LONDON – The EU is expected to announce “specific” measures to increase defense financing, sources told CNBC.
27 EU leaders will meet in Brussels on Thursday to attend a meeting dedicated to Ukraine’s defense and support. It follows two particularly tense moments in U.S.-European relations: Vice President JD Vance’s Munich’s speech In mid-February, he criticized European leaders. and Record conflicts Friday between the U.S. government and Ukrainian President Zelenskyy.
European leaders have tried not to alienate President Donald Trump after criticizing Zelenskyy.Gambling “in the potential world war. Meanwhile, Europeans knew that they had to act immediately to ensure that Ukraine continued to receive the support it needed – and prevented further aggression by Russian President Vladimir Putin.
An EU official doesn’t want to be named for the sensitivity of the discussion, but part of the meeting preparations on Thursday, he doesn’t want to be named.
The same official said the goal is to announce the “concrete deliverables” of defense financing.
Traders will closely monitor talks between EU officials. The European Stoxx Aerospace and Defense Index has so far risen nearly 23% as investors bet on rate increases, up more than 6% in trade on Monday morning.
Trump has frequently criticized European countries for failing to use 2% of their GDP for national defense, as stated by NATO rules. Several countries have increased defense spending since Trump’s first term, and NATO’s latest data suggests that 23 of the 32 members are expected to achieve the 2% target in 2024.
Now, many NATO members want to increase spending, NATO Secretary General Mark Rutte told CNBC in February that the number must be “More than 2%At the same time, Trump calls for 5% of GDP As a NATO contribution goal.
How to spend more on defense
European Commission President Ursula von der Leyen announced in February that it would update the EU’s fiscal rules to allow countries to spend more money on defense without being restricted by specific debt and deficit targets.
The unnamed EU official told CNBC that the next announcement will be further developed. “We are looking for defensive funds at the EU level, including through flexible use of structured funds and adaptation to the EIB mandate,” the official said.
European Investment Bank’s Goals 95 billion euros ($99.Invest 26 billion in 2025)currently limited to financing dual-use defense projects, meaning they must have civil and military purposes.
The second EU official, who does not want to be named for the sensitivity of the negotiations, confirmed to CNBC on Monday that Von der Leyen is expected to propose “concrete measures” in defense financing in the coming days. EU leaders will then discuss these on Thursday.
Ukrainian soldiers built T-64 tanks near the Soviet border with Russia on August 11, 2024 in the Soviet area where Russia invaded Ukraine. Russia admitted on August 11 that Ukrainian troops pierced deeply into the Kursk border area during the offensive, and a senior Ukrainian official said it aims to “destabilize Russia and “extend” its troops.
Roman Perch | AFP | Getty Images
“We are desperate to refocus Europe. To this end, I will propose a comprehensive plan to the leaders when the European Council is held on March 6,” Von der Leyen said at a summit in London on Sunday.
In a recent report titled “No America Defends Europe”, Brussels’ think tank learned that Europe could require 300,000 troops, and 300,000 troops. Annual defense spending is at least 250 billion The euro will stop Russian aggression in the short term. ”
Meanwhile, Goldman Sachs said in a report on Sunday: “Without offsetting fiscal measures, the eurozone needs to pay an additional 0.6% of GDP annually to meet 2.5% of its defense spending target.”
A key question is whether the EU will agree to jointly lend for defense projects. The group decided to take unprecedented steps in 2020 after the pandemic (called NextGenerationU) and some member states believe that it should be copied for defense spending. However, before taking this step, more fiscally conservative countries hope to run out of other options.
According to Goldman Sachs, EU leaders can “repurpose” the NextGenerationU fund’s outstanding financial capabilities to defend against. They can then look at a new plan that “can provide stable funding to block defense spending from trait country factors.”
