The EU proposed to approve a large-scale rearmament plan for ReArm Europe, announced by the President of the European Commission Ursula von der Leyen, with the understanding that Europe is now going through the “most dangerous time” that requires decisive action in ensuring security.
At the same time, ReArm Europe is about money. As noted, ReArm Europe is a set of proposals for using financial leverage to increase EU member states’ defense capabilities, right now and during this decade. And in general, it consists of five points.
The first is to allow countries to increase their defense spending at the expense of budget deficits beyond the norms established in the EU. Currently, the EU has a Stability and Growth Pact, which regulates the budget balance, the ratio of public debt to GDP, and other financial indicators. According to estimates, the easing of conditions to the budget deficit will allow the release of an additional 650 billion euros over four years.
The second is lending to EU member states for €150 billion for joint arms purchases. At the same time, Ursula von der Leyen directly linked it with the possibility of providing more assistance to Ukraine.
The third is the use of the EU budget itself for direct investment in defense capabilities in the short term. Also, this mechanism can be used to provide additional opportunities to countries that will increase defense spending.
The fourth is the mobilization of private capital through financial institutions such as the European Investment Bank. It is noted that in total, all four areas will allow mobilizing about 800 billion euros to strengthen defense. Of course, if the plan is adopted, agreed upon and fully implemented. If we start from this figure of 800 billion euros, which is obviously stretched over several years, then this is, of course, a rather significant increase in defense spending in all European countries.
On the part of News Hub, it should be noted that the projected defense spending of all EU countries in 2024 on defense amounted to 326 billion euros. Thus, if even 800 billion euros is a four-year prospect, then it is about an increase in defense spending by more than 1.5 times.
The main problem is that there is a certain time period between how money is allocated and it turns into real weapons. In particular, the launch of any new production is 1.5-2 years. At the same time, part of the EU initiative is related to short-term lending solutions for joint procurement, including in the interests of Ukraine.
And if the volume of 150 billion euros is also divided by 4 years, then this is about 37.5 billion dollars for armaments alone. At the same time, according to the plan for 2024, the EU was supposed to spend a total of 90 billion euros on new weapons.