EU considers forming joint defense fund

European Union finance ministers have expressed support for establishing a joint defense fund aimed at collectively purchasing and owning military equipment.

The initiative, prepared by the Bruegel think tank, reflects broader strategic intentions to enhance the EU's defense capabilities amid evolving security threats and the diminishing reliability of US security guarantees.

The proposed European Defense Mechanism, or EDM, envisions an intergovernmental fund where nations would contribute direct investment to establish a shared financial pool, reported Reuters.

This initial funding would be leveraged to secure additional market financing, enabling both EU and non-EU countries to collectively acquire and maintain military assets through joint procurement.

While there is general support for the concept, some member states, including France, Germany, and Belgium, have emphasized the importance of utilizing existing financial instruments, such as the European Investment Bank, the European Defense Fund, and the ReArm Europe plan, before establishing new mechanisms.

The ReArm Europe initiative aims to mobilize 800 billion euros ($876 billion) in defense spending through relaxed fiscal rules and EU-backed joint borrowing, though ministers remain open to additional funding mechanisms.

The EDM approach would enable engagement with the United Kingdom's substantial defense capabilities, while opening pathways for participation from other strategic partners such as Norway, Canada, and Ukraine.

"Most ministers were interested in the Bruegel paper," said Poland's Finance Minister Andrzej Domanski, who chaired informal talks on EU defense financing, held in Warsaw on Friday and Saturday.

A senior EU finance official at the meeting reported wide support for the idea. "The reaction to the Bruegel proposal was generally positive," the official said. "There was recognition that ReArm needs to be approved ASAP and then to develop things more along the lines in the Bruegel paper. But of course ironing out the details requires that we closely work with ministries of defense."

Bruegel stated in its policy brief that the EDM would focus on acquiring critical "strategic enablers" currently provided by the US, including command systems, satellite intelligence, and advanced weapon systems like next-generation fighter jets and integrated air defense. It said the initiative would address Europe's fragmented defense market by creating a unified system with non-EU partners.

In addition, Spain proposed an alternative approach that could tap into the European Stability Mechanism and issue joint debt, while remaining open to non-EU participation.

Ministers noted that eastern EU states face heightened security risks from Russia and Belarus, warranting increased defense support.

Spain's Finance Minister Carlos Cuerpo said: "This is the time for European solidarity to support Ukraine and Eastern frontline countries. We need to invest together in defense, which is a genuinely European public good that benefits our citizens and bolsters our economic security."

jonathan@mail.chinadailyuk.com