The European Union has plans to increase its defense spending on a large scale – but some leaders want it to continue with the geopolitical tensions.
The European Commission, the EU’s executive arm, proposed measures at the beginning of this month that could lead to this 800 billion euros (867 billion US dollars) for new defense spending. These measures still have to be approved by the various EU capitals, but were sufficient to increase the EU defense shares since the plan was announced.
The current measures are “an important step in the right direction”, but “maybe we have to be more ambitious,” Greek Prime Minister Kyriako’s Mitsotakis told CNBC Silvia Amaro on the edge of a summit of the European Council on Thursday.
The Repetition of Europe PlanWhich was announced at the beginning of this month, comprises 150 billion euros to which the Member States can access to invest in defense and security skills. However, these funds are only made available if at least 65% of the production costs in the EU, in Norway or in Ukraine take place.
The Ukrainian army soldiers of the 22nd brigade during the tank train as a Russia-Ukraine war will continue on October 29, 2023 in Donetsk Oblast, Ukraine.
Diego Herrera Carcedo | Anadolu agency | Getty pictures
The proposal also enables temporary relaxation of the fiscal rules of the block so that the Member States can use public financing for defense at national level. The lending of the European investment bank, the EU investment bank, would also be available.
“I am pleased about the fact that the Member States now have more fiscal flexibility within the limits of the stability package to spend more for defense,” said Mitsotakis and added that the plan could possibly continue.
“This should not only be a question of the loans, as is the case at the moment. I think we also have to seriously have the possibility of a facility, a joint borrowing that also offer the Member States grants,” he said.
Other leaders, such as Latvian Prime Minister Evika Siliņa, struck a similar tone.
She said she supported the package that – a year ago – probably not happened. The country has long supported a stronger Europe that spends more for security and defense, she said.
“I think we should discuss even more opportunities for financial resources,” said Siliņa and found that administrative stress also had to be reduced to support the military industry.
“This is just the start”
Lithuanian President Gitanas Nausėda recalled that further financial instruments were included in the EU defense plans.
“I think that’s just the beginning,” he said to Amaro and explained that options such as grants would also have to be taken into account.
“We would like to see the mix, as in the case of (the) pandemic, we would like to see the mixture of instruments, borrowing and grants,” he said.
When the Prime Minister of Luxembourg, Luc Frieden, exceeded the amount of the amount of money that was assigned to the defense spending, and said the most important question was what it is issued.
“I think financing is always the second,” he said. “You first have to know what you are doing … then we have to finance, mainly through our national budgets and beyond with some European money,” he said.
“But first we discuss how we do it, how we do better, how we do it more and more coordinated,” added Frieden.
The European Central Bank member and the Governor of the Bank of France, Francois Villeroy de Galhau, seemed to be more hesitant on Thursday to increase defense spending.
After a Reuters Translation, he told the French broadcaster BFM TV that it was necessary to improve defense spending, “we cannot have politics to spend everything thatever.”
