European Union finance ministers are set to meet on Monday to deliberate on strategies for financing defence, including new joint borrowing, utilizing existing EU funds, and expanding the role of the European Investment Bank (EIB). The discussions, chaired by Polish Finance Minister Andrzej Domanski, aim to finalize decisions by June, following recent EU leaders’ agreements to explore these funding avenues.
The urgency for increased defence spending comes as European nations seek to bolster support for Ukraine after U.S. President Donald Trump halted military aid to Kyiv, raising concerns about Washington’s commitment to European allies. Domanski emphasized the need for a stable and predictable funding framework to systematically enhance European defence capabilities.
Key topics on the agenda include a European Commission proposal to raise €150 billion ($163 billion) through loans secured by the EU budget for defence projects. Ministers will also explore using EU cohesion funds for dual-use projects benefiting both civilian and military sectors. Additionally, the EIB may broaden its lending scope to support defence-related initiatives.
On Tuesday, the second day of the meeting, ministers will discuss revising EU fiscal rules to allow increased national defence spending. The European Commission has proposed permitting all 27 EU governments to raise defence budgets by 1.5% of GDP annually for four years without breaching EU debt regulations. However, some governments, including Germany, advocate for a more permanent adjustment, citing the long-term nature of defence projects.
The ministers will also address redefining defence spending to include costs such as hiring soldiers, constructing ammunition factories, and reinforcing infrastructure like roads and bridges for military use. Poland has proposed using 2021 defence spending levels as a benchmark, reflecting the pre-invasion period before Russia’s attack on Ukraine in February 2022.
The outcome of these discussions could significantly shape Europe’s defence strategy, as member states navigate the challenges of ensuring security and maintaining support for Ukraine amidst shifting geopolitical dynamics.