Von der Leyen signals ‘extraordinary’ measure to boost EU defense spending – POLITICO Europe
The move would offer national capitals more room to increase defense spending. BRUSSELS — European Commission President Ursula von der Leyen privately suggested triggering an emergency clause to allow countries to increase defense spending, four European Union officials told POLITICO.The idea, made during a closed-door meeting with national leaders on Monday, would allow governments to increase their defense spending substantially without violating the EU’s budget rules.Those rules allow countries to deviate from their spending plans “in the event of a severe economic downturn” or in “exceptional circumstances outside the control of government.”Von der Leyen told reporters she would “use the full range that we have of flexibilities in the Stability and Growth Pact to allow for a significant increase in defense spending.”She added: “For extraordinary times, it is possible to have extraordinary measures also in the Stability and Growth Pact. And I think we live in extraordinary times.”During the earlier meeting, she had also floated specifically exempting defense spending from national budget deficits but did not go into further detail, one of the four officials said.Von der Leyen is under pressure from highly indebted southern European countries, such as Italy and Greece, to treat defense spending differently.Officials said triggering the emergency clause would allow countries to spend more on defense without reopening a deal on national spending that came into force last year after long and arduous haggling.“If a faster increase [in spending] is due to defense, they might say these are exceptional times,” said Zsolt Darvas, a senior fellow at the Bruegel think tank in Brussels. “So I mean, now we have a threat from Russia” and the United States security guarantee for Europe appears to have weakened, he added.The revived spending rules were criticized in many ways, not least for straightjacketing countries in the case of unexpected events such as war, which require immediate fiscal responses. The invasion of Ukraine had not only triggered an abrupt reassessment of EU member countries’ defense preparedness, but had also required heavy government subsidies to keep a lid on energy prices.Under the rules, which are an attempt to enforce collective fiscal discipline, each country is required to precommit to four- or seven-year plans to get their deficits and debt levels within agreed limits.The pandemic and the Ukraine war left many EU countries with excessive budget deficits, and the need for such adjustment plans. But those plans are now under fresh pressure from U.S. President Donald Trump’s demand for a sharp and immediate rise in defense spending above and beyond the reference level for NATO members, which is 2 percent of gross domestic product.The current rules offer a number of small concessions for countries that want to scale up their military budgets. Countries that commit to stronger defense capabilities are allowed “a more gradual fiscal adjustment,” according to a Commission spokesperson.Moreover, increases in defense spending can be considered a mitigating factor for countries whose expenditure levels would normally trigger the Commission’s sanctions procedure.In a further concession, national capitals are discussing broadening the definition of what constitutes defense spending, as critics such as Poland argue that the current framework is too conservative. The aim is to accelerate spending to boost strategic investments across the bloc. The need to counter Russia is shifting the attitudes of rich northern countries on budget discipline.Viktor Orbán has flirted with killing the EU’s Russia sanctions. But he didn’t get the ally he might have expected in Donald Trump.Austria escapes the European Commission’s excessive deficit procedure.
