BRUSSELS — Tensions are escalating at a summit of European Union leaders as Germany advocates for increased flexibility in defense spending. The emergency gathering of the bloc’s 27 heads of state seeks to address the ongoing war in Ukraine, the persistent threat posed by Russia, and the implications of U.S. President Donald Trump’s efforts to diminish America’s long-standing commitment to European security.
Germany’s defense spending initiative
Central to the discussions is a proposal from the European Commission aimed at loosening the EU’s stringent rules governing government expenditures. This proposal seeks to exempt defense spending from the fiscal constraints, allowing expenditures of up to 1.5 percent of GDP over a four-year period.
As he arrived at the summit, outgoing German Chancellor Olaf Scholz emphasized the necessity for countries to invest adequately in their defense:
“We have to ensure that in the long term, countries spend as much on defense as they themselves and their friends and allies think is right. And that’s why we also need to come to long-term changes to the rules and regulations in Europe.”
Historically, Germany has been a staunch opponent of easing fiscal constraints, driven by fears of accumulating debt that could jeopardize the stability of the eurozone. However, in a significant policy shift, Friedrich Merz, the expected successor to Scholz, alongside Scholz’s Social Democrats, agreed this week to reform Germany’s national debt regulations while advocating for the exemption of defense spending from the EU’s debt and deficit limits.
Divisions among EU member states
This sudden change in Berlin’s stance has not garnered unanimous support from its traditional allies in Northern Europe, known for their cautious approach to spending. An EU diplomat remarked,
“Someone around the table doesn’t have their [Germany’s] same enthusiasm.”
Countries such as Austria, Sweden, and the Netherlands appear reluctant to revisit the EU’s fiscal regulations. Conversely, nations like Finland and Latvia, which share borders with Russia, express support for Germany’s initiative. Furthermore, Italy and France, typically seen as adversaries regarding increased spending, are aligning with Berlin, likely seeking additional concessions.
Adjusting the rules would enable Germany’s forthcoming coalition government, expected to include Merz’s conservatives and Scholz’s center-left party, to execute a substantial defense spending plan without breaching EU spending regulations. Scholz affirmed,
“We all have to meet NATO’s 2 percent [of GDP for defense] target. Germany will prepare itself to ensure the financial background for this.”
Prior to the summit, EU ambassadors endorsed a vaguely worded resolution intended to appease the fiscally conservative states of Northern Europe. The EU member states called upon the Commission to “explore further measures” that would allow for increased national defense spending while maintaining “debt sustainability,” as highlighted in draft conclusions from the leaders’ meeting.
However, a faction within the EU is advocating for the removal of the phrase “debt sustainability,” considering it overly restrictive. It is unlikely that a conclusive decision will emerge from Thursday’s summit, with anticipated disputes likely to resurface during the upcoming meeting of finance ministers in Brussels.