Von der Leyen's plan to finance rearmament: tailor-made fiscal rules at the expense of the states

BrusselsThe President of the European Commission, Ursula von der Leyen, is gradually detailing her strategy for financing the rearmament of the European UnionThe EU leader announced last week that she would propose to make fiscal rules more flexible and thus allow member states to spend as much as they see fit on defence without Brussels opening up to them. a file for excessive deficitHowever, this Monday the community leader has gone a step further and has specified that it will not be a global freeze of fiscal rules, as happened during the pandemic, but that each Member State will have to individually request an exception in compliance with the deficit limits, as stated The World and various international media.

In this way, Brussels is currently betting that each member state will bear the majority of the increase in military spending. "A significant increase in national defence spending is necessary," said the head of the community executive in a small group of journalists. However, Von der Leyen does not close the door to the possibility of creating new Eurobonds for defence, as openly requested by France and, among others, Spain. "We should allow more specific and efficient defence spending through a designated European instrument," added the German conservative. It should be remembered that the European Union has already approved community funds to finance the post-covid economic recovery.

However, there are countries such as Germany and the Netherlands that are against issuing common debt and flatly refuse to do so, although it is true that there are states that have historically refused to create new common funds that are now more willing to do so, as is the case of D. In fact, it is an option that is gaining more and more strength and more and more European partners are looking favorably on this initiative. In any case, it is expected to be one of the measures that will be discussed at the extraordinary summit of heads of state and government that will be held on March 6 in Brussels.

Another option that is expected to be on the table of European leaders is the increase in military spending in the next European Union budget. However, it will not come into force until 2028 and the most bellicose member states believe that it would be too late. In this sense, they argue that it is necessary to get money from wherever and choose various financing channels. Therefore, the increase in the budget allocation for defense can be complementary to other measures, such as the relaxation of fiscal rules that Von der Leyen is put on the table.

More pressure on Calviño

Beyond the relaxation of fiscal rules, new Eurobonds for defence or the new EU budget, Von der Leyen has also pushed for the European Investment Bank to increase its funding for technological projects that could have a military use, such as drones, cybersecurity or border controls. For the moment, the president of this entity, the former Spanish vice president Nadia Calviño, is avoiding it and during 2024 only allocated just over 1% of the total budget she had in her hands.

This such a ridiculous investmentHowever, this has outraged Brussels and the majority of member states, who have asked Calviño in a letter to increase funding for projects that may have a military end use. Along the same lines, the President of the European Commission is also in favour of changing the statutes of this institution and allowing it to directly finance military projects for the first time in its history, which do not necessarily have any civil use. "We must increase the capacity of private financing to finance defence projects," stressed Von der Leyen.