The latest indication that leaders across the pond are awakening to President Trump's “America First” diplomacy to help strengthen their clever troops by proposing more than $150 billion in emergency borrowing.
“We live in the most important and dangerous times. We are in the era of recontracts. The European Commission's Ursula von der Leyen said on Tuesday, Tuesday, before the special defense summit was held by European Union leaders.
The proposed five-point plan, called “Rearm Europe,” would send a fund worth 150 billion euros ($157.6 billion) to European defense priorities, including air defense, drones and missiles, as Von Der Leyen said could mobilize up to 80 billion euros ($84.23 billion).
“If member states on average increase in GDP by 1.5%, this could create nearby financial space. [$690 billion] Over four years,” von der Leyen said.
Von Der Leyen first proposed a re-arming plan after the closure meeting in Ukraine in London on Sunday.
But the new spending, which lasted over five years, still pales in comparison to the US, which has allocated $883 billion in defense this year alone.
How does it work?
The 5-point plan will see a halt of strict budgetary control, allowing member states to increase their defensive spending without causing deficit spending in EU regulations, von der Reyen said.
The loan will be provided by the Commission to the EU government for plan-based defense.
The third part of the proposal is to “use the power of the EU budget” and involves directing shorter-term funds towards “defense-related investments,” von der Reyen said.
Trump warning
It's the day after Donald Trump's dramatic suspension of military aid to Ukraine.
Trump's diplomatic change is exposing Europe as he is still inadequately prepared to protect himself three years after the Russian invasion.
Trump accused European countries of not spending enough money on their defense, and instead relying on the US through the NATO alliance.
On Friday, Trump and JD Vance cried out with Zelensky in their oval offices, as the Ukrainian president jumped out of the White House and canceled a planned press conference.
While European leaders now argue that they are rapidly boosting defence spending, much of the committee's package focuses on encouraging EU member states to spend more on defense of existing funds rather than providing new EU money.
This package does not include grants (suggestions for joint borrowing, not loans) for defense projects that were supported by many countries such as France, Estonia, Latvia and the Baltic States of Lithuania.
French Finance Minister Eric Lombard said on Tuesday that the country must “become faster and more difficult” in defence spending.
Importantly, the move was opposed by the Netherlands and Germany. There, the package was welcomed on Tuesday by German Foreign Minister Annalena Baerbock as a “important first step.”
According to the European Defence Agency, 27 EU members spent a total of 326 billion euros on defense in 2024, at around 1.9% of GDP in 2024.
Von Der Leyen's plan is similar to how the EU raised funds for the Covid Recovery Fund, and can even see the re-channeling of around $95 billion in unclaimed Covid loans in defense. Politico reports.
However, the idea was shot down by the European Commission.
The EU's decision to put money into defence spending represents a dramatic break from past fundraising approaches.
Traditionally, the EU has used money to fund roads and subsidize farmers.
In the past, we were able to quickly distance ourselves from the lectures on military strategies that have sparked the fears of the so-called “European America.”
