Southern EU countries block von der Leyen's defense plan
Photo: Ursula von der Leyen, President of the European Commission (Getty Images)
Three countries have blocked the European Commission's plan to increase defense spending through loans. Southern countries fear that this will increase their debt burden, Politico reports.
France, Italy, and Spain have opposed the European Commission's initiative to increase defense spending through cheap loans.
They fear that such a move will only increase their already significant debt burden, which has hit EC President Ursula von der Leyen's plans to strengthen Europe's military autonomy.
The proposal included a €150 billion loan package and special relaxations of EU fiscal rules to unlock new defense investments and reduce dependence on the United States.
However, a lack of unity among member states is jeopardizing the plan, which could affect the EU's ability to supply Ukraine with more weapons.
"Some countries have serious doubts on the feasibility or even the possibility of indebting [themselves] to these levels," said one senior EU diplomat, speaking on condition of anonymity.
EU seeks compromise between loans and defense bonds
Southern countries that already have high levels of public debt are offering an alternative in the form of so-called defense bonds - grants financed by joint EU borrowing on the capital markets. However, this requires the unanimous consent of all 27 members of the bloc.
This option is opposed by fiscally conservative Northern European countries, such as the Netherlands and Germany. They fear that this would set a precedent for future mutual debt obligations.
Diplomats from the Nordic countries also question the feasibility of defense bonds if southern states refuse even the proposed loans.
“If they argue that defense is an existential challenge that justifies joint debt, then they need to take the loans first,” said one representative of the fiscally conservative bloc.
Europe's rearmament plan
The European Commission has presented a €150 billion defense initiative, ReArm Europe, to strengthen Europe's military capabilities. On March 6, EU leaders discussed this plan at a summit and agreed on it.
According to European Commission President Ursula von der Leyen, the initiative will provide member states with additional financial opportunities to invest in defense.
The plan envisages raising 800 billion euros, of which 150 billion will be in the form of loans for the defense sector. The allocated funds are to be used for the production of air defense systems and the modernization of defense infrastructure in the EU.
