Brussels – “Europe is ready to massively boost its defense spending.” The president of the European Commission, Ursula von der Leyen, flaunts confidence and determination. She warns about the “dangerous times” that characterize the present and, even more likely, the future. “I do not need to describe the grave nature of the threats that we face. Or the devastating consequences that we will have to endure if those threats would come to pass” because, she points out, “we are in an era of rearmament,” and at this stage, the EU intends to respond with a five-point European rearmament plan, the name of which — Rearm Europe — already suggests much.
Von der Leyen has already sent her plan to the member countries’ heads of state and government to ensure security and defense and revitalize the twelve-star heavy industry. It is a way to give leaders time to study it well and discuss it at the March 6 extraordinary European Council summit, from which the EU executive president expects full support. “The real question in front of us is whether Europe is prepared to act as decisively as the situation dictates. 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.”
A five-point plan. Less budget rules and less cohesion
In essence, von der Leyen’s strategy confirms suspending the stability pact only for government spending in the security and defense sector. After all, the EU Commission president is well aware that “governments can invest if they have budgetary space,” and, therefore, spending must be allowed without triggering the excessive deficit procedure: “If Member States would increase their defense spending by 1.5 percent of GDP on average this could create fiscal space of close to 650 billion over a period of four years.
In addition to the 650 billion euros all to be released, there are 150 billion euros that the European Commission intends to make available through a “new instrument” of loans again on condition that the money goes to revitalize the sector. The idea behind this instrument, which could be similar to the Recovery Fund, is that the loans should be for joint purchases to upgrade a European network of anti-aircraft defense systems, anti-drone systems, cyber and cyber defense systems, as well as purchases of missiles and ammunition with which also to help Ukraine through artillery supplies.
Together, the two initiatives can mobilize 800 billion euros in the short term. Then there is the question of the budget. For von der Leyen, it needs to be used more and better for defense. In that sense, “we will provide additional possibilities and incentives to member states that decide if they want to use cohesion policy programs to increase defense spending.” Due to the need to rearm, money earmarked for the revitalization of the regions is being redirected, with all the related implications: fewer roads, less money to promote tourism and fewer resources for infrastructure to equip Europe and its states with more missiles.
EIB for Defense
The last two areas of action under the ReArm Europe Plan aim to mobilize private capital by accelerating the Savings and Investment Union and making increasingly structured and structural use of the European Investment Bank (EIB). Von der Leyen urges states to consider the need to “broaden the scope” of the Luxembourg-based lending institution’s funding, as “the situation calls for considering all possible sources of financing.” The industry and businesses in the sector must have “the best possible access” to capital and financing and to encourage private investors to invest in the security of the EU. Leaders will start discussing this issue as early as Wednesday.
