The European Union is currently not ready to issue Eurobonds to build the necessary defense capacity to deter possible military aggression. This was stated by the European Commissioner for Defense and Space Andryus Kubilius, informs Euronews.
“The issuance of Eurobonds means an increase in the total debt of the EU. And all member countries will have to service it. Instead, we now have the task of repaying the already accumulated debt.” Kubilyus noted.
According to him, the preparation for the discussion of the new Multiannual Financial Framework (the EU’s long-term budget) shows that if no other solution is found, a significant part of the future budget will go to pay off the debts that arose during the pandemic.
The long-term budget of the European Union is about 1% of the bloc’s GDP (approximately 1.2 trillion euros). Annual payments on debts accumulated during the COVID-19 pandemic are expected to reach 25 to 30 billion euros per year, i.e. up to 20% of the EU’s annual financial fund.
Kubilyus added that he expects member countries to use the tools and mechanisms provided by the ReArm Europe plan, which has been renamed “Readiness 2030”. After all, the issue of repayment of the pandemic debt has not yet been resolved.
“Whatever instrument we choose — loans or bonds — in the end, someone has to return these funds. Therefore, we should not move to Eurobonds until we get answers to key questions.”, – emphasized the European Commissioner.
According to him, in the next four years, under an optimistic scenario, EU countries can start spending up to 3.5% of their GDP on defense. In total, it will amount to about 2.4 trillion euros. At the same time, the question arises — will this amount cover all needs, or will we have to seek additional funding? The final understanding of the real needs in Brussels is expected to be received by June.
It will be recalled that at the beginning of March, the head of the European Commission, Ursula von der Leyen, presented a plan to mobilize up to 800 billion euros over the next four years. The main emphasis in this plan is on increasing defense spending by EU countries at the national level.
The roadmap envisages the creation of financial opportunities to increase defense spending to 3.5% of GDP (approximately 650 billion euros), attract more private capital, adapt the mandate of the European Investment Bank (EIB) and stimulate defense investments within the common budget.
