EU Considers Financial Strategies to Boost Defense Readiness

The European Union is exploring various financial strategies to increase defense spending by 500 billion euros over the next decade. This involves modifying EU spending rules, potentially using the next long-term budget, and considering joint borrowing. However, differing opinions among EU members present challenges.

The European Union is deliberating on financial strategies to significantly enhance its defense readiness amid concerns about potential threats from Russia and to reduce reliance on the United States for security.

The European Commission has projected a need for 500 billion euros in defense spending over the forthcoming decade. This financial uptick may involve altering EU spending rules, as well as revisiting the Stability and Growth Pact to allow exemptions for defense expenditures. However, this approach is not universally approved among EU governments, some of whom argue that defense investments already receive special consideration under existing rules.

In addition, discussions around allocating funds from the EU's next long-term budget are underway, but timelines remain a concern. Suggestions include utilizing a joint EU borrowing model similar to the COVID-19 recovery fund, although this faces legal and political hurdles, notably from Germany. The prospect of creating new financial entities like a special purpose vehicle or a rearmament bank is also on the table to funnel resources into defense initiatives.

(With inputs from agencies.)