European Commission Unveils ReArm Europe Defense Funding Proposal
European Commission President Ursula von der Leyen revealed on Tuesday the European Union’s ReArm Europe defense funding proposal, which could make up to 800 billion euros (approximately $843 billion) in funding available to EU member states seeking to invest in their defense.
Von der Leyen’s announcement of the proposal was made after she sent a letter to EU leaders outlining the proposal, ahead of a meeting of EU leaders on defense investment scheduled for Thursday.
In a speech, von der Leyen said:
“The real question in front of us is whether Europe is prepared to act as decisively as the situation dictates. And whether Europe is ready and able to act with the speed and the ambition that is needed. In the various meetings in the last few weeks – most recently two days ago in London – the answer from European capitals has been as resounding as it is clear. We are in an era of rearmament. And Europe is ready to massively boost its defence 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.”
The proposal put forward will include activating the national escape clause of the Stability and Growth Pact, allowing EU member states to “significantly” increase defense spending through a waiver of debt and spending restrictions. This, von der Leyen says, would create a fiscal space of close to 650 billion euros should all EU member states increase their spending over the next four years by 1.5% over current amounts.
The proposal also includes the creation of a new facility to provide 150 billion euros in loans to EU members for defense investment to facilitate joint procurement of European systems. Von der Leyen says the facility is about “spending better – and spending together”, cutting costs while increasing interoperability among EU militaries and strengthening the EU’s defense industrial base.
Additionally, von der Leyen says the EU will propose additional possibilities and incentives for EU members that want to use the Union’s cohesion policy programs to increase defense spending.
The last two areas of action in the proposal aim at mobilising private capital by accelerating the Savings and Investment Union, and through the European Investment Bank.
Concluding her speech, von der Leyen said:
“Europe is ready to assume its responsibilities. ReArm Europe could mobilise close to EUR 800 billion 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.”