The European Union should explore the idea of establishing a “rearmament bank” to raise the money it needs to ramp up its defence capabilities and deter Russian aggression, Poland’s foreign affairs minister has said.

Poland currently hosts the rotating presidency of the EU Council and has put security atop its agenda.

It is estimated the bloc needs to invest an additional €500 billion over the coming decade to increase military production and cover its defence needs, which were dramatically transformed after Vladimir Putin launched the invasion of Ukraine.

“That’s the thing about defence. You build up your defence capabilities against (what) you don’t wish would happen anyway. It’s like being prepared for a pandemic. It’s an insurance policy,” Radosław Sikorski said on Thursday in a group interview attended by Euronews.

“The test of whether we are serious is actually quite simple: follow the money. Because defence is really expensive, as you know. And if you don’t spend real money it will not happen,” he went on. “Then you have to ask yourself a straightforward question: where is the money coming from?”

According to Sikorski, the options on the table should include: increasing the contributions of member states to the EU budget, re-purposing existing EU funds, redeploying unspent EU funds and issuing collective debt, an option that is gaining traction but is still opposed by Germany and the Netherlands.

“There is a new idea which I like: a rearmament bank,” the minister added.

Asked to develop the pitch, Sikorski said the bank could follow the template set by the European Bank of Reconstruction and Development (EBRD), which was founded after the end of the Cold War to promote the development of former communist nations.

The EBRD is an international initiative and is based in London. Last year, the EBRD invested €16.6 billion and mobilised €26.7 billion across the world.

Neither the EBRD nor the European Investment Bank (EIB) are allowed to finance projects that are exclusively military, leading to calls for reform.

“Now that we’ve decided that we do need to rearm, and I hope there is consensus on that, we need to create a somewhat similar institution to plug that gap. And that argument convinces me,” Sikorski told reporters.

“The added advantage would be that it could be opened not only to EU member states but also other like-minded countries Norway, the UK and Japan,” he added.

Shareholding in the bank would be “voluntary”, the minister clarified, as some member states (Ireland, Malta and Austria) are neutral.

Besides exploring the possibility of a rearmament bank, Sikorski urged Brussels to work towards the full confiscation of the frozen assets of the Russian Central Bank, which were paralysed at the start of the war and are worth €210 billion across EU territory.

The majority is held in Euroclear, a Central Securities Depository (CSD) in Belgium.

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So far, the European Commission has only introduced schemes to leverage the extraordinary revenues generated by the assets to back a loan for Ukraine. The option of confiscation has not been put on the table because it remains legally fraught, as the money is a sovereign asset of Russia and is therefore protected by international law.

Poland, the Baltic states and High Representative Kaja Kallas are keen to break the taboo and advance the debate around confiscation. European Central Bank President Christine Lagarde has warned the move could backfire and undermine the EU’s credibility.

“The Russian frozen assets should go to Ukraine to repair the damage that Russia has done,” Sikorski said. “If you don’t activate one of those sources of funds, it (the defence boost) will not happen. And if it doesn’t happen, then you’ll have to hope for the best. But we’ve been doing it for far too long.”