The EU executive proposed in early March a five-point plan to rearm and reach defence readiness by 2030. In an exclusive interview, EU defence commissioner Andrius Kubilius told Euronews he expects member states to make use of options proposed in the plan instead of issuing more joint debt.
The EU is not yet ready to issue so-called Eurobonds to ramp up much-needed defence capabilities to deter any potential military aggression against the bloc, EU Commissioner for defence and space Andrius Kubilius has told Euronews in an interview.
“Eurobonds means that the European Union will have a bigger debt, which will need to be serviced again by all the member states, and now we have in some ways a challenge on how to repay the existing debt,” the former Lithuanian prime minister said.
Kubilius said he expects member states to use the instruments and options already proposed under the “rearm Europe” plan – now rebranded as ‘Readiness 2030’ – as the bloc has not yet decided how to repay the debt incurred for pandemic-related recovery funds.
“Whatever instrument you are using, loans or bonds (grants), at the end somebody will need to pay those amounts of money, so that’s why we should not go for bonds before we shall get those answers,” the Commissioner argued.
“For the next four years, in some kind of idealistic scenario, member states will start to spend 3.5% of GDP, so it will be €2.4 trillion spent on defence. The question is: will it cover all the needs, or we shall need to have additional funding?” he said, adding that they expect to have a clear view of what the real needs are by June.
In early March, EU Commission President Ursula von der Leyen presented a plan to mobilise up to €800 billion over the next four years, which heavily relies on member states increasing their national spending on defence.
The five-point roadmap gives member states the fiscal space to raise their defence spending up to 3.5% GDP (which would result in €650 billion) and includes proposals to mobilise more private capital, adapt the European Investment Bank’s (EIB) mandate, and incentivise defence-related investments in the common budget.
We want to incentivise member states to spend more money on European production
“Preparation to discuss the next Multiannual Financial Framework (long-term EU budget) exactly shows that if we shall not find another solution, then quite a big part of the next MFF will be spent to repay pandemic debt,” he added.
The EU’s long-term budget represents 1% of the bloc’s GDP (around €1.2 trillion) — and the EU’s debt repayments from grants issued in response to the Covid-19 pandemic are expected to run to between €25 billion and €30 billion annually, or to up to 20% of the bloc’s annual cash pot.
