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The European Commission has proposed a bold plan to borrow up to €150 billion ($157.76 billion) to lend to EU governments as part of a major rearmament effort. This initiative aims to bolster European defense capabilities in the wake of Russia's invasion of Ukraine and rising doubts about the reliability of U.S. protection under NATO.
European Commission President Ursula von der Leyen stressed the urgency of the plan, describing the current geopolitical climate as "the most momentous and dangerous of times." The €150 billion will support key defense priorities, including air defense, missiles, and drones, as part of a broader strategy to mobilize up to €800 billion for European defense.
EU leaders are expected to discuss the proposals at a special summit later this week, though some measures will require approval from member states. Von der Leyen also proposed allowing defense spending to be exempt from EU debt rules, which could free up nearly €650 billion over four years.
The plan aims to address growing concerns over Europe's defense spending, especially as U.S. President Donald Trump pauses military aid to Ukraine. While Trump has accused Europe of underfunding its defense, European leaders are now accelerating their defense budgets, with some advocating for grants instead of loans. However, not all member states agree on the best approach, with countries like France and the Baltic states supporting grants, while Germany and the Netherlands oppose them.
The European Investment Bank will also play a role, increasing financing for defense projects while maintaining restrictions on weapons and ammunition. Despite the challenges, the proposal has been welcomed by many European leaders, although the details will need further negotiation to ensure fair distribution among all member states.
As pressure mounts to secure Europe's defense future, EU governments are focusing on long-term fiscal flexibility to meet these demands.
With information from the European Commission.
