The European Union responded to U.S. President Trump’s pausing of American military assistance to Ukraine by unveiling a massive increase in defense spending. Unveiling the package at a press conference Tuesday, European Commission President Ursula von der Leyen said it would be funded by a 1.5% rise in national defense budgets and loans from Brussels. Photo by Olivier Matthys/EPA-EFE
March 4 (UPI) — The European Union on Tuesday unveiled a $841 billion “ReArm Europe Plan” using all the financial means at the continent’s disposal to help member states urgently ramp up defense capabilities, both to meet immediate threats and through the remainder of the 2020s.
The proposal to unleash state funding by triggering emergency measures exempting governments from strict deficit spending rules, calls for member states to up their defense budgets by 1.5% of GDP, equivalent to $683.5 billion over four years, and $157.5 billion in defense investment loans, European Commission President Ursula von der Leyen said in a statement.
Speaking in Brussels after the United States said it was cutting off all military assistance to Ukraine, von der Leyen said events had moved beyond questions of the true threat level facing Europe, or if it should take greater responsibility for its security, to whether it was ready and able to respond “as the situation dictates.”
She said the answer from a series of emergency summits in European capitals, most recently in London on Sunday, was unanimous agreement that a colossal increase in defense spending was necessary.
“We are in an era of rearmament. And Europe is ready to massively boost its defense spending. Both, to respond to the short-term urgency to act and to support Ukraine but also to address the long-term need to take on much more responsibility for our own European security,” said von der Leyen.
The $157.5 billion of loans was designed to create a “pan-European” capability in which states “spend better” by pooling their purchasing power and developing joint air, missile and drone defense systems, missiles and attack drones, as well as cyber warfare systems, enabling them to “massively step up their support to Ukraine,” she said.
“Joint procurement will also reduce costs, reduce fragmentation increase interoperability and strengthen our defense industrial base. And it can be to the benefit of Ukraine,” von der Leyen said. “This is Europe’s moment, and we are ready to step up.”
Von der Leyen said Brussels would provide incentives to encourage states to increase defense by allowing them to use money from its “cohesion policy programs” budget, which is set at $412 billion for the current 2021-2017 period.
The plan would also tap private capital via the European Investment Bank and by speeding up the creation of the Savings and Investment Union which aims to a single financing market within the EU with no internal borders.
The initiative comes amid a rapidly evolving new realpolitik in which Europe faces having to shoulder a much larger share, if not all, of the responsibility for its security, but also providing all of Ukraine’s military requirements to stay afloat in its struggle with Russia, and figuring out how to pay for it all.
The continent has been diverting interest on more than $210 billion of frozen Russian assets to help pay for Ukraine’s defense, but British Foreign Secretary David Lammy is pushing for Europe to go further and seize the assets and hand it to the United States to buy the advanced U.S. military equipment, support and logistics so essential to Ukraine’s military viability.
However, the proposal is opposed by French President Emmanuel Macron, German Chancellor Olaf Scholz and the European Central Bank.
They fear it would establish a damaging precedent in breach of internationally observed protections of sovereign assets and create a chilling effect on eurozone investment, scaring off potential big investors like Saudi Arabia and China.
