The European Union is set to take a major step forward in strengthening its defense capabilities. Ursula von der Leyen, President of the European Commission, has announced a series of measures that could mobilize up to 800 billion euros to consolidate the continent’s defense industry and ensure a safer, more resilient Europe.
Speaking in Brussels, Von der Leyen explained that the new plans are aimed at increasing military production and modernizing member states’ defense infrastructures. To achieve this, the EU intends to set up a new financial instrument offering ?150 billion in loans to member states specifically dedicated to defense investment.
In addition, the European Commission plans to activate the safeguard clause of the Stability and Growth Pact, giving member states greater budgetary flexibility to finance their rearmament efforts.
In a novel approach, Von der Leyen also emphasized that the EU would not limit itself to public funding. The aim is to mobilize private capital via the European Investment Bank (EIB) and the Investment and Savings Union project. The aim of this initiative is to boost private investment in the defense sector and encourage the technological development of European industries.
Enhanced cooperation between member states
One of the pillars of this new strategy is the pooling of military resources and orders. The EU is proposing to facilitate the pooling of requests from member states, enabling them to buy military equipment together, thereby reducing costs and accelerating the modernization of Europe’s armed forces.
At the same time, Brussels wants to allow member states to decide whether they want to use cohesion policy funds to increase their military spending. Such a measure would mark a turning point in the use of European structural funds.
Von der Leyen also indicated that this new financial instrument could benefit Kiev.
European defense sector soars
European defense stocks continue to soar. The previous day, they had been boosted by the need for the old continent to rearm following the expected withdrawal of the United States.
“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 much more responsibility for our own European security,” she said in a press statement.
Von der Leyen said she had written to European leaders ahead of the European Council meeting later this week to propose the “ReArm Europe Plan,” designed to enable EU member states to increase spending in defense capabilities.
“ReArm Europe could mobilise close to EUR 800 billion for a safe and resilient Europe,” she said. “This is a moment for Europe. And we are ready to step up.”
The plan will include 150 billion euros of new joint EU borrowing for member states to invest in what von der Leyen described as “pan-European capability domains.”
“For example: air and missile defence, artillery systems, missiles and ammunition drones and anti-drone systems; but also to address other needs from cyber to military mobility for example,” she added.
