Does the EU have the financial resources to match its defence ambitions? With its . These needs have to be reconciled with long-term budgetary sustainability. These discussions are occupying the European Parliament, which is holding its plenary session in Strasbourg this week. It will soon adopt its position with a view to the EU’s next long-term budget (multiannual financial framework, or MFF), ahead of the European Commission’s proposals expected in July.
The plan presented by European Commission president Ursula von der Leyen is based on five pillars. They are:
1. Allowing member states to significantly increase their defence spending without triggering the excessive deficit procedure. According to Brussels, if member states were to increase their defence spending by an average of 1.5% of GDP, this could create budgetary space of almost €650bn over a four-year period.
2. Making €150bn in loans available to member states for their defence investments. Called Safe (Security Action for Europe), this instrument “will help member states to pool demand and buy together,” says von der Leyen.
3. Directing cohesion funds towards defence.
4. Mobilising private capital by accelerating the Savings and Investment Union.
5. Significantly .
In the European Parliament, von der Leyen can count on her traditional supporters: the European People’s Party (EPP, pro-European right), the Social Democrats (S&D) and the centrists of Renew Europe. To these votes should be added those of certain ecologists.
In the current context, when we talk about defence and military mobility, it is crucial to put the emphasis back on infrastructure.
For MEP Martine Kemp (CSV/EPP), the Rearm Europe plan means spending more, but above all spending better--by buying together. “If we pool our efforts to acquire equipment, such as aircraft and drones, we could go further in Europe with fewer financial resources because it would become cheaper for each member state,” she says.
Kemp sets out her priority: “In the current context, when we talk about defence and military mobility, it is crucial to put the emphasis back on infrastructure. Today, we don’t have the transport network we need because we haven’t invested enough. This point must be central to the EU’s next long-term budget. Defence is also supported by logistics. And rail is the most suitable means of moving military equipment, because of its weight and logistical requirements.”
(LSAP/S&D) also stresses the importance of the €150bn Safe instrument. “It can be used to pool resources, improve the efficiency of defence procurement and share the costs of military systems, which are often very expensive. This European pillar deserves to be strengthened. We should even consider increasing the current envelope. Today, member states’ combined defence spending represents around 1.9% of the European Union’s GDP. This is clearly insufficient.”
Drawing from cohesion funds
The next multiannual financial framework could be given greater budgetary flexibility to respond rapidly to urgent needs. In other words, if there is a shortfall in funding for one item, an attempt is made to compensate by drawing on another.
This is an “interesting” idea, says Angel. “But it must not be at the expense of cohesion policy, as Ursula von der Leyen is proposing. It should be remembered that some of these funds already support industrial regions, particularly those where the arms industry is located, by helping to create quality jobs. Diverting even more of these funds would undermine social cohesion.”
The European Commission moved forward on this issue on Tuesday 1 April, presenting its “modernised cohesion policy to reinforce the EU’s strategic priorities.” This proposal should enable member states to make greater use of existing cohesion funds to develop resilient infrastructures, in particular for military mobility.
The issue of European defence upsets all budgetary balances.
“The issue of European defence upsets all budgetary balances,” says MEP (DP/Renew Europe), who speaks of a “whatever it takes for defence.” For Goerens, whilst it is becoming urgent to mobilise additional resources for the multiannual financial framework, two major obstacles are holding back this effort.
“The first is the persistent reluctance of certain so-called ‘frugal’ states to exceed the symbolic limit of 1% of gross national income allocated to the European budget. I hope this resistance can be broken,” says the MEP. “The second obstacle is linked to the obligations to repay the loans taken out to finance the post-covid recovery plan. These are common debts, but they have to be repaid via the European budget. And in the absence of sufficient own resources, savings will have to be made on current expenditure.”
Goerens concludes that “the member states will have to make the bulk of the defence effort.” He cites the example of Germany, which has planned to borrow €500bn to invest in its infrastructure, and to finance any military expenditure above a certain threshold by borrowing. “”n Germany, it’s ‘whatever it takes.’ And that’s the most responsible attitude in the current context. We must not give the Russians the impression that a simple warning from the European Central Bank could cause us to back down.”
Whilst the ECB cannot be placed under supervision, its role remains central, says the liberal MEP. “When it comes to increasing borrowing, we are entering a form of quantitative easing. The ECB will understand what is at stake and will show responsibility and tact.”
“Growing public support”
The fact remains that, faced with the “debt wall” of European countries, the Rearm Europe plan may not be enough. In the corridors of Brussels, the idea of a new common loan--along the lines of the one adopted to deal with the pandemic--is resurfacing. French president Emmanuel Macron recently said he was “convinced” that such a loan would be necessary, whilst acknowledging that a consensus does not yet exist among the 27 member states.
“Whether the loan is borne by the European Union or by the member states, it is always the member states that will have to pay,” says Goerens. He points out that over 90% of the European budget comes from national contributions, due to a lack of sufficient own resources. “Perhaps efforts will be made in this direction. But that in no way detracts from the relevance of a European approach. If only to obtain more advantageous interest rates, it makes sense to pool our efforts.”
Finally, the MEP stresses the importance of public support. “At European level, the critical mass must remain mobilised. What is encouraging is that the latest Eurobarometer surveys show growing public support. And it’s important to remember that citizens, collectively, are often one step ahead of individual politicians.”
This article was originally published in .