Politico: EU governments split over proposal to establish joint military fund

As tensions between the U.S. and Europe escalate, countries with a strong defence posture, including Poland and the U.K., are considering alternative strategies to bolster their military sectors.

A proposal, informally outlined by the Bruegel think tank in Brussels, suggests that Warsaw supports the creation of a new rearmament fund aimed at joint weapons procurement, Caliber.Az reports per Politico.

Northern countries, including Sweden, Denmark, Finland, and the Netherlands, alongside the U.K., have already engaged in preliminary secret discussions regarding a similar initiative proposed by the British Treasury.

This proposal is in addition to a separate European Commission initiative offering EU nations greater fiscal flexibility and €150 billion in defence loans. Unlike the Commission's plan, the rearmament fund would be immediately accessible to the U.K. and potentially other non-EU nations.

The U.K., along with Norway and Switzerland, both non-EU countries with a coveted triple-A credit rating, is set to join discussions, highlighting their ability to borrow significant funds. However, EU governments remain deeply divided on the proposal, particularly due to reluctance among southern countries, distant from Russia, to significantly increase their defence budgets.

“This proposal won’t gain any traction; there is no point in discussing it,” said a third EU diplomat.

“It is not a silver bullet for countries such as France, with a reduced fiscal space, but it will help to achieve in three years what we would achieve in 10,” remarked another EU diplomat.

Governments with high levels of debt continue to favour EU common borrowing rather than loans.

“We are very close to the moment when some form of common borrowing becomes inevitable,” said Fabian Zuleeg, the chief executive of the European Policy Center think tank.

“The risk of Russia does not go away, regardless of what happens in the economy,” Zuleeg added.

By Aghakazim Guliyev