The member states are divided on joint arms purchases, joint borrowing and the need to buy European.
When it comes to financing European rearmament, the EU has a difficult balancing act to perform.
On the one hand, many members’ public finances are in the red. Conversely, the threat from Russia and the prospect of an American isolationist retreat are looming too large for Europe to ignore.
Despite their various fiscal headaches, the member states have put their hands in their pockets since the all-out Russian invasion of Ukraine on 24 February 2022.
According to the European Defence Agency (EDA), in 2024, defence spending by the EU-27 reached €326 billion, or 1.9% of the EU’s GDP. This represents an increase of 31% compared with 2021.
“You have to create factories, and you have to train people. So it doesn’t happen overnight,” says Philippe Perchoc, Director of IRSEM Europe, the European office of the Strategic Research Institute at the Ecole Militaire.
Joint purchasing and production
Various solutions are on the table to finance the continent’s defence, among them joint production and arms purchases.
But Guntram Wolff, a senior fellow at the Bruegel Institute, says joint spending must be the “starting point” to increase efficiency, cost-effectiveness, and cost reduction.
He assures Euronews that hypersonic missiles, air defence, satellites, and drones are “really worth our money if we work together in these areas”.
However, the specific needs of member states in terms of armaments sometimes stand in the way of this form of cooperation.
Jan Joel Andersson, a senior analyst at the EU Institute for Security Studies, says France, for example, needs “a nuclear deterrent capability.”
The researcher tells Euronews that some expeditionary countries will prefer “lighter, easily transportable equipment” such as armoured vehicles and artillery, “whereas other countries have prepared to fight an enemy or adversary here in Europe and have therefore concentrated more on heavy tanks and heavy artillery”.
One way to finance these efforts would be joint borrowing, also known as Eurobonds.
“The idea of the EU borrowing more together is that many member states have problems with their national finances, and this would be a way of using the EU’s collective power as a borrower to make borrowing cheaper,” explains Andersson.
However, supporters of budgetary orthodoxy, such as Germany, remain reluctant to borrow jointly.
Should we ‘buy European’?
Some leaders, like French President Emmanuel Macron, are calling for “buying European” in the name of strategic autonomy — but others prefer to place orders elsewhere to reduce costs or delivery times.
“It’s not that we should only buy European; I don’t think anyone has that in mind, but we should perhaps reevaluate the share of what is European in what we buy,” Philippe Perchoc, Director at IRSEM Europe, told Euronews.
“If it’s made outside Europe, we don’t have the priority to consume it. We signed a contract, and if conditions change or something happens in the Indo-Pacific or Taiwan, Europeans won’t have priority. So you have to watch your back.”
However, the EU’s role has been and still is limited: defence remains the exclusive competence of the member states.
