EU presents €800bn plan to rearm Europe and support Ukraine

Ursula von der Leyen, photo by UNIAN

President of the European Commission Ursula von der Leyen has presented a plan to rearm Europe, which will mobilise approximately 800 billion euros to strengthen defence.

The first part of the initiative involves expanding public funding for the defence sector at the national level, according to «Evropeiska pravda».

To do this, the European Union will offer member states the possibility of bypassing the Growth and Stability Pact, which will allow them to increase defence spending without the risk of triggering the excessive deficit procedure.

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According to Ursula von der Leyen, if EU countries increase their defence spending by 1.5% of gross domestic product on average, this will create a fiscal space of approximately €650 billion over four years.

The second proposal would create a special instrument that would provide €150 billion in loans to member states for defence investments.

As Ursula von der Leyen explained, the funds will be used to develop pan-European defence capabilities, including air and missile defence, artillery systems, missiles, ammunition, drones and countermeasures. The funding can also be used for cyber security and military mobility. This will allow EU states to pool demand and conduct joint procurement, which, in turn, will strengthen support for Ukraine.

The third area involves raising funds from the EU budget. The European Commission plans to offer additional incentives to member states to use cohesion policy programmes to increase defence spending.

The last two points of the initiative are aimed at mobilising private capital.

«The EU is ready to take responsibility. The European Rearmament Plan could mobilise around €800 billion in defence spending for a secure and resilient Europe,» Ursula von der Leyen said.

As a reminder, the European Union is temporarily suspending the development of a new €20 billion aid plan for Ukraine.

According to Politico, the item on assistance to Ukraine has disappeared from the summit agenda, proposed by Foreign Minister Kaja Kallas, and has been removed from the latest draft conclusions to be considered by EU ambassadors today.

They added that the change came after Hungary vetoed the previous version of the document.