A total of 16 European Union member states are planning to make use of relaxed budget rules to free up money to spend on defence in an effort to reduce their reliance on the United States to guarantee the continent’s security.
Given the question mark over future US support for Ukraine in the war with Russia, EU states have been under pressure to ramp up their defence spending to deter any future threat from Moscow.
Earlier this year EU leaders agreed on a plan that they hoped might see hundreds of billions of euro more spent on defence over the coming years.
The plan included offering capitals cheap loans backed by the EU budget and easing rules meant to keep national spending in check if the money was invested in defence and military projects.
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To date 12 EU states have applied to exempt defence spending when calculating whether their budget deficits fall under a 3 per cent ceiling set by the bloc.
Those who have applied to avail of the defence spending loophole are: Germany, Poland, Belgium, Denmark, Portugal, Estonia, Finland, Latvia, Greece, Slovakia, Hungary and Slovenia. The European Commission, which proposed the defence plan, said it was now assessing the requests.
The governments of Lithuania, Bulgaria, Croatia and the Czech Republic are finalising their applications to make use of the budget deficit exemption.
[ EU leaders back major defence spending in response to ‘existential challenge’ in Ukraine ]
Under the plan EU states would be given leeway to spend an extra 1.5 per cent of their gross domestic product on defence a year, before the commission would try to rein in budget overruns. A decision on the applications to avail of the deficit exemptions is expected in the coming weeks.
Diplomats are still debating the scope of another plank of the plan to boost defence spending, which would see the commission extend cheap loans to national capitals. The funding would be contingent on states grouping together on joint projects and orders, as well as spending a significant portion of the money in Europe.
Countries outside of the EU who have defence pacts with the union would also be allowed to take part.
At a closed-door meeting this week diplomats from EU states called for tweaks to the commission’s proposal. It is understood several states wanted to make sure the United Kingdom can access the scheme, given its close co-operation with the EU to support Ukraine.
An internal Department of Defence briefing paper indicates Ireland is most interested in joint EU defence projects related to cyber and maritime security.
“Ireland plans to take a constructive approach to the proposals outlined in the ReArm Europe Initiative ... Ireland will engage with our European partners to progress this discussion over the coming months,” the recent briefing stated.
