State lead to a major impact on the public finances” of a country, according to EU spending rules that were revamped last year.
Von der Leyen, however, did not lay out the specific conditions she will attach to prevent rampant spending from highly indebted countries.
EU finance ministers will discuss this in a planned meeting on Monday and Tuesday next week, according to an internal note seen by POLTICO.
As part of the plan, she also offered cheap loans for defense to EU countries in a further attempt to mobilize funding.
The new instrument will be worth €150 billion and finance EU-wide defense capabilities including artillery, missiles, ammunition, drones and anti drone systems. This money will also free up space for EU countries to send weapons for Ukraine.
“With this equipment, member States can massively step up their support to Ukraine,” von der Leyen added.
In her statement, however, she was tight-lipped on where this funding will come from.
Several officials indicated that it will be partly funded with €93 billion of unclaimed loans that were made under the EU’s post-Covid recovery fund, which was set up in 2021 to boost green and digital investments.
Commission officials are confident that unused money can be repurposed with the backing of a simple majority of EU countries, as opposed to unanimity.
Highly indebted countries such as France, Italy and Spain instead favored EU joint debt for defense, but that remains controversial in Germany and some Northern European countries.
The Commission president also floated repurposing more regional funds for defense purposes, unlocking private capital by creating an EU-wide investment space and changing the rules of the European Investment Bank to allow more military spending.
The latest draft of the conclusions for Thursday’s EU leaders’ summit stresses that the bank’s practices “regarding core defense projects” should change and that the volume of available funding should increase.
This story has been updated.
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