Paris: The European Commission, the executive arm of the European Union, proposed a plan that could free up around €800 billion ($841 billion) in defence spending over the next four years, as the continent prepares to face Russian aggression and help Ukraine to defend itself.
Commission President Ursula von der Leyen proposed a five-point plan, dubbed ReArm Europe, to help pay for more security spending ahead of a meeting of EU leaders in Brussels. She said the world is seeing an era of rearmament, and the 27-nation bloc is ready to “massively” boost defence spending.
The plans include €150 billion in loans to member states to build up pan-European capacities in areas like air defence and ammunition, and activating a fiscal escape clause to let countries spend more on defence without triggering the bloc’s excessive-deficit procedure, Von der Leyen said.
If member states were to use the clause to raise defence spending by 1.5% of GDP on average, that would create fiscal space of nearly €650 billion over a period of four years, according to the commission president.
The spending proposal comes as US President Donald Trump has pulled military and financial support for Ukraine and appears ready to walk away from NATO security guarantees for Europe, as he aligns with Russia’s Vladimir Putin. Trump has repeatedly criticized European NATO members for not spending enough on defence.
“We’re living in the most momentous and dangerous of times,” Von der Leyen said. “The real question in front of us is whether Europe is prepared to act as decisively as the situation dictates, and whether Europe is ready and able to act with speed and with the ambition that is needed.”
Von der Leyen said various meetings of European leaders in recent weeks, most recently in London, show the answer to the question whether Europe is ready to spend is “resounding and clear.” Only a handful of NATO members in Europe spent more than 2.5% of GDP on defence in 2024, and nearly a third didn’t meet the 2% target set by NATO in 2014, according to data from the alliance.
There is a short-term need to support Ukraine, and a long-term need for Europe to take on more responsibility for its own security, Von der Leyen said. She said member states are ready to invest in their own security if they have the fiscal means, hence the proposal to activate the national escape clause of the EU’s Stability and Growth Pact.
The proposed loans will be a new instrument, focused on joint armament spending to reduce costs and increase interoperability in Europe, the council president said. Areas of investment could include air and missile defence, artillery systems, missiles and ammunition, drones, cyber and military mobility, according to Von der Leyen. The commission also plans to study how more of the EU budget can be directed towards defence spending. Also on the table are measures aimed at accelerating the bloc’s savings and investment union and spending by the European Investment Bank.
“Europe is ready to assume its responsibilities,” Von der Leyen said. “ReArm Europe could mobilise close to €800 billion of defence expenditures for a safe and resilient Europe. We will, of course, continue working closely with our partners in NATO. This is a moment for Europe, and we are ready to step up.”
