France, Italy and Spain are reportedly opposing the European Union‘s plans to increase defense spending with cheap loans as a split seems to be growing among bloc members over beefing up military spending to deal with Russia’s threat.
Southern European countries are concerned that a €150 billion ($161 billion) plan to make the continent more militarily independent might put too much strain on their heavy debt burdens, Politico reported, citing EU diplomats.
Baltic states bordering Russia have significantly boosted their defense spending, in line with U.S. President Donald Trump’s demands. Trump has accused European NATO allies of piggybacking on U.S. military capabilities.
Newsweek reached out to the European Union for comment.
Why It Matters
Trump has cast doubt on continued Washington commitment to European security and continued support for Ukraine’s fight against Russia, prompting Europe’s leaders to push for increased military spending.
But while Latvia, Lithuania and Estonia have increased their military budgets considerably, other EU members that strongly support Ukraine seem to be getting cold feet, having already rejected a much-touted €40 billion ($43.3 billion) European aid package for Kyiv last week.
What To Know
After Trump threatened to cut off U.S. support for Ukraine and criticized Europe for its military reliance on Washington, European Commission President Ursula von der Leyen devised a plan to reinforce the EU’s defense capabilities.
This included allowing EU states to temporarily raise defense spending by 1.5 percent of GDP over four years and borrowing €150 billion on behalf of the EU for joint weapons procurement and Ukraine assistance.
The hope was that the loan-based plan would be embraced, particularly by countries like Italy and Spain which fall short of NATO’s 2-percent-of-GDP defense spending target.
However, European diplomats have told Politico that a plan to loosen EU fiscal rules to spur investments in defense has caused some countries to worry about indebting themselves to such an extent.
While the European Commission can borrow more cheaply than most member states, the loans still count against national debt levels, which could pose a problem for highly indebted countries that do not want to spook markets.
The European Commission has acknowledged that national budgets must be cut elsewhere to accommodate rising defense costs, which may be politically unpopular in some countries.
Southern European countries with high levels of public debt have proposed so-called defense bonds, which are financed by joint EU borrowing on the capital markets.
However, this requires the unanimous consent of all 27 bloc members and is opposed by some countries, such as the Netherlands and Germany, for fear it would set a precedent for future mutual debt obligations.
EU Military Plans Splinter
Last week, a €40 billion ($43.3 billion) European aid package for Ukraine was dropped from the European Council summit agenda after opposition from France, Italy, Spain and Portugal.
The plan, named after EU High Representative Kaja Kallas, who proposed it, would have doubled the EU’s military aid and included two million artillery rounds for €5 billion, air defense systems, missiles, drones, fighter jets, and lethal and non-lethal equipment up to €35 billion ($37.8 billion).
Southern European countries wanted contributions to be relative to their GDP and asked the EU to find other funding sources, such as the remaining profits generated by Russia’s frozen assets.
Nicu Popescu, a policy fellow at the European Council on Foreign Relations, told Newsweek that not all EU discussions lead to immediate results, and they quite often fail at first before an agreement is reached.
Given Ukraine’s importance to the peace and security of Europe, Popescu said it was likely that the EU would find a way to help Ukraine.
The EU split over military budgets follows the presidents of Latvia and Lithuania announcing their goal of increasing defense spending to 5 percent of GDP.
Lithuania said it would do this by 2026. Latvia, along with Estonia, would follow suit, although no timeline has been given as concern grows about the threat posed by Russia.
What People Are Saying
A senior EU diplomat, cited by Politico: “Some countries have serious doubts on the feasibility or even the possibility of indebting [themselves] to these levels.”
Nicu Popescu, policy fellow at the European Council on Foreign Relations, told Newsweek: “Not all EU discussions lead to immediate results. It is quite frequent that the EU first fail to agree, and then manages to agree on something.”
What Happens Next
The European Commission president’s drive to boost the continent’s military autonomy has faced a setback, which could threaten Brussels’ plan to supply more weapons from Europe to Ukraine.
However, a NATO summit in June in which the alliance wants to set a new spending goal closer to 3.5 percent of GDP could boost the argument for its European members to follow suit. Sweden, the alliance’s newest member, has announced plans to reach this goal by 2030—up from 2.4 percent this year.
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