VDL: ReArm Europe plan could mobilise close to 800B euro for a safe and resilient Europe

European Commission President Ursula von der Leyen announced on March 4 a proposed ReArm Europe plan that she said could mobilise close to 800 billion euro for a safe and resilient Europe.

The announcement came as the BBC reported that a White House official had confirmed to CBS News that the United States was pausing military aid to Ukraine, and two days ahead of a special meeting of EU leaders to discuss continued support for Ukraine and European defence.

Von der Leyen said that she had outlined the ReArm Europe Plan in a letter to leaders ahead of the March 6 European Council.

“This set of proposals focuses on how to use all of the financial levers at our disposal – in order to help Member States to quickly and significantly increase expenditures in defence capabilities. Urgently now but also over a longer time over this decade,” she said.

There are five parts to this, Von der Leyen said.

The first part of this ReArm Europe plan is to unleash the use of public funding in defence at national level, she said.

Von der Leyen said that EU Member States are ready to invest more in their own security if they have the fiscal space: “And we must enable them to do so”.

“This is why we will shortly propose to activate the national escape clause of the Stability and Growth Pact,” Von der Leyen said.

This would allow Member States to increase significantly their defence expenditures without triggering the Excessive Deficit Procedure.

“For example: If Member States would increase their defence spending by 1.5 per cent of GDP on average this could create fiscal space of close to 650 billion euro over a period of four years.”

The second proposal will be a new instrument.

It will provide 150 billion euro of loans to Member States for defence investment.

“This is basically about spending better – and spending together. We are talking about pan-European capability domains,” Von der Leyen said.

“For example: air and missile defence, artillery systems, missiles and ammunition drones and anti-drone systems; but also to address other needs from cyber to military mobility for example.|”

She said that it would will help Member States to pool demand and to buy together.

“Of course, with this equipment, Member States can massively step up their support to Ukraine. So, immediate military equipment for Ukraine,” she said.

Von der Leyen said that this approach of joint procurement will also reduce costs, reduce fragmentation increase interoperability and strengthen our defence industrial base.

“And it can be to the benefit of Ukraine, as I have just described. So this is Europe’s moment, and we must live up to it.”

Third point is using the power of the EU budget.

“There is a lot that we can do in this domain in the short term to direct more funds towards defence-related investments…we will propose additional possibilities and incentives for Member States that they will decide, if they want to use cohesion policy programmes, to increase defence spending.”

She said that the last two areas of action aim at mobilising private capital by accelerating the Savings and Investment Union and through the European Investment Bank.

“To conclude: Europe is ready to assume its responsibilities,” Von der Leyen said.

“We will continue working closely with our partners in Nato. This is a moment for Europe. And we are ready to step up,” she said.

(Photo: EC Audiovisual Service)

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