EU DECODED Will a European rush to rearm be properly funded? - video Dailymotion

euronews (in English)

The European Union wants to bolster defence in face of Russia's aggression on Ukraine and growing US demands for greater European financial support for NATO.

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00:00The European Union wants to bolster its defense in face of Russia's aggression on Ukraine

00:23and growing U.S. demands for greater European financial support for NATO.

00:28On paper, the bloc has created its first-ever defense industrial strategy, but will cost

00:34hundreds of billions of euros.

00:36Challenges for European rearmament are in focus this week on EU Decoded.

00:42The Commission proposed a European defense industry program in March 2024.

00:48It provides for 1.5 billion euros to be allocated to defense from the EU budget between 2025

00:55and 2027.

00:57The money should boost defense technology and industry, but is scanty when compared

01:01with the 500 billion euros of investment in the sector, which experts claim is needed

01:06in the coming decade.

01:07Since the Russians war of aggression against Ukraine, the U.S. supplied much weaponry and

01:14logistical support.

01:15But the conflict highlighted difficulties in increasing ammunition and weapons production.

01:21We asked Europeans how they feel about spending to be ready for war.

01:25I understand that sometimes you need a certain level of power and preparedness to show yourself

01:30strong for other diplomatic reasons, but still I think the world can function in much better

01:34ways rather than investing money in that.

01:37I feel like it has to be well thought, and if the EU does decide to invest more money

01:44in war, I would like for this money to be used in an ethical and moral way.

01:51I think it has to stop to give money to Ukraine also.

01:54I think it's better to defend our countries now for the future, and I think it's better

01:59than to do that.

02:01I would prefer not to spend money on it, but we are in a situation in Europe where we need

02:06to do it.

02:07Both our own protection, but we also need to protect Ukraine.

02:10If we don't protect Ukraine, we don't protect Europe.

02:13Jacques Chicla covers this policy area for EURONEWS.

02:17The EU produces weapons, but is also highly dependent on imports.

02:22What are the main goals of the new strategy to boost the industry?

02:26There's been a number of initiatives from the EU about this, regulations, standards

02:32and funding, all with a bid to ensure that you can get the kind of economies of scale

02:39you get across the EU single market, so that countries, instead of each buying individually

02:44leave their own armies and navies, that they club together and come up with some common

02:48principles and hopefully get the economies of scale you need to succeed.

02:53The budget for this boost must be quite important.

02:58What are the financing options under discussion, and can the European Investment Bank also

03:04play a role?

03:05Indeed, historically, most spending in this area has come from national budgets funding

03:10their national militaries.

03:11There's certainly a lot of people around here who say maybe you could make it more efficient

03:15if you club together in some way at the EU level.

03:17You could have common borrowing of EU member states using euro bonds, like was done in

03:24the response to the pandemic.

03:26Or indeed, you could have loans made by the European Investment Bank, which is backed

03:30by EU finance ministries.

03:33All of these face a number of problems.

03:35Firstly, there's not that much money available.

03:38All governments are pretty cash strapped at the moment.

03:41And also, there are a number of bars on the EU spending money on defence.

03:44A number of its members are avowedly neutral.

03:47And there are legal restrictions on its ability, for example, to buy arms or ammunition.

03:52Most of the EU members belong also to NATO, the main defence structure in the West.

03:58How does this affect the investment plans for the defence sector?

04:03When you look at industrial policy for defence, the risk is that you exclude other NATO members

04:08such as the US or the UK.

04:11They won't be very happy if the EU passes a regulation that says all our military spending

04:16has to be spent on European companies.

04:18It can't be spent on British Aerospace or US defence companies.

04:22So there's the risk that that creates a rift within the NATO alliance.

04:26More money will be also needed if the contribution target to NATO by each country increases from

04:31current 2% to around 3.5% of GDP, as advocated by the new Secretary General of the Alliance

04:39This could mean that the EU would need to raise as a whole around 200 billion euros per year.

04:45Currently, only Poland, Estonia, Latvia and Greece spend 3% or more.

04:51Germany and France, the bigger powerhouses in the EU, have reached the 2% target.

04:57But other big economies such as Italy and Spain are not yet at that level of spending.

05:03With us at European Parliament is Tobias Cramer, member of the Committee on Foreign Affairs

05:09and the Subcommittee on Security and Defence.

05:13Welcome to Euronews.

05:14How feasible it is for the European Union to come together in the idea of increasing

05:20defence spending when some member states do not even respect the 2% target?

05:25We have to understand that geopolitics is changing from a unipolar world order where

05:30we could rely on the United States providing security for everybody to a multipolar order

05:34where we need to also assume more responsibility to work together with the US but that we need

05:39to strengthen especially the European pillar of NATO.

05:42A lot of countries already have achieved the 2% but realistically we also need to spend

05:47more but what is important to me is to say spending more but also more efficiently.

05:52NATO Secretary General just mentioned recently that instead of the 2% we might need to go

05:58as high as 3.5%.

06:01Germany, the country where you come from, is against the idea of issuing new common

06:07debt to get these large funds but some countries argue that that is the only way to get a real

06:15boost to the industrial sector in the defence area.

06:19I think Germany actually is one of the countries where you've seen the biggest shift when it

06:22comes to defence spending.

06:24We had the Zeitenwende, the shift of the era that Chancellor Scholz called out and we then

06:30really invested the 100 billion special investment into the Bundeswehr and we actually are saying

06:34we need to reform for instance the German debt break in that direction so that we can

06:39actually spend the money we need to have a strong defence for our country and for Europe.

06:44So the so-called Eurobonds for defence are feasible, are needed, will we have a consensus

06:50among the member states when you know that the frugal countries are somehow more sceptical

06:55about that?

06:56I think it's really important that every country meets at least the 2% and that we then talk

07:00about how we can ensure that this is done, that also financing on the European level

07:06is done in a solidary way and I think that different Eurobonds are one option but I think

07:10there are also other things we can talk about.

07:12For instance one problem is that there is a lot of private money that could actually

07:17be channelled in that direction.

07:19When we talk about industry, when we talk about even the supply chain, at the moment

07:23there are a lot of barriers for private investors that can't invest even if they wanted to.

07:30The EU is taking unprecedented steps to address the real potential of war.

07:35For the first time it has a commissioner dedicated to the defence industry, the Lithuanian Andrius

07:41Kubilius.

07:42It also wants to use part of Russia's frozen assets for supporting Ukraine.

07:47But it remains to be seen to what extent it has the conditions and unity to be a global

07:54military power.

EU DECODED Will a European rush to rearm be properly funded?

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