The European Commission (EC) proposed on Tuesday, the 4th of March, a new joint European Union (EU) loan of 150 billion euros to EU governments for defence projects. The sum is part of a larger 800 billion euro plan to strengthen Europe’s defence capabilities, according to Reuters and Politico.
The announcement comes hours after US President Donald Trump’s decision to suspend all military aid to Ukraine.
“Europe is ready to significantly increase its defence spending to respond both to the short-term need to act and support Ukraine and to address the longer-term need to take greater responsibility for our own security,” said von der Leyen.
With US President Donald Trump’s withdrawal from supporting Ukraine and Europe, EU governments are looking for ways to significantly increase defence spending.
Speaking to journalists, she presented the ReArm Europe plan to provide up to 800 billion euros in additional defence spending over the coming years.
The Commission announced that 150 billion euro of the new joint borrowing would be used to develop European defence capabilities such as air and missile defence, artillery systems, missiles and munitions, drones and anti-drone systems. As well as to address other needs ranging from cyber security to military mobility.
The money will also enable EU countries to send arms to Ukraine.
“This will help Member States pool demand and buy together. It will cut costs, reduce fragmentation, increase interoperability and strengthen our defence industrial base,” said Commission President Ursula von der Leyen.
Von der Leyen did not give a detailed timetable, but said that spending needs to be increased not only “urgently now, but also in the longer term over the next decade”.
EU leaders will discuss the proposal at a summit on defence spending on Thursday.
The Commission proposed that defence spending should not be limited under EU rules on government spending.
“If Member States increase their defence spending by an average of 1.5% of GDP, this could create a fiscal space of almost 650 billion euros,” said von der Leyen.
In addition, the Commission proposed that the money countries receive from the EU’s so-called cohesion funds, which are designed to improve living standards across Europe, could also be used for defence.
All these elements could provide up to 800 billion euro for EU governments to spend on defence projects.
“Europe is ready to take up its responsibilities. Europe could mobilise almost 800 billion euros for a safe and resilient Europe. We will continue to work closely with our NATO partners. This is Europe’s moment. And we are ready to act,” said von der Leyen.