The Rearming Europe plan announced by Ursula von der Leyen on Tuesday contemplates a total mobilization of up to 800,000 million euros in Defense, which, as is almost always the case with these types of actions, is a maximum figure that is difficult to achieve. In fact, the Commission itself acknowledges this. But it is a demonstration of the ambition and demands of the President of the European Commission, who also places most of the required effort on national budgets. On the countries. And in the case of Spain, the pressure is certainly not less: because in the face of the reluctance shown by the government of Pedro Sánchez, the high-ranking German official aspires for the Government to allocate up to an additional 25,000 million each year to annual military investment over the next four years.
Because Von der Leyen assumed that the member countries will increase their annual Defense spending by 1.5% of their Gross Domestic Product (GDP), which in the case of Spain amounts to around those 25,000 million euros. To achieve this, she wants to activate national escape clauses, a measure that will allow countries that register a budget deviation of up to that same one and a half percentage points for their investment in Defense to not be exposed to an excessive deficit procedure. It is, in essence, the fiscal space that the European Union offers them and expects them to use to rearm themselves.
"Use of national funds" for a "significant" increase in government spending, Von der Leyen insisted, estimating that up to 650,000 million could be mobilized through this tool alone. And although this total figure seems challenging since Brussels technicians point out that countries are always slow in increasing military spending, the message is clear and powerful.
To access this fiscal space, it will be the governments themselves who will have to request the activation of the clauses. And, very importantly, from the fourth year onwards, countries will have to be able to support the investments they have made on their own. "By increasing taxes or reducing expenses," specify EU sources.
Along with this fiscal action, Von der Leyen also announced a "European instrument" that will offer countries up to 150,000 million in loans. Therefore, credits that States will have to repay although the interest rates will be very favorable. "It is basically about spending better and together, and we are talking about pan-European capabilities, areas such as, for example, air defense and anti-missile systems, artillery systems, missiles and ammunition, drones and anti-drone systems, but also to address other needs from cyberspace to military mobility, for example," explained the President.
The Commission aims for the plan to not only be "ambitious" but also "fast," so it wants it to be discussed at the exceptional summit of presidents taking place in Brussels this Thursday. And for both the Council and the European Parliament to approve it in the coming weeks, which represents a notable speed of action by the standards in the EU capital. "We live in dangerous times," as "Europe's security is under very real threat," Von der Leyen insisted, always trying to convey the seriousness of the situation. The real threat posed by Russia to Ukraine but also to EU countries.
The head of the EU executive also proposed the possibility of reallocating cohesion funds for Defense as the third point of her plan, while the fourth addressed the need to mobilize private capital by accelerating the Savings and Investment Union. And the five areas of action within Rearming Europe are completed with the European Investment Bank (EIB) chaired by Nadia Calviño, who yesterday sent a letter to the heads of government of the member countries indicating her willingness to spend more on Defense.
This is a way to act jointly with Von der Leyen but also a response to the letter that, in turn, 19 leaders sent to Calviño last January. Including President Sánchez. "We want to propose at the March meeting of the EIB Board of Directors a new adjustment of the Group's eligibility criteria to ensure that excluded activities are defined in a more precise and as limited as possible approach to align them with the EU's new political priorities in a way that safeguards the operations and financial position of the EIB," the document states.
The Bank does not consider direct investment in weapons and ammunition, something that, for example, the Prime Minister of Finland, Petteri Orpo, directly requested after sending the aforementioned letter. But there is a key issue that, on the other hand, the former Spanish Vice President seems willing to eliminate: the 8,000 million limit currently in place for granting military financing. All of this would increase the EIB's effort, which this year will barely allocate 2% of its nearly 100,000 million budget to the military sector.