The European Commission outlined on Wednesday a major defense package that includes potential military investments totaling billions of dollars for European Union member states, extending up to 2030.
The EC said the initiative, part of the ReArm Europe Plan/Readiness 2030 program, will open funding worth up to $868 billion for use in national defense spending. Part of the effort will involve creating Security Action for Europe, or SAFE, a financial instrument to enable member states to raise EU-backed loans of up to $163 billion to boost defense capabilities through pooled arms purchases.
Funding Clause and Channels
To facilitate public funding access at the national level, the commission recommended member-countries’ activation of the national escape clause of the Stability and Growth Pact for bigger budget allocations on defense spending within EU fiscal rules. The escape clause activation shall be up to a maximum 1.5 percent of gross domestic product per year of the national escape clause activation for a four-year period.
To support ReArm Europe Plan/Readiness 2030’s goal, the commission will tap the EIB Group, the EU’s long-term financing institution, and mobilize private capital by harnessing the organization’s savings and investments union.
White Paper for Guidance
As a guide for implementing the defense package, the EC also presented a white paper outlining approaches to bridge critical capability gaps and create a robust regional industrial base.
Action steps in the document include increasing military aid to Ukraine and closer integration of European-Ukrainian defense industries. The white paper also recommends simplifying regulations to deepen the EU defense market and adopting disruptive innovations, such as artificial intelligence and quantum technology, to accelerate defense transformation.