BRUSSELS — In a significant move to enhance European defense capabilities, the EU is ramping up its defense spending initiatives. European Commission President Ursula von der Leyen announced plans for a dedicated funding instrument aimed at critical weapons programs, alongside measures to relax fiscal constraints that previously limited member states’ spending capabilities. This strategy is intended to encourage banks to increase lending for defense purposes.
“We should enable more targeted and efficient defense spending through a designated European instrument,” von der Leyen stated during a press briefing. This is the first time she has specified which military capabilities will be prioritized for EU funding and coordination.
“The focus will be on European capability areas of European strategic interest like a European integrated air defense, deep- and precision strike capabilities, drones and UAVs, missiles and ammunition or of course the military use of AI,” she said.
Her comments come as European nations are racing to enhance their defense mechanisms in response to mounting threats, particularly from Russia. Concerns are escalating regarding U.S. foreign policy under President Donald Trump, which many perceive as favoring closer ties with the Kremlin and potentially neglecting European security interests.
Prioritizing Defense Capabilities
European leaders are scheduled to convene in London on March 2 and in Brussels on March 6 to deliberate on collective defense and security strategies. This initiative is part of a broader effort to substantially increase Europe’s military production capabilities.
Defense Commissioner Andrius Kubilius is tasked with formulating an EU industry output plan designed to assist member countries in organizing and prioritizing their weapons production efforts. A policy paper outlining the future of European defense is set to be unveiled on March 19, which will likely present a prioritized list of military equipment development alongside various financing strategies.
Currently, different member states are advocating for their own defense priorities. Paris has identified seven key areas, including military artificial intelligence and air defense capabilities. The Netherlands is focusing on space and maritime domain awareness, while Poland and the Baltic nations have concentrated on ammunition production and strengthening eastern borders.
Funding Challenges Ahead
One of the crucial questions surrounding these initiatives is the source of funding. Von der Leyen has not clarified whether the new instrument will be financed through EU common debt — a proposal that faces resistance from fiscally conservative Northern European countries — by reallocating existing EU funds, or through direct contributions from member states.
These financial discussions will be pivotal during the March 6 meeting of EU leaders, which will also address a new military aid package for Ukraine. Von der Leyen reiterated her commitment to facilitate increased defense spending by allowing countries to exceed EU debt and deficit regulations.
She proposed triggering the EU’s national escape clause to exempt military expenditures from the bloc’s fiscal constraints. This clause can be activated under “exceptional circumstances outside the control of the Member State,” as per the revised EU spending rules established last year. However, von der Leyen emphasized that this mechanism would be applied cautiously to prevent unchecked spending by heavily indebted nations.
Moreover, Commission officials are backing a German proposal to restrict the emergency clause to countries investing more than 2 percent of their GDP in defense, a move that has drawn criticism from nations like Italy and Spain that currently do not meet this threshold.
Finally, von der Leyen called for a greater involvement of institutions such as the European Investment Bank and private financial entities in facilitating increased lending to the defense sector, an effort that has garnered support from several EU capitals.
Earlier on Tuesday, Polish Prime Minister Donald Tusk expressed optimism following discussions with European Council President António Costa, emphasizing the need for collective European mobilization in financing defense and security initiatives. “Costa said that the Commission is on the right track, preparing a certain package. We will find out the details on March 6,” Tusk remarked.