The European Union is changing its spending policy, planning to redirect billions of euros towards defense and security sectors.
One-third of the EU’s common budget, around 3,920 billion euros for the period of 2021 to 2027, was initially intended to reduce economic inequality among EU countries. However, member states will now have greater flexibility in using this existing budget.
Up to now, only about 5% of the budget known as the “cohesion funds” has been utilized.
A spokesperson for the European Commission stated that member states will be informed in the coming weeks that the cohesion funds can be utilized to support the defense industry and enhance military mobility as long as the expenditures contribute to “strengthening the overall mission of regional development”. This includes funding for weapon and ammunition production, strengthening roads and bridges for tank maneuverability, among others.
However, member states are still not allowed to directly purchase weapons or fund their armies using EU funds, though the purchase of dual-use products like drones is permitted.
Germany, due to its geographical position, is crucial for European military mobility, but its transportation infrastructure is in poor condition. German authorities estimated in 2022 that Germany urgently needs 165 billion euros to be invested in roads, railways, and bridges. By 2027, Germany is set to receive 39 billion euros from the cohesion funds.
This move will be welcomed by Eastern border countries of the EU. Since the full-scale Russian invasion of Ukraine, these countries have increased military spending, while some have experienced a decrease in foreign investments.
Lithuania’s Finance Minister Gintarė Skaistė said, “We must invest in enhancing military mobility, but these projects require enormous funds.”
“And this is not only important for one country but for the whole region,” Skaistė added.
During his first term as President of the United States, Trump threatened to withdraw from NATO multiple times and pressured member countries to allocate 2% of their GDP for defense.
However, many NATO member countries among the 31 have failed to meet the 2% of GDP defense spending target, which has long been a source of tension in NATO-U.S. relations, with the U.S. military forming the core of NATO’s military strength.
Poland has also been pushing for increased defense spending from European countries. Poland’s defense spending this year accounts for 4.1% of its GDP, double the NATO target, and aims to reach 4.7% by 2025.
Net contributing countries to the EU budget like Germany, the Netherlands, and Sweden welcome the policy of strengthening defense expenditure. They believe that using existing funds is more preferable than issuing joint debts or providing additional EU funding.
(This article referenced related reports from the Financial Times)