08 Apr
2025
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EU planning to create joint defense fund

EU planning to create joint defense fund

The European Union plans to create a joint intergovernmental defense fund for the purchase of equipment, Reuters reports, citing a draft document.

European Union finance ministers will discuss this week the setting up of a joint intergovernmental defense fund that would buy and own defense equipment, and charge members a fee for its use. The fund, called the European Defence Mechanism (EDM)—which could also issue loans—would admit members from outside the European Union, like Britain, Ukraine or Norway.

The paper, drafted by the Bruegel think tank, was commissioned by the Polish presidency of the EU and could generate large defense funding without boosting national public debt levels. The defense fund, to be discussed on Saturday during an informal meeting of EU finance ministers in Warsaw, would come on top of the already announced financing initiatives. The paper is part of an EU discussion on how to finance preparations against a potential attack from Russia as European governments realize they can no longer fully rely on the United States for their security.

On March 19, the European Commission presented its new defense strategy, ReArm Europe Plan, later renamed Readiness 2030. It plans to raise about €800 billion over four years. Most of the funds are proposed to be raised from the budgets of European states (about €650 billion), and €150 billion in the form of loans. At the same time, the European Commission will provide budgetary relief for EU countries, as well as redirect funds allocated for regional development to military spending. Readiness 2030 plans to increase defense spending by EU countries by 1.5% of GDP.

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