BRUSSELS — A coalition of sixteen European Union nations is poised to activate an emergency provision that would allow them to exceed the bloc’s budgetary constraints in order to enhance their defense capabilities. These nations, which include Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Slovenia, Slovakia, and Finland, are advocating for greater fiscal leeway, as outlined in a statement from the Council.
Formal requests and defense spending limits
According to the European Commission, twelve of these countries have already submitted formal petitions requesting permission to utilize this exemption. The provision permits member states to increase their defense expenditures by up to 1.5 percent of their gross domestic product annually for a duration of four years, without contravening EU fiscal regulations.
Notably, Germany stands out as the only major economy within the EU intending to leverage this clause. In contrast, nations like Italy and France, which are grappling with budget constraints, have refrained from seeking such fiscal flexibility for military procurement. Meanwhile, countries with robust public finances, including the Netherlands and Sweden, are also not pursuing similar measures; however, Denmark, despite its healthy fiscal situation, has chosen to participate in the request to convey a united political stance. Economy Minister Stephanie Lose emphasized, “The Danish activation will help send a signal to the outside world that the EU countries are united in the rearmament effort.”
Upcoming decisions and NATO spending targets
The EU executive has urged member governments to finalize their decisions by April 30 to facilitate coordinated fiscal policy ahead of market responses, with the aim of collectively activating the clause by July. It is important to note that this deadline is not mandatory.
Spanish Economy Minister Carlos Cuerpo indicated on Wednesday that Spain would determine its position “over the coming months.” In Italy, Finance Minister Giancarlo Giorgetti expressed confidence that the Italian government could meet the NATO defense spending target of 2 percent by adjusting its accounting practices to encompass additional expenditure categories. Italy plans to await the NATO summit in June, where new spending targets for member countries are expected to be established, especially as the U.S. advocates for increased military investment across the alliance.