Bloomberg: The EU has prepared a three-element defense plan
Trump has made it clear that Europe will have to defend itself, writes Bloomberg. This forces the EU to urgently start looking for all available means. The von der Leyen defense plan will consist of three elements that will have to be implemented "it is unclear how".
Jorge Valero
Andrea Palasciano
Donald Trump has made it clear that Europe has to defend itself, and the continent's response to threats of American withdrawal is slowly taking shape.
As part of the largest regional security initiative since the Cold War, the European Union is seeking to allocate hundreds of billions of euros for additional defense funding, according to informed sources.
Continental Europe has followed in the footsteps of Great Britain and intends to dramatically increase military spending. In addition, changes in fiscal rules are expected to free up national resources, as well as allow the redistribution of existing funds, the sources said on condition of anonymity due to the sensitivity of the topic.
Separately from EU initiatives, Germany is rushing to finance a defense fund of up to 200 billion dollars through debt. British Prime Minister Keir Starmer will arrive in Washington on Thursday, just days after French President Emmanuel Macron, to jointly convince Trump that Europe has listened to his words and is seriously engaged in defense.
"This is a once—in-a-generation moment, and we need a determined attitude, urgent action, and a strategic plan to rearm Europe," European Commission President Ursula von der Leyen said in Brussels this week after a trip to Ukraine.
However, Europe's far-reaching intentions face two problems: firstly, its military-industrial complex is weak and not ready for rapid rearmament; secondly, Ukraine's support has practically emptied European arsenals. Despite the US withdrawal, the bloc has promised further assistance to Kiev and is working on an additional military package worth about 20 billion euros.
Haste to build up its own arsenals will require the purchase of weapons abroad, mainly from the United States. In this case, the EU will watch as funds flow out of the region. The support of local gunsmiths will require time and money: and both are in short supply. As a result, this dilemma forces the EU to seek all available means.
The new security architecture will begin to take shape at an emergency meeting of the leaders on March 6. Then, on March 19, Defense Commissioner Andrius Kubilius and Top Diplomat Kaya Kallas will present a new defense industry strategy. Feverish negotiations on replenishing the block's resources have already begun.
The von der Leyen defense plan will consist of three elements. However, all three are complex, and it is unclear to what extent they will be able to be implemented, the sources say. The Commission did not respond to a request for comment.
The first initiative is designed to allow States to allocate additional funds by relaxing fiscal rules. According to some officials, this will help to mobilize at least 160 billion euros.
The main topic of the negotiations is to exclude additional defense spending from the deficit calculations. These funds could amount to between 1% and 2% of national GDP within two to four years, according to the sources. Some details have yet to be worked out, including the exact definition of defense spending, the duration of the exemption, and meeting the NATO standard of 2%.
The second topic is to resolve costs at the EU level through a new joint instrument. This money will mainly be invested in common projects in areas such as air defense, long-range strike capabilities, missiles, drones, and military-grade artificial intelligence.
Some senior EU officials and a number of countries are calling for joint loans to be allowed, but this idea is considered controversial and could split the bloc.
Finally, the third topic is to ease restrictions on the European Investment Bank. Currently, he is allowed to invest only in dual-use goods. The changes will clear the way for additional financing from private banks.
In addition to these three elements, von der Leyen suggested using unspent EU funds during closed discussions, including those raised for recovery after the coronavirus pandemic, the sources said.
According to the commission, only 6.4% of the so—called "cohesion funds" worth 392 billion euros, one of the largest EU sources available, have been paid. Although this money can finance defense projects if they contribute to regional development, the criteria can be expanded now and in the future.
In addition, there are 93 billion euros of unclaimed "cheap loans" from the pandemic recovery fund, which, according to EU officials, can be used for defense needs. Some of the announced funds can also be redistributed, but time is running out, as the deadline is August 2026.
Another idea is to use the European Stability Mechanism, the euro zone rescue fund in the amount of 500 billion euros. But this option is fraught with difficulties, since it will exclude countries outside the eurozone (in particular, Poland) and will be inaccessible to allied countries outside the EU.
Given the difficulties associated with EU decisions, countries, including Poland, have proposed non-aligned cooperation through a special fund or bank. The so-called "coalition of the willing" will be able to act more quickly and will be able to include countries from outside the EU, such as the United Kingdom and Norway, the sources said.
"We, the Europeans, need an advanced approach to financing in order to receive much more common investments," French President Emmanuel Macron said in an interview with Fox News after meeting with Trump. - why? Because we have to take on our share of the burden and invest much more in our own security."
The article was written with the participation of Alberto Nardelli and Anya Nussbaum
