EU pushes for €500 billion defence fund to strengthen security

European Union countries are in talks to set up a joint €500 billion defence fund, aiming to finance common defence projects and arms procurement.

This move follows concerns over US President-elect Donald Trump’s potential withdrawal of security guarantees for NATO allies, which has pushed European capitals to explore more radical funding options, Caliber.Az reports, citing foreign media.

These include joint borrowing, a method previously opposed by fiscal conservatives in countries like Germany, the Netherlands, and Denmark.

The plan, which involves issuing bonds backed by national guarantees, has gained momentum among several EU member states and could also extend to non-EU countries like the UK and Norway. The European Investment Bank (EIB) would play a key role in administering this fund, which aims to boost defence spending in anticipation of Trump's return to power.

European leaders, particularly from countries like Greece, Italy, Spain, and Poland, are rallying behind this initiative, calling it essential to bolster European security and defence capabilities. Greek Prime Minister Kyriakos Mitsotakis emphasized the growing urgency, noting a shift in sentiment towards joint financing for defence projects of common interest. Poland’s deputy finance minister, Pawel Karbownik, echoed these sentiments, stressing that Europe must be prepared for worst-case security scenarios.

The discussions aim to raise at least €500 billion, with European Commission President Ursula von der Leyen noting this as the minimum amount needed over the next decade. These funds could support joint projects, such as common air defence systems proposed by Poland and Greece. However, much still needs to be resolved regarding how these funds will be allocated and the specific projects they will support.

This push for greater European defence spending has also been linked to growing concerns over the future of NATO and the EU’s ability to defend itself and support Ukraine in the face of ongoing geopolitical challenges.

By Tamilla Hasanova