The European Union will propose a €150 billion loan to boost defence spending after decades of underinvestment and as US President Donald Trump rolls back American security on the continent, LuxTimes reports.
European Commission President Ursula von der Leyen also said the EU would propose activating a fiscal clause that would allow countries to use their national budgets for €650 billion in additional defence spending over four years without triggering budget sanctions.
Von der Leyen said the package, combined with new loans for defence spending, could raise about 800 billion euros if governments take full advantage of the new leeway.
“We are in an era of rearmament,” she told reporters in Brussels on Tuesday. “Europe is ready to massively boost its defence spending.”
Once-in-a-generation moment
Europe is seeking hundreds of billions of euros in additional funding to continue supporting Ukraine, especially after Trump ordered the suspension of all military aid to Kyiv. Von der Leyen called it a “once-in-a-generation moment” and has previously said the EU needs around €500 billion in defence investment over the next decade.
Von der Leyen sent a letter to member states listing options for strengthening national defence in the near term. The proposal will be discussed by EU leaders at an emergency meeting on Thursday.
Leaders are expected to assess the most favoured ideas and instruct the commission, the EU’s executive body, to work on them further before concrete proposals are put forward as early as the next meeting on March 21-22, said people familiar with the matter who spoke on condition of anonymity.
Many EU countries, including France and Italy, are in difficult budgetary situations and have little financial capacity to dramatically increase borrowing.
The letter also lists several other options, including raising private financing through the capital markets, reallocating other EU funds to defence, expanding European Investment Bank lending to include some military projects currently excluded, or using the European Stability Mechanism, the eurozone’s 500 billion euro bailout fund.
