Europe’s Defense Future
We're living in the most momentous and dangerous of times. I do not need to describe the grave nature of the threats that we face or the devastating consequences that we will have to endure if those threats would come to pass, because the question is no longer whether Europe security is threatened in a very real way or whether Europe should shoulder more of its responsibility for its own security.
In truth, we have long known the answers to those questions. The real question in front of us is whether Europe is prepared to act as decisively as the situation dictates and whether Europe is ready and able to act, with speed and with the ambition that is needed.
In the various meetings in the last few weeks, most recently, two days ago in London, the answer from European capitals has been as resounding as it is clear. We are in an era of rearmament, and Europe is ready to massively boost its defense spending, both to respond to the short-term urgency to act and to support Ukraine, but also to address the long-term need to take on more responsibility for our own European security.
And this is why today I have written a letter to the leaders ahead of Thursday's, European Council. This is why, we are here together today. I have outlined in this letter to the leaders the ReArm Europe Plan.
This set of proposals focuses on how to use all the financial levers at our disposal in order to help member states to quickly and significantly increase expenditures in defense capabilities, urgently now, but also over a longer period of time over this decade. Now, there are five points to this plan. The first part of this ReArm Europe Plan is to unleash the use of public funding and defense on the national level.
Member states are ready to invest more in their own security if they have the fiscal space, so we must enable them to do so, and this is why we will propose to activate the national escape clause of the Stability and Growth Pact. This will allow member states to significantly increase their defense expenditures without triggering the excessive deficit procedure.
So if member states would increase their defense spending by 1.5% of GDP on average, this could create fiscal space of close to 650 billion euros over a period of four years. The second proposal will be a new instrument. It will provide 150 billion euros of loans to member states for defense investment.
This is about basically spending better and spending together, and we're talking about pan-European capability domains, like, for example, air and missile defense, the artillery systems, missiles and ammunition, drones and anti-drone systems, but also to address other needs from cyber to military mobility, for example.
This will help member states to pool demand and to buy together, and of course, with this equipment, member states can massively step up their support to Ukraine, so immediate military equipment for Ukraine. This approach of joint, procurement will also reduce costs. It will reduce fragmentation, but it will increase interoperability and of course, strengthen our defense industrial base.
And it can be to the benefit of Ukraine, as I've just described. So this is Europe's moment, and we must live up to it.
The third point is using the power of the EU budget, and there's a lot we can do in this, domain in the short term to direct more funds towards defense-related investments, and this is why I can announce that we will propose additional possibilities and incentives for member states, that they will decide if they want to use cohesion policy programs to increase defense spending.
Now, the last two areas of action aim at mobilizing private capital by accelerating the Savings and Investment Union and of course, through the European Investment Bank. So to conclude, Europe is ready to assume its responsibilities. ReArm Europe could mobilize close to 800 billion euros of defense expenditures for a safe and resilient Europe.
We will, of course, continue working closely with our partners in NATO. This is a moment for Europe, and we are ready to step up. Thank you very much.
Madam President.
