European Union finance ministers will discuss the creation of a joint intergovernmental defense fund to purchase weapons with the money of its members.
Reuters reports this, citing sources.
The project for such a defense fund was developed by the Bruegel think tank at the request of Poland, which holds the EU presidency. The fund could provide significant defense funding without increasing the level of national public debt (a concern for many highly indebted countries).
The defense fund project, called the European Defense Mechanism, is part of a European debate on how to finance preparations for potential aggression by Russia. After the inauguration of President Donald Trump, European governments realized that they could no longer rely entirely on the United States for their security.
The European Union already plans to increase military spending by €800 billion over the next four years, easing fiscal constraints on defense investment and jointly borrowing money for major defense projects under EU budget guarantees.
The "European Defense Mechanism" will have capital in the form of paid-in funds and reserve liabilities. This will allow it to borrow on financial markets, as well as provide loans and admit non-EU countries, such as the United Kingdom, Ukraine, or Norway.
This initiative envisages that the "European Defense Mechanism" will contribute to the creation of a single market for defense equipment in Europe, reduce costs, and pool resources.
Currently, defense procurement in the 27 EU countries is fragmented. The bloc uses seven types of tanks, nine types of self-propelled guns, seven types of infantry fighting vehicles, etc. And these are at least problems with equipment compatibility.
The “European Defense Mechanism” should focus on strategic elements, namely: expensive military infrastructure and equipment, which are currently often received from the United States. These include command and control systems, satellite reconnaissance and communications, the development of advanced weapons, air defense systems, missiles, and nuclear deterrence.
The draft of this fund states that it will allow the European Union to reduce its military dependence on the United States by 2030 only if it maximizes its procurement and creates a common European defense market, which the United Kingdom should also join.
The fund will only make purchases from countries that join it. In certain cases, the European Defense Mechanism board will be able to make exceptions.
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