Pumping 150 Billion Euros into Defense: Europe's Hasty Arms Race
People are actively abandoning the use of traditional currency in Europe
By Lea VerstlMore InfoFacebookTwitterWhatsappEmailPrintCopy Link**
The EU's Defense Fund is a whopping 150 billion euros, and Europeans are eager to dip into it. But, is it a walk in the park? Far from it!
When the US President Donald Trump made it clear he saw European defense as a hefty expense, Brussels' response was unanimous: It's high time for European nations to unite and shoulder their defense responsibilities. And time is running out fast, as many intelligence officials believe that Russian President Vladimir Putin may launch an assault on Eastern Europe within the following years if deterred.
So, it's a race against time to streamline the 27 fierce national armament industries. The rule of thumb is simple: At least two countries must join forces for a joint defense project to be eligible for funds from the Defense Fund. But in the first ten months, even a single country can apply, provided it scouts for a partner. If the quest for a partner fails, the money must be returned.
German Dilemma: Surrender or Battle?
The complexities of pooling resources for defense initiatives are evident in the EU. Green member of the Defense Committee in the European Parliament, Hannah Neumann, remarks that the Security Action for Europe (SAFE) Instrument is a shaky scaffold, merely granting loans to member states. For her, subsidies through Eurobonds would be more practical, allowing EU countries to jointly assume debt at the union level. However, Germany, as the EU's financial powerhouse, is hesitant about the idea.
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Since Germany is financially sound and can secure loans relatively inexpensively, it plans to skip the Defense Fund. The funds would then be at the disposal of additional countries in need of financing for joint defense projects that might not have favorable terms otherwise.
Rules for Defense Factories Too Rigid
Another significant hurdle en route to shared defense is bureaucracy. The EU intends to streamline the process through the Omnibus Package, aiming to relax rules related to certifications, approvals, procurement, and transactions. Andrius Kubilius, Defense Commissioner, is urgently engaging with member states' representatives to facilitate the creation of an internal market for armaments. According to Kubilius, the current regulations are a tragic joke, as they can take up to five years to build an armaments factory in some countries, potentially delaying potential defense actions.
In sum, European countries are joining forces to group-procure military equipment and technologies, focusing on local manufacturers and strengthening supply chains. The 150 billion euro Defense Fund acts as a financial backend, providing loans for defense projects. In addition, the EU is tirelessly working on easing regulations to decrease bureaucratic red tape.
- The EU's Defense Fund, amounting to 150 billion euros, is aimed at unifying European nations in defense responsibility, while the Security Action for Europe (SAFE) Instrument, a shaky scaffold, merely grants loans to member states, with Green member Hannah Neumann suggesting subsidies through Eurobonds as a more practical solution.
- German hesitance about Eurobonds may lead to the Defense Fund's utilization for financing joint defense projects in other countries, potentially bypassing Germany and providing favorable terms for nations otherwise unable to secure such financing.
- The creation of an internal market for armaments is important for decreasing bureaucratic red tape, as the current regulations can take up to five years to build an armaments factory in some countries, potentially delaying potential defense actions, according to Defense Commissioner Andrius Kubilius.
