EU finance ministers will analyze the proposal to create a new intergovernmental institution called the “European defense mechanism” (MED) to provide loans related to protection and cooperation with third countries such as the United Kingdom, Norway or Switzerland.
“Given the need to maintain prudent budget positions, investments in defense cannot continue without proper coordination,” said Andrem Doryask, Minister of Polish Financing in a letter sent to his colleagues last Friday.
The proposed mechanism reflects the recent British idea of the supranational re -equipment fund. This would include reducing loans in capital markets and the centralization of defense acquisition to reduce costs.
“Since defense costs remain a national prerogative, this intergovernmental model can offer a more effective reaction to insufficient financing of defense,” Damansky added.
The financial ministers of the UE-27 will be accompanied by their colleagues in the United Kingdom, Norway and Switzerland during the informal Warsaw Assembly on April 11 and 12, where a political document will be discussed on a group of economic thoughts in Brussels.
Based on the model of the European Bank for reconstruction and development (BERD), the Bruegel document suggests that the EU be a separate shareholder presented by the European Commission to ensure harmonious coordination with third countries.
According to Bruegel investigators, the Edm mandate may include the creation of a single defensive market and even possession of strategic military assets, such as a satellite system for military information and advanced missile communications – measures that would reduce the tax burden of re -equipment of member countries.
Although similarly to the current European stability mechanism (Mee), the proposed fund will not require the participation of all 27 EU member states. It can also expand their financial coverage to the third countries of the subscriber and for members outside the Eurozone.
Adherence to the mechanism will require members to contribute to a quota based on their economic dimension, military and/or active expenses, and decisions can make decisions in accordance with capital quotas or qualified majority of votes.
The fund can also support the front members through interest on interest loans or to appoint the front of the purchased equipment paid by these members.
EU defense financing mechanisms do not offer correct incentives
US President Donald Trump called on NATO members to increase their defense costs to 5% of GDP – a goal that no member is currently meeting, and it is especially difficult for eight European NATO members, which spent less than 2% by 2024.
In response, European countries promise more money to strengthen European defense, but higher budgets themselves will not collect gaps as a block.
Bruegel researchers claim that the current EU defense financing tools do not offer appropriate incentives for monitoring the Kremlin’s military production.
Existing tools, such as the European Defense Fund (Fed), an act of support for the production of ammunition (ASAP) and the Eustry plan, are progress, but “the proposed incentives are too small to solve the problem of national bias or coordinate the proposal of“ strategic facilitators ”, such as military satellites,” the document says.
In the national defense markets, local champions are still dominated by. For example, in France, two main defense companies represented 69% of the internal sales of the sector by 2024.
According to researchers, since the United States is increasingly moving away from the traditional role of a defender in Europe, this fragmented approach, the internal trend in acquisitions and current technological spaces should be urgently resolved.
How? In addition to the European defense mechanism, Brogel recommends expanding the role of existing organisms, such as the European Defense Agency, in planning, acquisition and financing.
He also offers a new tool similar to those used in response to the Covid-19 pandemia for temporary support to reduce the risks of unemployment in an emergency (of course), as well as strengthening cooperation, such as constant structured cooperation to protect and security (neck) to develop strategic facilitators and reduce dependence on the United States.
“The dependence of American manufacturers can be difficult to overcome,” says the document, emphasizing that Europe has the opportunity to correct and reduce its dependence on the United States if the main reform is both on a market proposal and on defense in Europe.