The EU on the path to militarisation What is behind ReArm Europe and what are the consequences for Baku?

In March of this year, the European Union (EU) took a major step towards reshaping its defence policy by announcing the launch of the ReArm Europe programme. This ambitious plan, presented by European Commission President Ursula von der Leyen, marks a new phase in Europe’s militarisation, driven by geopolitical challenges, shifting power dynamics, and uncertainty over the future of the transatlantic partnership.

Why is the EU moving towards active rearmament?

There are several key factors behind this large-scale military initiative.

Firstly, the growing instability on Europe’s eastern borders—caused by the war in Ukraine and tense relations with Russia—has made defence a top priority for Brussels.

Secondly, concerns are rising over the future of US security guarantees, particularly in light of Washington’s recent statements and actions. The US has increasingly signalled that continued funding for Europe’s security at the expense of American taxpayers is no longer justified.

In response to these challenges, the EU has announced a large-scale military initiative for the first time in many years. As part of ReArm Europe, up to €800 billion is planned to be allocated to strengthen the defence capabilities of the Old World. The funds will be used to purchase modern air defence systems, ammunition, unmanned aerial vehicles, cyber protection, and to enhance security in border areas with Russia and Belarus.

Funding: Who will foot the bill for Europe's rearmament?

A key issue that has sparked significant debate in Europe is the funding of this programme. The EU has proposed a two-tier mechanism for securing the necessary funds:

1. Joint Borrowing – €150 billion will be provided to member states as loans, which can only be used for military procurement.

2. Loosening Budgetary Restrictions – The remaining €650 billion will need to be found by countries through increased budget deficits.

The last point has sparked particularly sharp debates. To finance defence spending, it is proposed to partially reallocate funds from the Cohesion Fund, traditionally directed towards social and infrastructure development. This creates the risk of reducing funding for vital programmes, which, in turn, could trigger growing discontent among European citizens.

Moreover, the increase in budget deficits poses a debt burden on the economies of EU countries. In the long term, this could lead to the need for tax hikes or cuts in social spending, potentially destabilising the political situation in several countries.

Challenges and risks of rearmament

Despite the ambitious nature of the project, its implementation faces several significant challenges.

Firstly, the EU lacks a centralized military structure capable of effectively coordinating defence procurement and responding quickly to threats. Political disagreements among member states, differing approaches to defence policy, and competition between national military-industrial complexes complicate the process of creating a unified military strategy.

Secondly, the EU relies on bureaucratic mechanisms, which slow down the decision-making process. For example, even the approval of loan applications under ReArm Europe could take up to a year, making this programme ineffective in the face of immediate military challenges.

Thirdly, the contradictions within the financial strategy pose significant risks. The rearmament programme requires substantial investments, but the EU has not yet proposed a clear plan for repaying the loaned funds. Moreover, the idea of reallocating budget funds to defence meets resistance in Southern European countries, which traditionally advocate for prioritising social policy funding.

Confiscation of Russian assets as a funding source

In light of the funding shortfall, the EU is considering alternative sources of financing, particularly the confiscation of frozen Russian assets held in European banks. According to various reports, the total value of these assets reaches €300 billion, with the majority concentrated in Belgium, France, and the United Kingdom.

Until recently, leaders of major EU countries opposed the full seizure of these funds, fearing it could undermine trust in the EU's financial system. However, in recent weeks, France, Germany, and the United Kingdom have started to actively discuss mechanisms for confiscation. Among the proposed options is linking the fate of these assets to Russia's compliance with a potential future ceasefire: if Moscow violates the terms, the funds will be permanently seized.

This initiative represents an unprecedented step that could create a dangerous precedent. The use of frozen sovereign assets from another state to finance military operations is a risky move that could undermine Europe's status as a global financial centre.

How will this impact the South Caucasus?

The ReArm Europe programme carries certain consequences for the South Caucasus. As the EU strives for strategic autonomy, it may increase its role in military supplies to third countries, including Armenia.

France is already acting as a key lobbyist for arms supplies to Yerevan. In the context of the expanding EU military initiative, Paris may succeed in securing increased funding for the rearmament of Armenia. This creates potential threats for Azerbaijan and requires Baku to intensify efforts to neutralise such risks.

One possible response from Azerbaijan could be to deepen military cooperation with friendly countries within the EU, such as Italy, Hungary, the Czech Republic, Slovakia, and others. Collaboration with these states will help balance France's influence and minimise the risks associated with potential EU decisions on arms supplies to Armenia.

Conclusion

The ReArm Europe initiative marks a transition for the EU into a new phase in military policy. The European Union is seeking greater independence in defence matters, but this process comes with significant financial, institutional, and political risks.

Against the backdrop of these changes, it is crucial for Azerbaijan to closely monitor the dynamics of European defence policy and develop a strategy for interaction with key players within the EU. Baku must strengthen cooperation with countries that share its interests and work to minimise potential threats related to the militarisation of Europe.