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.