The EU wants to increase defense spending: what it offers

The European Union is considering changing its approach to defense funding to allow member states to increase military spending without risking violating the bloc's strict fiscal rules. This was reported by Reuters, according to UNN.

Details

This decision is gaining relevance against the backdrop of Russia's war against Ukraine and US President Donald Trump's calls for European countries to raise their defense budgets above 2% of GDP.

At the EU summit on February 3, the leaders of the member states agreed to strengthen defense capabilities more actively, increasing spending and closing gaps in military capabilities.

Poland, which currently holds the EU presidency, has prepared a document emphasizing that the current definition of defense investment is too narrow, as it covers only the purchase of military equipment, such as tanks or aircraft.

Given the security challenges, the interpretation of the growth in defense investment should be broader. It should include not only the purchase of military equipment, but also capital support for arms and ammunition factories to increase defense capabilities,

It also proposes to classify as defense investments the costs of infrastructure used by the army, as well as dual-purpose facilities, such as the construction of shelters in residential buildings and financing of civil defense.

This definition is important because under the new EU fiscal and debt rules, which limit public deficits to 3% of GDP and debt to 60% of GDP, a country that exceeds the 3% deficit limit will not be subject to disciplinary sanctions if the new excess is related to defense spending.

In addition, the new rules set an annual limit on the growth of public spending so that EU countries can gradually reduce their public debt over 4-7 years. An exception for defense spending in these calculations would allow governments more room for maneuver.

In addition to revising the definition of defense investment, EU countries are also discussing the possibility of applying so-called "national exemptions".

This would allow governments to ask the European Commission to temporarily suspend borrowing restrictions due to serious economic difficulties or external factors. However, this idea, which was not part of the Polish proposal, is controversial and has less support among eurozone countries, according to officials.

Addendum

European Commission President Ursula von der Leyen said on February 3, after a meeting of EU leaders on defense funding, that she was ready to use all the flexibility of the EU budget rules (Stability and Growth Pact) to allow a significant increase in military spending.

Meanwhile, Trump, who has repeatedly questioned the United States' commitment to NATO's security obligations, has called on European members of the alliance to increase defense spending to 5% of GDP, a figure that no NATO country, including the United States, currently reaches.

Recall

NATO Secretary General Mark Rutte also stated that the future quota of defense spending by NATO countries will be much higher than 2% of gross domestic product.