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A five-part plan to bolster Europe’s defence industry and increase its military capability could raise nearly €800bn (£660bn) and help provide urgent military support for Ukraine after the US suspended aid to Kyiv, the head of the European Commission has said.
Ursula von der Leyen said on Tuesday the 27-member bloc would propose giving member states more fiscal space for defence investments, as well as €150bn in loans for those investments, and would also aim to mobilise private capital.
Presenting the “ReArm Europe” package in Brussels, von der Leyen said: “This is a moment for Europe, and we are ready to step up.” The proposals “could mobilise close to €800bn of defence expenditures for a safe and resilient Europe”, she added.
The announcement followed Washington’s decision to suspend all US military aid to Ukraine, blocking billions of dollars’ worth of ammunition, vehicles and other vital equipment as Donald Trump piles pressure on Kyiv to agree a peace deal with Russia.
The US president’s announcement came after heated exchanges in the White House on Friday between Trump and his Ukrainian counterpart, Volodymyr Zelenskyy, and a crisis meeting in London on Sunday at which European leaders rallied round Kyiv.
Trump’s direct approach to Russia on ending the Ukraine war has thrown Ukraine’s future into question and left Europe contemplating the stark prospect of the US withdrawing longer-term support from Ukraine and from its European allies.
“A new era is upon us,” the commission president wrote to EU leaders. “Europe faces a clear and present danger on a scale that none of us has seen in our adult lifetime … We are living in the most momentous and dangerous of times.”
The commission’s plan includes €150bn of new joint EU borrowing that would be lent to EU governments to fund pan-European capabilities in areas such as air and missile defence, artillery systems, missiles, ammunition, drones and other needs.
“It will help member states to pool demand and to buy together. This will reduce costs, reduce fragmentation, increase interoperability and strengthen our defence industrial base,” von der Leyen said.
“With this equipment, member states can massively step up their support to Ukraine. So, immediate military equipment for Ukraine,” she added.
The commission would also propose loosening the fiscal constraints the EU puts on government spending to “allow member states to significantly increase their defence expenditures” without triggering punishing budget deficit rules, she said.
“If member states increase their defence spending by 1.5% of GDP on average, this could create fiscal space of close to €650bn over a period of four years,” von der Leyen said. Defence spending in many EU states is below the Nato target of 2% of GDP.
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The package also includes action by the European Investment Bank – which EU member states want to drop limits on lending to defence firms – and on a savings and investments union to help European companies access capital.
EU leaders are due to discuss the proposals at a special summit devoted to defence spending in Brussels on Thursday – although diplomats have said immediate decisions beyond strong commitments were unlikely.
France’s finance minister, Eric Lombard, said on Tuesday that his country would have to spend “faster and harder” on defence even if it meant it would have to make savings elsewhere, although though the welfare system would largely remain intact.
Lombard rejected seizing Russian assets to fund European military spending, saying Paris’s position was that “these Russian assets … belong notably to the Russian central bank” and seizing them “would be contrary to international agreements”.
