Southern Europe rejects von der Leyen’s defence plan over debt concerns

Southern European countries are pushing back against a European Commission plan to increase defence spending through low-interest loans, fearing it will exacerbate their already high debt levels. 

Led by France, Italy, and Spain, this resistance undermines Commission President Ursula von der Leyen's efforts to boost Europe's military autonomy.

Her proposal includes a €150 billion loan package and a clause to loosen EU fiscal rules to allow major defence investments, reducing reliance on U.S. protection. However, this standoff threatens to derail plans to send more weapons to Ukraine.

A senior EU diplomat explained in a conversation with Politico that some countries doubt the feasibility of taking on such debt, per Caliber.Az.

Southern nations, in particular, are advocating for defence bonds, which would be grants financed through EU borrowing but require unanimous approval from all 27 member states. Von der Leyen has been hesitant to support this idea, fearing opposition from fiscally conservative northern countries like Germany and the Netherlands.

The plan was formulated after U.S. President Donald Trump's criticism of Europe’s defence reliance on the U.S. Von der Leyen proposed temporarily increasing defence spending by 1.5% of GDP over four years and borrowing €150 billion to fund joint weapons procurement and aid for Ukraine. The Commission hoped this would be supported by southern economies, which fall short of NATO’s defence spending targets.

However, the Commission underestimated the concern that loans, though cheaper, still count towards national debt, a problem for countries like Italy and Spain. These nations have pushed to expand the definition of defence spending to include border control, cybersecurity, and infrastructure resilience. While Italy and Spain haven’t yet invoked the emergency clause, some EU officials believe they may be waiting for von der Leyen to reconsider defence bonds ahead of the June summit.

Fiscally conservative states, however, accuse southern countries of playing politics, and market concerns about fragmented EU responses could undermine the plan’s effectiveness.

By Tamilla Hasanova