EU’s von der Leyen: This is a moment for Europe, and we are ready to step up
BRUSSELS – The European Commission proposed on Tuesday new joint EU borrowing of 150 billion euros ($157.76 billion) to lend to EU governments for defence as part of an overall 800 billion total financing effort to boost Europe’s defence capabilities, and announced an emergency summit to be held on Thursday.
The 150 billion euros of new joint borrowing is to go towards building pan-European capability domains like air and missile defence, artillery systems, missiles and ammunition, drones and anti-drone systems, or to address other needs from cyber to military mobility, the Commission said.
“It will help Member States to pool demand and to buy together. This will reduce costs, reduce fragmentation, increase interoperability, and strengthen our defence industrial base,” Commission President Ursula von der Leyen said.
EU leaders will discuss the proposal at a special summit devoted to defence spending on Thursday.
The Commission also proposed to lift limits imposed by EU rules on government spending in case of defence investments.
“If Member Sates would increase their defence spending by 1,5% of GDP on average, this could create fiscal space of close to 650 billion euros,” von der Leyen said.
The Commission also proposed that EU countries can use for defence purposes money they receive from the EU budget in funds to equalise the standards of living across Europe.
All these elements could provide up to 800 billion euros for EU governments to spend on defence projects.
“Europe is ready to assume its responsibilities. Europe could mobilise close to 800 billion euros for a safe and resilient Europe. We will continue working closely with our partners in NATO. This is a moment for Europe. And we are ready to step up,” she said.
The Stoxx Europe Aerospace and Defence index .SXPARO rose on the news to 2284.88 from 2265.36.
The European Commission’s proposal comes in the wake of U.S. President Donald Trump’s decision to pause military aid to Ukraine following his clash with Ukrainian President Volodymyr Zelenskiy last week.
Accordingly, Europeans are racing to boost their own military spending and provide alternative support for Kyiv, including a plan to put troops on the ground to support any ceasefire, though they say they still need some form of U.S. support.
On Monday, shares in European arms makers surged by the prospect of higher defence spending in the region, following Sunday’s London summit.
JPMorgan analysts said the events of the last two weeks have “turbocharged” their thesis of a European rearmament cycle, with Europe seeking to gradually make more of its own military equipment and import less from the United States.
