BRUSSELS — In a strategic shift to bolster Europe’s defense capabilities, European Union countries are now required to buy military equipment manufactured within Europe. This comes under a newly proposed loan initiative that aims to enhance the continent’s ability to manage its own security requirements.
During a recent summit, the leaders of the EU’s 27 member nations discussed a European Commission proposal outlining a 150 billion euros ($163 billion) loan plan. This fund is intended for the acquisition of air defense systems, drones, and strategic tools such as air transport, as well as strengthening cybersecurity efforts.
European Commission President Ursula von der Leyen highlighted to EU lawmakers that the loans should be utilized to purchase from European manufacturers, a move designed to stimulate the local defense industry. She emphasized the significance of multi-annual contracts to ensure that the defense industry receives the predictability it requires for sustained growth. Von der Leyen also noted the advantages of collective purchasing, suggesting that countries acquire equipment in groups, which has proved to be highly effective.
Defense supplies from U.S. companies currently account for about two-thirds of the orders by European NATO members. However, the incentive to buy European has increased due to former President Trump’s administration pushing for European countries to assume more responsibility for their security, as well as that of Ukraine in the future.
France is advocating for the European Commission to increase the funding allocated to the loan program and insists that the expenditures should be confined within the continent. Meanwhile, Spain, facing substantial debt levels, is calling for grants instead of loans to alleviate financial strain.
EU leaders are expected to give their approval to this loan scheme, which the European Commission predicts will benefit approximately 20 nations with borrowing costs higher than that of the commission. Formal approval is anticipated during another summit scheduled for late next week.
This initiative is part of a broader set of strategies, which includes relaxing budgetary constraints related to defense expenditures and reorganizing EU funds, with a goal to generate up to 800 billion euros ($874 billion) for priority security needs.
