March 4, 2025

The ReArm Europe initiative suggests injecting €800 billion in defense, including €150 bln for programs with quick returns, and it can make Ukraine tangibly stronger, too.

The European Union is looking to adopt the ReArm Europe plan for large-scale rearmament. The program was submitted by European Commission President Ursula von der Leyen, stressing that Europe is now “living in the most momentous and dangerous of times” that requires decisive action to ensure security.

In essence, ReArm Europe is about money. As outlined in von der Leyen’s statement, ReArm Europe is a set of proposals aiming to increase the military potential of EU member states using financial leverage, starting with immediate investments and throughout this decade. There are five key points.

The first is allowing nations to raise their defense spending even if it leads to budget deficits that exceed the standards set by the EU. The currently enacted Stability and Growth Pact regulates the budget balance, the ratio of public debt to GDP and other financial indicators. The EU Commission expects that easing the conditions for the budget shortfalls will free an additional 650 billion euros over the next four years.

The second proposal is to lend 150 billion euros to EU members for joint arms purchases. Ursula von der Leyen directly mentioned that with this new instrument, member states “can massively step up their support to Ukraine” and also reduce costs and fragmentation inherent to independent contracts while increasing interoperability between European forces and strengthening local industry.

The third point is to use the EU budget itself for defense investments in the short term. This could also help countries intent to increase their military expenditures by offering “additional possibilities and incentives.”

The fourth is to mobilize private capital through financial institutions such as the European Investment Bank.

In total, all these four measures should be able to mobilize about 800 billion euros to strengthen Europe’s military posture. That is, if the plan is accepted, agreed, and fully implemented. After all, even though this amount of money is to be attracted throughout several years, €800 billion is still a significant sum to invest, requiring a defense spending raise by all European countries.

The projected defense spending of all EU countries in 2024 amounted to 326 billion euros. Thus, even if the said 800 billion-euro boost is stretched over the next four years, the members will need to increase their collective military budget by more than a half of its current amount.

The main problem is the time interval between when money is allocated and when it is converted into real weapons. The launch of any new production usually takes 1.5 to 2 years. On the other hand, the EU initiative partly bypasses this by introducing short-term loans for joint procurement. The inclusion of Ukraine aid is important here since many EU states buy weapons for this purpose these days.

If we divide these 150 billion euros into 4 years, too, we’ll get an additional €37.5 billion yearly for armament procurements. To put it into perspective, the 2024 planning provided that the EU spent €90 billion on new weaponry.

https://en.defence-ua.com/news/rearm_europe_how_much_eus_plan_can_really_boost_the_continents_defense_capability_ukraine_included-13725.html