Aysu Bicer
04 March 2025•Update: 05 March 2025
LONDON
Ahead of this week's European Council meeting, European Commission President Ursula von der Leyen on Tuesday outlined the ReArm Europe plan, an ambitious strategy to enhance the continent's defense capabilities that would mobilize as much as €800 billion ($841 billion).
The announcement came following reports that Trump, who has demanded NATO members to increase defense spending to up to 5% of their GDP, paused military aid to Ukraine after his Oval Office clash with Ukrainian counterpart Volodymyr Zelenskyy.
Trump wants a quick deal to end the three-year-long war in Ukraine, but Zelenskyy, backed by Europe, has pushed for security guarantees.
Addressing a press conference in Brussels, the European Commission president said, "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."
Von der Leyen said spending needs to be increased "urgently now but also over a longer period of time over this decade."
“Member states are ready to invest more in their own security if they have the fiscal space,” she said, sharing that she also wrote a letter in this regard to European leaders.
Von der Leyen highlighted that an average 1.5% increase in defense spending could create fiscal space of up to €650 billion over the next four years.
The second major initiative proposed a new instrument offering €150 billion in loans to member states for defense investment.
“This is about basically spending better and spending together,” said von der Leyen, emphasizing joint procurement in areas such as air and missile defense, artillery systems, ammunition, and drones.
"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," she said.
"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."
She also announced new possibilities for EU funding, saying: “We will propose additional possibilities and incentives for member states to decide if they want to use cohesion policy programs to increase defense spending.”
This move aims to direct more funds toward defense-related investments in the short term.
The final two elements of the plan focus on mobilizing private capital, particularly through the Savings and Investment Union and the European Investment Bank.
“This is Europe’s moment, and we must live up to it,” von der Leyen said, reaffirming her call for greater responsibility in ensuring a "safe and resilient Europe."
"Europe is ready to assume its responsibilities," she said, adding: "This is a moment for Europe, and we're ready to step up."
EU leaders will discuss the proposal at the summit on defense spending on Thursday.
