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The President of the European Commission, Ursula von der Leyen, announced a plan to strengthen the European defense industry and Europe’s military capabilities amounting to up to 800 billion euros.
The President of the Commission proposes relaxing fiscal rules to promote investments in the Defense sector. “This will allow member states to significantly increase their defense spending without triggering the excessive deficit procedure,” she explained. The European Union proposes giving member states more fiscal space for defense investments, 150 billion euros in the form of loans available to each member state for these investments, as well as activating private capital, explained the President of the Commission.
The plan for “ReArm Europe” will allow for “immediate” aid to Ukraine, said Ursula von der Leyen.
The five points included in the plan
The President of the European Commission, Ursula von der Leyen, presented the plan to enhance EU defense spending under the name “ReArm Europe.” As she said during the presentation, “We live in the most important and dangerous times. I don’t need to describe the severe nature of the threats we face. The real question before us is whether Europe is ready to act as decisively as the situation demands. And if Europe is ready and able to act with the speed and ambition required.”
She referred to the meetings of recent weeks – the most recent being the day before yesterday in London – with the response from European capitals being “as loud as it is clear,” as she stated. Specifically, the President of the Commission emphasized that “we are in an era of rearmament. And Europe is ready to massively increase its defense spending. Both to respond to the short-term urgent need to act and support Ukraine, and to address the long-term need to take much greater responsibility for our own European security. This is why I wrote a letter today to the leaders ahead of Thursday’s European Council. This is why we are here today together.” As she explained, the letter to the leaders consists of a set of proposals focused on “how to use all the financial levers at our disposal – in order to help member states quickly and significantly increase spending on defensive capabilities. Urgent now, but also over a longer period during this decade. This proposal consists of five parts.”
Specifically:
“The first part of this ReArm Europe plan is the liberalization of the use of public funding in defense at the national level. Member states are ready to invest more in their security, if they have the fiscal room. And we must give them the possibility to do so. This is why we will soon propose activating the national escape clause of the Stability and Growth Pact. It will allow member states to significantly increase their defensive spending without triggering the excessive deficit procedure. For example: If member states increase their defensive spending by 1.5% of GDP on average, this could create fiscal space close to 650 billion euros over a period of four years.
The second proposal will be a new instrument. It will provide loans of 150 billion euros to member states for defense investments. It’s essentially about better spending – and common spending. We’re talking about pan-European capability sectors. For example: air and missile defense, artillery systems, missiles and munitions, unmanned aircraft and anti-unmanned aircraft systems – but also addressing other needs, from cyberspace to military mobility for instance. It will help member states pool demand and purchase jointly. Naturally, with this equipment, member states can massively increase their support to Ukraine. Immediate military equipment for Ukraine. This approach of joint procurement will also reduce costs, decrease fragmentation, increase interoperability and strengthen our industrial defense base. And it can benefit Ukraine, as I just described. This is Europe’s moment and we must seize it.
The third point is the use of the power of the EU budget. We can do a lot in this area short-term to direct more funds towards defense-related investments. That’s why I can announce that we will propose additional capabilities and incentives for member states to decide, if they want to use cohesion policy programs, to increase defense spending.
The last two areas of action aim to mobilize private capital by accelerating the Union of Savings and Investments and through the European Investment Bank.
Ursula von der Leyen stated, “Europe is ready to take on its responsibilities. ReArm Europe could mobilize nearly 800 billion euros for a secure and resilient Europe. We will continue to work closely with our NATO partners. This is a moment for Europe. And we are ready to take action.” (4/3/2025)
PHOTO EPA/OLIVIER MATTHYS