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The UK will join this week in a groundbreaking talks about EU leaders setting up a European-wide defence financing arrangement.
British Prime Minister Rachel Reeves will hold talks with other European finance ministers at the G20 conference in Cape Town this week as the war in Ukraine is now in its fourth year.
“It could be funds or banks. For example, there's the concept of re-contract banking, and we're also looking at this,” Poland's Finance Minister Andrzezi Domansky said.
Domanski told the Financial Times that the debate had been going on with the UK for months, adding, “Without the UK, it's hard to imagine the defense of Europe.”
The UK Treasury confirmed that Reeves will “update defense funding proposals with European counterparts” at the G20, but said the speech is in its early stages.
Donald Trump is risking that European NATO allies demand increased defensive spending at 5% of GDP, not yet reaching the existing 2% target or losing US protection.
The rapid re-engagement with Russia, a country most European countries see as an existential threat, has led to a desperate debate on how to collectively strengthen Europe's defensive capabilities and reduce reliance on American troops and weapons caused.
On Sunday, German Prime Minister Friedrich Merz declared that Germany needs to fundamentally reshape security arrangements and end decades of dependence on Washington, and Trump said he had “largely” on Europe's fate. “is indifference,” and said the continent needs to “achieve independence.”
European defence spending has been widely discussed in a call this weekend between European Commission President Ursula von der Leyen and British Prime Minister Kiel Starmer, with von der Leyen and Norwegian Prime Minister Another call with Jonas Gars Su Store is debate.
European countries are looking for ways to improve their defense capabilities during times of tighter national budget constraints. By leveraging national guarantees, banks allow the country to increase its spending without increasing its balance sheet in advance.
The UK is looking for ways to increase defence spending from 2.3% to 2.5% of GDP, and if its ability to increase spending is significantly constrained by voluntary fiscal rules, it will cost at least £5 billion a year. Masu.
Among the proposals is one of General Nick Carter, former head of the British army. He proposed a “recontract bank” that utilizes the European savings pool modeled after the European Bank for reconstruction and development. of iron curtains supporting central and eastern Europe.
“The Treasury is interested in that,” said one person involved in the discussion with Reeves' team. However, the finance authorities said there are many models of multilateral funding on the table, and Reeves has an open mind in the next step.
Experts said the benefit of Reeves of Carter's “Refmament Bank” is to mitigate the impact of additional defence spending on fiscal rules.
Andy King, a former British official currently at Flint Global, said he is a consulting firm, saying that such banks “suppose important resources for defense without having a significant impact on fiscal rules.” It's possible.” He added: “That's not a specific outcome. The details are important in terms of how the entities were structured and how they used their lending capabilities.”
The EU Leader Conference in late March discusses common defence needs, and Poland's goal is to make progress on the funding needs of the EU finance ministers gathering in April ahead of the leader's decision in June.
The European Commission said this month it will partially lift EU fiscal rules so that the country can invest in defense.
Von Der Leyen has also opened the door to “European fundraising” for a common defense project, and is expected to detail fundraising options in March.
