European Commission president Ursula von der Leyen has unveiled an ambitious financial strategy, termed the ReArm Europe Plan, which encompasses a budget of €800bn ($867.74bn) aimed at bolstering defence spending across the continent.
The initiative outlines a comprehensive approach for leveraging various fiscal tools to assist European Union member countries in rapidly enhancing their defence infrastructure and capabilities.
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The plan comprises five key elements. The initial aspect of ReArm Europe initiative involves activating the deployment of government funds for defence purposes within individual nations. This could potentially release up to €650bn for defence spending.
A subsequent proposition introduces a novel mechanism designed to extend up to €150bn in lending to member countries for defence-related expenditures. The essence of this approach is to enhance the efficiency and collective nature of spending.
The third element capitalises on the financial leverage of the EU’s budgetary resources.
The final two strategic objectives focus on engaging private investment by expediting the progress of the Savings and Investment Union, as well as using the financial capabilities of the European Investment Bank.
von der Leyen said: “We are coming out of this European Council very determined to ensure Europe’s security and act with the scale, speed and resolve that the situation demands. We are determined to invest more, better and faster together. From Paris to London to Brussels, we have shown that we are willing and able to step up our joint efforts and to coordinate effectively.
“The fact is that Europe is facing a clear and present danger. This is why I presented the REARM Europe Plan to the leaders today, a plan to give Europe the military capability it needs to face today’s threats. It could mobilise up to €800bn. It is about shouldering more responsibility for our own security. Because the urgency is real.”
She concluded: “We will continue working closely with our partners in Nato. This is a moment for Europe. And we are ready to step up.”
The EU chief noted that the upcoming release of the European Defence White Paper is scheduled for 19 March 2025, just prior to the routine session of the European Council.
Additionally, a proposal aimed at streamlining defence-related processes will be introduced.
The call to re-arm the continent follows recent events from Washington’s new leadership that have spotlighted Europe’s responsibility for its own defense. The US is showing a reduced commitment to safeguarding its longstanding European allies as it navigates and engages with Russia.
Recently, the UK has shown its support for Ukraine by signing a bilateral loan agreement worth £2.26bn ($2.9bn) to bolster the defence capabilities of the war-affected nation.
