The European Commission has proposed borrowing up to €150 billion to finance a major European rearmament plan, ReArm Europe, in response to ongoing tensions caused by Russia’s war in Ukraine, as well as growing concerns about wavering US commitments on the continent and what that means for internal security.
As tensions across Europe rise over fears of a possible escalation of the war in Ukraine, the European Union is formulating a game plan in the form of €150 billion in loans destined for a major defence fund that will shore up the military spending of EU governments.
The proposal, which the EU is calling ReArm Europe, comes just after US President Donald Trump suspended military aid to Ukraine, underscoring the widening transatlantic rift over European security. European Commission President Ursula von der Leyen’s plan aims to fund pan-European defence priorities, including air defence, missiles and drones, as part of a broader initiative that could mobilise up to €800 billion for military purposes.
“We are living in the most momentous and dangerous of times,” said von der Leyen in a press statement. “I do not need to describe the grave nature of the threats that we face or the devastating consequences that we will have to endure if those threats were to come to pass… We are in an era of rearmament, and Europe is ready to massively boost its defence spending.”
EU leaders are set to discuss the proposals at a special summit on Thursday 6th March, which will focus on both defence and Ukraine. While much of the plan involves reallocating existing funds rather than introducing new EU money, it stops short of joint borrowing for grants—a measure supported by France and the Baltic states but opposed by Germany and the Netherlands.
The European Investment Bank has also announced that it will ease financing restrictions on defence projects, though it will maintain a ban on funding weapons and ammunition. Additionally, the Commission has proposed exempting military spending from EU-imposed debt limits.
With Trump’s return to the White House fuelling uncertainty over NATO commitments, European leaders are under significant pressure to boost military budgets. The EU spent €326 billion on defence in 2024, about 1.9% of GDP, but leaders have pledged further increases. French Finance Minister Eric Lombard has stressed that France “must go faster and harder” on spending.
Locally, Renaud Muselier, President of Provence-Alpes-Côte d’Azur, has taken to social media to express support for the plan, writing on X, “The Région Sud, the first military region of France, is immediately organising itself to help its companies and its forces to seek these credits, in conjunction with the State. A dedicated permanent team, in Brussels and Marseille, is set up. These are jobs and very concrete potential investments for our territories!”
The proposal also allows EU cohesion funds—typically aimed at reducing economic disparities—to be redirected for defence purposes. European markets have reacted positively to the announcement, with the Stoxx Europe Aerospace and Defence index rising.
To read von der Leyen’s statement on the ReArm Europe fund in full, click here.
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Photo source: European Commission
