New Delhi: European Commission President Ursula von der Leyen presented a plan to ‘ReArm Europe’ Tuesday, which could see the European Union (EU) member states mobilise around €800 billion. The announcement comes hours after US President Donald Trump suspended US military aid to Ukraine to pressure Kyiv to engage in negotiations with Russia.
“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 defence spending,” von der Leyen said in a statement.
The plan was shared in a letter to the leaders of the 27 member states ahead of a 6 March emergency European Council meeting, where European defence and support for Ukraine will be under discussion. Ukrainian President Volodymyr Zelenskyy has been invited to the special summit.
As part of the plan, von der Leyen proposed a new €150 billion common defence fund, which would allow member states to raise money from the EU to invest in their defence capabilities.
“It will help Member States to pool demand and to buy together. 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, reduce fragmentation, increase interoperability and strengthen our defence industrial base,” the statement said.
"Europe is ready to assume its responsibilities.
ReArm Europe could mobilise close to €800 billion for a safe and resilient Europe.
This is a moment for Europe. And we are ready to step up."
— President @vonderleyen on the defence package pic.twitter.com/OiE8kH8FnK
— European Commission (@EU_Commission) March 4, 2025
Furthermore, as part of her five-point plan, the Commission President has also proposed to allow member states to invest more in their defence capabilities without falling foul of the Stability and Growth Pact—a set of rules designed by the EU to prevent excessive deficits.
“This is why we will shortly propose to activate the national escape clause of the Stability and Growth Pact. It will allow Member States to significantly increase their defence expenditures without triggering the Excessive Deficit Procedure,” said von der Leyen.
The Stability and Growth Pact imposes deficit and debt limits on EU member states. The limits include maintaining fiscal deficit spending of up to 3 percent of their Gross Domestic Product (GDP) or a government debt level above 60 percent of total GDP, without it significantly diminishing.
Under the excessive debt procedures, a member state could face potential economic sanctions by the EU. However, there exists the national escape clause, which would allow states to get around these limits.
“If Member States would increase their defence spending by 1.5% of GDP on average, this could create fiscal space of close to €650 billion over a period of four years,” von der Leyen said.
According to reports by Politico, the €150 billion pot of cash for cheap loans for European defence spending could come from around €93 billion that remains from the post-COVID-19 recovery funds.
Also Read: US suspends military aid to Ukraine in dramatic escalation as Trump-Zelenskyy rift widens
Defence spending boost comes as US recedes from Europe
For the EU, the defence spending boost comes at a time when the US under Trump has broken with Brussels on a number of issues, particularly with regard to the war in Ukraine. Last week, the US administration voted with Russia against a European-backed United Nations resolution condemning Moscow for its role in starting the war.
Furthermore, Trump has been in touch with Russian President Vladimir Putin and has opened preliminary talks with the Kremlin for an end to the war, which has excluded both Ukraine and the European leaders so far.
Moreover, last Friday, a White House meeting between Trump and Zelenskyy ended in disaster for the Ukrainian president after both Trump and Vice President J.D. Vance tore into Zelenskyy for what they believe is the lack of appreciation of the US’s military aid for Ukraine.
A minerals deal, which was being negotiated by the US and Ukraine, was not signed by the two leaders. Trump had been pushing for the minerals deal as a means for Kyiv to “payback” the nearly $180 billion in aid that the US has given to the eastern European country over the last three years.
The US administration under Trump has made it clear that Europe needs to step up for its own defence as Washington looks to pivot to other challenges. The US has also ruled out potential NATO membership for Ukraine, which is Kyiv’s chief ask as a security guarantee before proceeding with any deal for peace with Russia.
“Make no mistake, President Trump will not allow anyone to turn Uncle Sam into ‘Uncle Sucker,’” US Secretary of Defence Pete Hegseth said at a press conference during his first trip to Brussels last month for a NATO summit.
(Edited by Sanya Mathur)
Also Read: Russia-Ukraine war & FTA to top the agenda during EU Commission president’s India visit
Now that the “sugar daddy” is no longer around, EU has to fend for itself.
For the last 8 years, the US has been insisting on higher defence spending from it’s NATO “allies”. Trump has all along insisted that defence budget should ideally be at least 5% of the national budget for any NATO nation. All we heard were empty promises, plans and false commitments.
Now that push has come to shove, the EU seems to be stepping up. Good news indeed.
As for Canada, it is a laggard and a liability for both NATO as well as the EU. Nothing much can be expected from it. It will forever remain content with being a lackey of other powerful nations or blocs. Now that President Trump has taken action against it, the Canadian ministers have gone crying to the EU to see if it could help them. The Canadian “strategy” seems to be to change it’s sugar daddy – from USA to the EU.
This very clearly shows that the EU had the financial resources all along. If it could muster 800 billion euros within a few days of the US threatening to pull out of the Ukraine war, it simply means that it had the wherewithal all along.
Just because the US, acting like an idiot, splurged on the war effort and sent advanced military equipment, the EU chose to take the backseat and let the US lead. Now that the US has backed out, it’s quite clear that the EU can manage the situation on it’s own.
This should serve as a lesson to US defence strategists. Don’t get involved in conflicts in other continents when the nations there can manage the issue without your involvement.