Loan scheme to rearm Europe could be ‘important breakthrough' in Ukraine support

Irish Times

23-05-2025

A €150 billion loans programme to rearm Europe that was finalised this week could be 'a very important breakthrough' in the EU's
military support for Ukraine
, the bloc's defence commissioner has said.
Andrius Kubilius, a former prime minister of Lithuania who is the
EU's
first defence commissioner, said he expected several member states to request EU-backed loans under the Security Action for Europe (Safe) scheme, which was approved on Wednesday.
The
European Commission
proposed the €150 billion loans alongside flexibilities in the bloc's fiscal rules as part of an €800 billion rearmament plan, which was hastily drawn up after US president Donald Trump's decision to suspend all US military aid to Ukraine.
Once the loans agreement is rubber-stamped next week, EU member states have six months to draw up plans for defence projects they wish to fund. 'Member states will take those loans... and will use them for joint procurement together with Ukraine and for Ukrainian needs,' Mr Kubilius told the Guardian.
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British defence companies will also have greater opportunities to be involved in defence projects funded by the scheme as a result of the EU-UK security pact signed on Monday. The UK and EU are expected to sign a technical agreement on Safe that will require a yet-to-be determined administrative fee from London. The British government, however, does not intend to seek access to the EU-backed loans, which are designated for EU member states.
'We cannot complain that 340 million Americans are not ready forever to defend 450 million Europeans against 140 million Russians,' said Mr Kubilius, playing down European differences with the Trump administration. 'We can dislike language and messages, but what we need to avoid really is what I call angry and chaotic divorce [with the US]. We need to go into a very rational agreement on a division of responsibilities.'
He expressed confidence that EU member states would deepen national debts to spend the €800 billion possible defence spending identified by the commission.
So far, 15 countries, including Germany and Poland, have announced they intend to use the flexibilities in the EU's fiscal rules, but some large and heavily indebted economies have held back, including France, Italy and Spain.
These countries, which are among the least generous donors to Ukraine, are thought to be reluctant to increase debts for defence. Consequently, some sources in Brussels remain sceptical that the EU will meet the €800 billion headline figure.
The EU commissioner, nevertheless, said Europe could fill any shortfall in US military aid for Ukraine.
By the third anniversary of Russia's full-scale invasion – February 24 – Europe had provided Ukraine with €62 billion in military aid, compared with €64 billion from the US, according to the Kiel Institute for the World Economy.
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Europe had also sent €70 billion in humanitarian and financial aid, compared with €50 billion from the US. To replace US aid flows, Europe would need to spend 0.21 per cent of GDP, according to the Kiel Institute, compared with what its analysts described as the 'minor effort' of 0.1 per cent of GDP being spent today.
An additional 0.1 per cent 'of course is not zero, but also it is not something which would destroy our financial situation', Mr Kubilius said. – Guardian.