Chairman of the European Commission Ursula von der Leyen announced the plans on Tuesday to re -arrange the EU.
Von Der Leyen said that the EU is trying to release funds for defense investments of EUR 800 billion.
The chairman of the Commission proposed that the EU would introduce a new financial instrument, which would provide EUR 150 billion for Member States for defense investments.
Through the financial instrument, Member States could acquire, among other things, air defense, artillery and droons. Through the financial instrument, the Commission hopes that European joint procurement will increase.
Through the new financial instrument, Member States would also be able to quickly support Ukraine.
The rules of debt are being loosened
In addition to the financial instrument, the Commission also proposes to loosen the debt rules set out on the Member States in so far as Member States are investing in defense.
This allows Member States to increase defense expenditure without fear of being subjected to the “observation class” of the Commission, that is, an excessive deficit procedure.
According to the current deficit rule, the EU country’s public economy expenditure may exceed up to 3 % of the country’s GDP, or otherwise the countries will be subject to the Commission’s special control.
According to von der Leyen, the loosening of the debt rules gives countries the opportunity to increase defense expenditure “quickly and significantly”.
He estimates that if every EU country increased defense expenditure by 1.5 % of GDP, it would produce a defense investment of EUR 650 billion in four years.
In addition, the Commission intends to open up to Member States to direct unused regional development resources to defense.
The Commission also intends to accelerate private investments in the defense industry. It is to be done through the European Investment Bank and the capital market.
“This is the moment of Europe and we have to live up to expectations,” von der Leyen said on Tuesday.
The chairman of the Commission presents his plans for EU leaders at an unofficial Ukraine and Defense Meeting on Thursday, March 6.