EU leaders to address defense collaboration at Brussels summit

The possibility of using Eurobonds to finance the EU’s defense capabilities will be discussed as the bloc’s leaders meet in Brussels. This proposal, supported by French President Emmanuel Macron and Estonian Prime Minister Kaja Kallas, aims to test member states’ willingness to issue joint debt to strengthen the defense industry. Despite reservations from more fiscally conservative capitals, some argue that it is necessary to initiate discussions on defense bonds to enhance the EU’s preparedness for conflict, especially in the face of Russia’s war economy.

Following recent breakthroughs in EU support for Ukraine, including a €5 billion weapons fund and a proposal to utilize profits from Russian assets to arm Ukraine, the summit will address innovative ways to replenish the EU’s defense stockpiles. European Council President Charles Michel is urging leaders to take radical steps to prepare the EU economy for potential conflicts, including considering European defense bonds. The summit will also focus on addressing the crisis in Gaza and determining the steps needed to open accession talks with Bosnia and Herzegovina, Ukraine, and Moldova.

The proposal for Eurobonds faces resistance from the ‘frugal five’ countries, which have historically opposed the idea of EU public debt during economic crises due to concerns about punishing wealthier nations. The success of the EU’s COVID-19 recovery plan, funded through joint EU bonds, has been met with increased borrowing costs, potentially impacting future crisis responses. Additionally, an alternative proposal to amend the European Investment Bank’s mandate to fund military investments has been suggested by 14 member states, aiming to redefine dual-use projects and expand its defense industry lending policy.

An initiative led by the Czech Republic to provide additional artillery shells to Ukraine’s armed forces as they combat the Russian offensive has garnered support from up to 20 EU countries. Countries such as Denmark, Belgium, Germany, the Netherlands, and Sweden have confirmed their participation in purchasing unused ammunition from undisclosed Western countries to aid Ukraine. During the summit, leaders will also address the crisis in Gaza, calling for a humanitarian pause leading to a sustainable ceasefire. They will also consider opening accession talks with Bosnia and Herzegovina, Ukraine, and Moldova.

Despite the push for Eurobonds and other innovative approaches to bolster the EU’s defense capabilities, there remains skepticism and resistance from various member states. The discussion on defense bonds highlights the challenges of navigating differing perspectives within the EU on issues of joint debt issuance and military spending. As leaders gather in Brussels, they will seek to find common ground on a range of issues, including support for Ukraine, the crisis in Gaza, and the potential expansion of the EU through accession talks with Bosnia and Herzegovina, Ukraine, and Moldova.