The European Commission has introduced ReArm Europe, a new plan to enhance Europe’s defense capabilities. Commission President Ursula von der Leyen presented the initiative, emphasizing the growing security threats facing Europe and the severe consequences that could arise if these threats materialize.

“The real question before us is whether Europe is ready to act as decisively as the situation demands. Are we prepared to move with the speed and ambition required?” von der Leyen stated, highlighting discussions with European leaders, including a recent meeting in London.

“We are in an era of rearmament. Europe is ready to significantly increase its defense spending—both to address the immediate need to support Ukraine and to assume greater responsibility for its own security,” she said.

The ReArm Europe strategy includes several measures to support national defense investments and strengthen the European defense sector. These measures involve:

• Expanding fiscal flexibility for EU member states to increase defense spending without violating budgetary rules.

• Creating a new financing tool to provide €150 billion in loans for defense-related investments.

• Mobilizing private capital through the Union of Savings and Investments and the European Investment Bank to further support defense projects.

1. Increasing Public Defense Spending: The first part of the plan focuses on enabling EU member states to boost their national defense budgets. Von der Leyen noted that states are willing to spend more on their security if given the fiscal space to do so. The Commission will propose activating the national escape clause of the Stability and Growth Pact, allowing governments to raise defense spending without triggering excessive deficit procedures. “If member states increase defense spending by an average of 1.5% of their GDP, it could create up to €650 billion in fiscal space over four years,” von der Leyen explained.

2. Providing €150 Billion in Defense Loans: The second proposal introduces a new financing mechanism to provide €150 billion in loans to member states for defense investments.

3. Leveraging the EU Budget for Defense Investments: The third component of the plan focuses on using the EU budget to redirect more funds toward defense-related projects in the short term. “There is much we can do immediately to channel more funds into defense investments. That’s why we will propose additional funding options and incentives for member states that choose to use cohesion policy programs to expand their defense spending,” von der Leyen stated.

Von der Leyen stressed that ReArm Europe could mobilize nearly €800 billion to build a stronger and more resilient European defense sector. She also reaffirmed the EU’s commitment to close cooperation with NATO in implementing the plan.

“This is a defining moment for Europe. And we are ready to move forward,” she concluded.

The European Council will discuss the ReArm Europe proposal at an extraordinary summit on March 6, amid ongoing concerns over the war in Ukraine and broader geopolitical challenges.