London – it is expected that the European Union will announce “specific” funds regarding the increase in defense financing this week, the sources have informed CNBC because Europe and the United States conflict with support for Ukraine.
27 EU leaders will gather in Brussels on Thursday for a meeting devoted to defense and support for Ukraine. This is due to two particularly tense moments in US-EUROPS relations: Vice President JD Vance's Speech in Munich in mid -February, when he criticized European leaders; and Continue the start Between the US administration and the President of Ukrainian Zelenskyy in an oval office on Friday.
European leaders are trying to not imagine President Donald Trump after he criticized Zelenskyy for “Gambling “over the potential World War III. At the same time, Europeans know that they have to take immediate action so that Ukraine still receives the support needed – and prevents further aggression from Russian President Vladimir Putin.
“In the coming days there will be intensive work,” said CNBC EU official, who did not want to be exchanged because of the sensitivity of the discussion, but is part of the preparations for the Thursday meeting.
The same official said that the goal is to announce “specific results” regarding defense financing.
Traders will carefully observe conversations between EU officials. The European Air and Defense indicator increased by almost 23% a year, when investors focus on trips, and was more than 6% higher in Monday morning trade.
Trump often criticized European nations for not spending 2% of their GDP on defense, in accordance with NATO's principles. From the first term of Trump, several countries have increased defense expenditure, and the latest NATO data indicate that 23 out of 32 members should reach 2% in 2024.
Now many NATO members want to increase expenses even more, and NATO Secretary General Mark Rutte said CNBC in February that this number will have to be “much more than 2%. “Meanwhile, Trump required 5% of GDP as the purpose of the NATO contribution.
How to spend more on defense
The President of the European Commission Ursula von der Leyen announced in February that EU fiscal principles would be updated to enable countries to issue more defense without limiting specific debt and deficit purposes.
The nameless EU official told CNBC that the next advertisement would go even further. “We look at additional defense funds at the EU level, including through flexibility in the use of structural funds and the adaptation of the EIB mandate,” said the official.
European Investment Bank, which is targeted EUR 95 billion (USD 99.26 billion) in investments in 2025.It is currently limited to financing only double application defense projects, which means that they must have civil and military goals.
The second EU official, who did not want to be replaced because of the sensitivity of conversations, confirmed on Monday CNBC that von der Leyen is to present “specific funds” in terms of defense financing in the coming days. They will then be discussed by EU leaders on Thursday.
Ukrainian soldiers run Soviet T-64 tanks in the Sumy region, near the border with Russia, on August 11, 2024 among the Russian invasion of Ukraine. Russia on August 11 admitted that the Ukrainian army broke deeply in the Kursk border region in the offensive, who said the highest official in Ukraine, aimed at “destabilizing” Russia and “stretching” his strength.
Roman Pipey AFP Getty images
“We urgently have to strengthen Europe. And for this I will present the leaders a comprehensive plan on how to raise Europe on March 6, when we have our European Council, “said von der Leyen on Sunday at the summit in London.
In a recent report entitled “defending Europe without the USA” Think Tank Bruegel from Brussels calculated that Europe may need “300,000 more soldiers and Annual increase in defense expenditure of at least 250 billion Euro in a short period to stop Russian aggression. “
Meanwhile, Goldman Sachs said on Sunday in the note that “in the absence of fiscal compensation, the euro area must finance an additional 0.6% of GDP per year to achieve the goal of defense expenditure at the level of 2.5%.”
One key question is whether the EU will go so far that he will agree to joint loans for defense projects. The block decided to take this unprecedented step in 2020 as a result of a pandemic (known as Nextgenerationeu) and some Member States believe that this should be repeated for defense expenses. However, more conservative tax nations want to exhaust other options before taking this step.
According to Goldman Sachs, EU leaders could “change the purpose” of outstanding financial abilities from the Nextgenerationeu Funds for defense. Then they could look at the new program, which “can provide stable expenses to defend the financing of idiosyncratic national factors,” added analysts.