European Commission President Ursula von der Leyen unveiled the key elements of her proposed “ReArm Europe” plan on Tuesday (4 March), aimed at strengthening the EU’s defence spending and capabilities in response to the current era of rearmament. The plan includes €150 billion in subsidised loans to help member states bolster their defences. EU leaders endorsed its main lines on Thursday (6 March) during a special European Council meeting. Finally, Ms. Von der Leyen pledged to advance a legal framework for the plan, which could be presented at the next European Council meeting in two weeks.
Specifically, the ReArm Europe Plan is structured around five key initiatives:
- Unleashing EU public funding for defence at the national level
This includes activating the national escape clause of the Stability and Growth Pact to allow increased defence spending without triggering the Excessive Deficit Procedure. This could create a “fiscal space” of €650 billion over four years. - Establishing a new common instrument to provide €150 billion in loans for defence investment: This new fund will allow Member States to finance joint defence investments. This initiative would enhance pan-European military capabilities through the joint procurement of artillery, missiles, drones, and anti-drone systems. Ms. von der Leyen declared that, by pooling demand, Member States could reduce costs, improve interoperability, strengthen the European defence industry, and increase military aid to Ukraine.
- Harnessing the power of the EU budget: by directing additional EU funds towards defence-related investments. Member States will also have the option to use cohesion funds -those that have not been used,- to boost defence spending
The final two proposals outlined by Ms. von der Leyen focused on mobilising private capital:
- Accelerating the Savings and Investment Union
- Enhancing the role of the European Investment Bank in defence spending: allowing the bank to grant and increase the credits for defence investments.
Ms. von der Leyen underscored that ReArm Europe could mobilise nearly €800 billion in defence spending, reinforcing Europe’s security and resilience. She also reaffirmed the EU’s commitment to close cooperation with NATO partners and emphasised that this is Europe’s moment to step up on defence.
Although EU leaders formally approved the plan in the European Council conclusions, key figures argued it falls short of its goal to rearm the bloc. Spanish Prime Minister Pedro Sánchez insisted that the €150 billion allocated as loans should instead be direct grants from the Commission to member states. Meanwhile, French President Emmanuel Macron dismissed the sum as simply too low.
Furthermore, other actors have raised concerns about using cohesion funds for defence. Committee of the Regions President Kata Tüttő warned it would be a “catastrophic mistake,” while S&D leader in the European Parliament, Iratxe García, affirmed that it should remain a one-time exception.
Conclusion
ReArm Europe could mark a historic effort to consolidate Europe’s defence capabilities through financial innovation, joint procurement, and enhanced coordination. If implemented effectively, the plan could transform the EU into a stronger geopolitical actor while reducing its reliance on the U.S. security umbrella.
