BRUSSELS — European Commission President Ursula von der Leyen has proposed an extraordinary measure that would enable EU member states to significantly increase their defense budgets. This suggestion was made during a private meeting with national leaders, according to four officials from the European Union.
The proposal entails invoking an emergency clause, which would permit governments to elevate their defense spending without infringing upon the EU’s established budgetary regulations. Currently, these regulations allow deviations from planned expenditures only in cases of severe economic downturns or under exceptional circumstances beyond a government’s control.
Flexibility in defense spending
In her comments to reporters, von der Leyen emphasized her intent to utilize the full range of flexibilities available within the Stability and Growth Pact to facilitate a significant rise in defense expenditures. She stated:
“For extraordinary times, it is possible to have extraordinary measures also in the Stability and Growth Pact. And I think we live in extraordinary times.”
During the same meeting, she also proposed the possibility of exempting defense expenditures from national budget deficits, although specific details were not disclosed, as noted by one of the officials involved.
Amidst rising defense concerns, particularly from highly indebted southern European nations like Italy and Greece, von der Leyen faces pressure to reconsider the treatment of defense spending within budgetary frameworks. Officials indicated that triggering this emergency clause would allow countries to enhance their defense budgets without reopening the national spending agreements established last year after extensive negotiations.
Context of rising defense needs
According to Zsolt Darvas, a senior fellow at the Bruegel think tank in Brussels, the current geopolitical climate, including threats from Russia and perceived reductions in U.S. security guarantees for Europe, necessitates this reevaluation. He remarked,
“If a faster increase [in spending] is due to defense, they might say these are exceptional times.”
The revised spending regulations, however, have faced criticism for potentially restricting countries during unforeseen events like wars that demand immediate fiscal responses. The conflict in Ukraine has not only compelled EU nations to reassess their military readiness but has also necessitated substantial government subsidies to manage rising energy costs.
Under the current fiscal rules aimed at enforcing collective discipline, EU member states must commit to long-term plans to manage their deficits and debt levels. However, the financial strain resulting from the pandemic and the war in Ukraine has left many countries with substantial budget deficits and adjustment obligations.
Moreover, the recent push from U.S. President Donald Trump for an immediate increase in NATO defense spending — set at 2 percent of GDP — adds further pressure on EU nations to respond decisively. While the existing rules provide some leeway for countries aiming to bolster their military capabilities, a spokesperson for the Commission noted that nations committing to enhanced defense measures may be granted a more gradual fiscal adjustment.
Additionally, discussions are underway among national capitals to broaden the definition of defense spending, as critics like Poland argue that the current guidelines are overly restrictive.