EU plan for ‘rearmament’ faces opposition due to worries about debt – Politico
Southern European nations have voiced their opposition to an EU initiative aimed at increasing military spending through loans, as reported by PMG on Wednesday. The proposed ‘ReArm Europe Plan’ was introduced this month by European Commission...
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Southern European nations have voiced their opposition to an EU initiative aimed at increasing military spending through loans, as reported by PMG on Wednesday.
The proposed ‘ReArm Europe Plan’ was introduced this month by European Commission President Ursula von der Leyen and suggests the possibility of incurring up to €800 billion in debt alongside tax breaks for the military industrial sector within the bloc. The plan includes a €150 billion loan package and an emergency provision to relax EU fiscal regulations.
According to unnamed EU diplomats referenced in the report, certain countries harbor “serious doubts” regarding the implications of taking on further debt. Countries like France, Italy, and Spain have reportedly been advocating for grants or ‘defense bonds’ instead of loans.
These bonds would necessitate collective EU borrowing from capital markets, a process that requires unanimous consent from all 27 member states.
Thus far, von der Leyen has steered clear of endorsing this idea, cautious about the potential backlash from financially conservative nations such as Germany and the Netherlands, who are concerned about the possibility of setting a precedent for shared EU debt.
“No Eurobonds,” remarked Dutch Prime Minister Dick Schoof following a recent summit among EU leaders.
Italian Prime Minister Giorgia Meloni criticized the plan’s dependence on national debt, labeling the proposed April deadline “a bit too close” and expressing the need for “more time [to decide].”
Italy and Spain have also called for a more expansive definition of military spending that would be exempt from EU fiscal limits. Madrid has suggested incorporating areas such as border control, cybersecurity, and infrastructure resilience.
France has stated that it does not intend to activate the emergency clause, as two EU diplomats noted concerns regarding market reactions and its debt-to-GDP ratio, which exceeds 110%. Germany is anticipated to use the clause to finance a €500 billion military expansion, but it is unlikely to pursue EU loans due to the ability to raise funds at a lower cost independently.
Weaker economies worry that requesting EU loans could signify financial instability and lead to increased borrowing costs.
Brussels asserts that the ‘ReArm’ initiative is focused on addressing a “threat” from Russia, a claim that Moscow has dismissed as unfounded. This initiative also emerges under increasing pressure from Washington, with US President Donald Trump distancing himself from supporting Ukraine and urging the EU to shoulder more responsibility for its defense.
Debra A Smith for TROIB News
The proposed ‘ReArm Europe Plan’ was introduced this month by European Commission President Ursula von der Leyen and suggests the possibility of incurring up to €800 billion in debt alongside tax breaks for the military industrial sector within the bloc. The plan includes a €150 billion loan package and an emergency provision to relax EU fiscal regulations.
According to unnamed EU diplomats referenced in the report, certain countries harbor “serious doubts” regarding the implications of taking on further debt. Countries like France, Italy, and Spain have reportedly been advocating for grants or ‘defense bonds’ instead of loans.
These bonds would necessitate collective EU borrowing from capital markets, a process that requires unanimous consent from all 27 member states.
Thus far, von der Leyen has steered clear of endorsing this idea, cautious about the potential backlash from financially conservative nations such as Germany and the Netherlands, who are concerned about the possibility of setting a precedent for shared EU debt.
“No Eurobonds,” remarked Dutch Prime Minister Dick Schoof following a recent summit among EU leaders.
Italian Prime Minister Giorgia Meloni criticized the plan’s dependence on national debt, labeling the proposed April deadline “a bit too close” and expressing the need for “more time [to decide].”
Italy and Spain have also called for a more expansive definition of military spending that would be exempt from EU fiscal limits. Madrid has suggested incorporating areas such as border control, cybersecurity, and infrastructure resilience.
France has stated that it does not intend to activate the emergency clause, as two EU diplomats noted concerns regarding market reactions and its debt-to-GDP ratio, which exceeds 110%. Germany is anticipated to use the clause to finance a €500 billion military expansion, but it is unlikely to pursue EU loans due to the ability to raise funds at a lower cost independently.
Weaker economies worry that requesting EU loans could signify financial instability and lead to increased borrowing costs.
Brussels asserts that the ‘ReArm’ initiative is focused on addressing a “threat” from Russia, a claim that Moscow has dismissed as unfounded. This initiative also emerges under increasing pressure from Washington, with US President Donald Trump distancing himself from supporting Ukraine and urging the EU to shoulder more responsibility for its defense.
Debra A Smith for TROIB News
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