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The plan to strengthen Europe’s defense was presented today in Brussels by the European Commission, which named the much-anticipated plan “White Paper,” describing specific legal and financial tools to support member states’ defense investments.
As an official stated, “It is an ambitious plan for the defense package that provides financial levers at the immediate disposal of EU member states to significantly increase defense investments and defense capabilities.”
The aim of the plan is to push and facilitate member states to spend more on their defense, form partnerships, and create effective directions. The increase in funding for Europe’s defense, according to a European official, means greater contribution to transatlantic security, support for Ukraine, and readiness for security challenges and shifting balances, bringing into the frame countries like Russia, China, regions like the Middle East -Africa, as well as hybrid threats and critical raw materials.
Sectors and investment goals
This refers to a large pool of defense investments such as anti-aircraft and missile defense, artillery systems, ammunition and missiles, unmanned aircraft and counter-unmanned aircraft systems, military mobility, cyber warfare, strategic objectives, combat capabilities, and protection of vital infrastructure. As an official explained during the presentation of technical details of the plan for Europe’s defense enhancement, the goals are Ukraine and its military support on the ground, following the change in stance of the USA. Strengthening the EU-NATO relationship, EU partnerships with the UK, Canada, Norway, Japan, and Australia. Also, creating a strong and innovative European industry, meaning support of defense enhancement, signing contracts for the rapid acquisition of required capabilities, support of rapid adoption of the European Defense Industry Program, the emergence of new defensive players, supporting investments in technologies like AI and the European roadmap to accelerate defense innovation transformation, and creating a pan-European defense equipment market.
Key goals, readiness by 2030
The ReArm Europe plan is designed to leverage all immediately available tools and mobilize up to 800 billion euros for defense investments. To achieve this, the plan includes: a) The liberalization of the use of public funding in defense on a national level. b) A new special instrument for the safety action for Europe -SAFE- for conducting urgent and massive defense investments through joint procurements.
“Action for Security in Europe – SAFE”
One of the key initiatives of the plan is a new financial instrument called “Action for Security in Europe – SAFE,” which will provide member states with loans of up to 150 billion euros supported by the EU budget. This will help member states strengthen their defense capabilities through joint procurements. Additionally, “joint procurements will ensure interoperability for member states’ armed forces and predictability for the European defense industry, reduce costs, and create the scale needed to reinforce the European defense industrial base,” as officials emphasize.
Funding options plan of 800 billion euros
The plan targeting defense expenditures of 800 billion euros includes specific funding tools: 1) Activation of the escape clause, with an estimated impact of 650 billion euros, 2) Gathering up to 150 billion euros in capital markets, 3) Contribution from the European Investment Bank and mobilization of private funds, 4) Flexibility of EU cohesion policy instruments, 5) New instrument for supporting joint procurements of member states with 150 billion euros, 6) Loans backed by the EU budget on demand, 7) Simplified procurement rules, 8) VAT exemption, 9) Joint public contracts.
Activation of the escape clause
As known from a European official, “It is activated with the Commission’s Council recommendation upon request.” At the same time, the EU’s fiscal rules continue to operate normally for other expenditures.
The loans and allocation keys
The loans will enable member states to secure favorable financing terms by leveraging the EU’s creditworthiness, market access, and, most importantly, as a technical advisor to the plan noted, “it will support rapid response to current defense needs.” Additionally, “the loans provided will be long-term (up to 45 years with a grace period of 10 years for principal repayment), competitively priced, and well-structured. They will be financed by EU borrowing, which often makes them a more efficient source of funding for public investments compared to national borrowing.” At the same time, the “allocation of the 150-billion-euro fund to member states will be based on demand. There will be no allocation keys. Member states wishing to receive loans must submit to the Commission an investment plan of the European defense industry. The plan must include a description of the activities, expenses, and measures for which the member state is seeking a loan. As a transitional deviation, member states may use the loan for national procurement of priority capabilities, provided it is open to other countries and all necessary measures are taken to extend the contract’s benefit to other countries.” (19/3/2025)