Latest news with #EuropeanDefenceMechanism
Yahoo
07-05-2025
- Business
- Yahoo
Poland proffers common defense financing as panacea for arming Europe
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Generate Key Takeaways WARSAW, Poland — As European nations seek more self-reliance in weapon procurement, a new intergovernmental initiative dubbed the European Defence Mechanism (EDM) could pave the way for closer integration of the continent's fragmented defense industries, according to a recent report by Brussels-based think tank Bruegel. The study was commissioned by Poland, a European Union member state which holds the rotating presidency of the bloc's council for the first six months of 2025. The report was presented to the EU's Ministers for Economic and Financial Affairs at an April meeting in Polish capital Warsaw, involving 27 governments in the ensuing debate. One of its key findings is that better-integrated European defense markets could both stimulate competition and make it easier for new defense companies to launch products. Combining integrated markets and scaled-up procurement could facilitate halving unit costs, according to the think tank. By pooling demand for military gear and enforcing common standards, European partners can achieve reduced costs, but also incentivize the continent's industry players to grow, Guntram Wolff, a senior fellow at Bruegel and a co-author of the report, told Defense News. 'We need to work on a European defense funding mechanism for a deeper integration of markets across the European Economic Area. If we don't to that, we will have fragmented markets with national producers supplying to small domestic markets, and the economic cost is going to be very high for individual products,' Wolff said. 'Expensive products, such as modern fighter jets, will not be developed by individual countries,' he added. At the same time, future discussions on the EDM will be shaped by institutional and political challenges, Wolff said. This is because certain EU member states have constitutional constraints that could stop them from participating in similar mechanisms, and some governments do not want to engage in defense cooperation with other EU partners. 'It is a political question whether to include non-EU countries in this proposed mechanism, one that would need to be answered by the governments of EU member states,' the researcher said. 'Countries such as the UK and Norway, or even Turkey and, outside Europe, Canada could decide that they want to engage their defense industries in this form of cooperation.' A spokesperson for the Polish Ministry of National Defence told Defense News that the ongoing talks on the EDM are led by the country's Ministry of Finance, indicating that the discussions are mostly related to the financial aspects of the proposed mechanism. 'Together with EU finance ministers, we discussed what I believe is the most pressing issue right now in Europe: security and defense financing,' Andrzej Domański, Poland's Deputy Prime Minister and Finance Minister, said in a statement released by the Polish presidency. 'We welcome the ReArm Europe Plan, the most ambitious defense plan so far presented by the European Commission, with an up to €150 billion [$170.5 billion] loan mechanism and a greater flexibility in EU fiscal rules.' Since Russia launched a war against Ukraine in February 2022, Poland has boosted defense spending to expand its military and arm it with modern weapons. For 2025, the country's government aims to allocate a total of PLN 186.6 billion ($49.6 billion) to defense. With the country's military expenditure expected to reach an estimated 4.7 percent of its gross domestic product this year, Poland has established itself as one of the alliance's top spenders. In response to the new foreign policy course in Washington, officials in Warsaw have doubled down on Poland's commitment to defense cooperation with the United States. A large share of the nation's defense budget finances major purchases of weapons from Washington, including the ongoing programs to acquire F-35 fighters jets , Boeing AH-64D copters , M1A2 Abrams SEPv3 tanks , and Patriot air defense batteries , among others. At the same time, Polish Prime Minister Donald Tusk has declared his Cabinet aims to tighten defense cooperation with EU partners, as well as key European allies such as the U.K. and Turkey, securing weapons and military technology from these countries.
South China Morning Post
12-04-2025
- Business
- South China Morning Post
EU begins defence fund talks to ease debt concerns
European Union finance ministers started talks on Saturday over a joint defence fund that would buy and own defence equipment and charge members a fee for its use, as a way to spend more on defence without burdening national accounts with more debt. Advertisement The fund, called the European Defence Mechanism, was proposed by the Bruegel think tank in a paper for the ministerial discussions as a way of addressing concerns about how highly-indebted countries could pay for costly military equipment. It is part of a broader European effort to prepare for a potential attack from Russia as EU governments realise they can no longer fully rely on the United States for their security. 'It's a good starting point for discussion,' Portuguese Finance Minister Joaquim Miranda Sarmento said. Several other EU countries also expressed initial support, noting that setting up such a fund could be technically relatively simple because it would be based on the model of the euro zone bailout fund, the European Stability Mechanism. Advertisement 'We'll still have several issues in terms of the mandate, the finance, the contributions, the leverage in the market. There are several issues on the financing, but also on the military aspect,' Sarmento said. The EU is already looking to boost military spending by 800 billion euros (US$876 billion) over the next four years by loosening its fiscal rules on defence investment and jointly borrowing for large defence projects against the EU budget.
Reuters
12-04-2025
- Business
- Reuters
EU considers defence fund to ease debt concerns for military gear
Summary EU finance ministers discuss European Defence Mechanism proposal EDM aims to reduce national debt impact of military spending Fund could include non-EU members such as UK, Ukraine, Norway BRUSSELS, April 12 (Reuters) - European Union finance ministers started talks on Saturday over a joint defence fund that would buy and own defence equipment and charge members a fee for its use, as a way to spend more on defence without burdening national accounts with more debt. The fund, called the European Defence Mechanism, was proposed by the Bruegel think tank in a paper for the ministerial discussions as a way of addressing concerns about how highly-indebted countries could pay for costly military equipment. It is part of a broader European effort to prepare for a potential attack from Russia as EU governments realise they can no longer fully rely on the United States for their security. "It's a good starting point for discussion," Portuguese Finance Minister Joaquim Miranda Sarmento said. Several other EU countries also expressed initial support, noting that setting up such a fund could be technically relatively simple because it would be based on the model of the euro zone bailout fund, the European Stability Mechanism. "We'll still have several issues in terms of the mandate, the finance, the contributions, the leverage in the market. There are several issues on the financing, but also on the military aspect," Sarmento said. The EU is already looking to boost military spending by 800 billion euros ($876 billion) over the next four years by loosening its fiscal rules on defence investment and jointly borrowing for large defence projects against the EU budget. But such options increase national debt - a worry for many high-debt countries - while the Bruegel idea would provide a way to keep some of the defence investment off national books. INTERGOVERNMENTAL FUND OPEN TO NON-EU COUNTRIES The fund would be established under an intergovernmental treaty and have substantial paid-in and callable capital, allowing it to borrow on the market. The EDM could admit members from outside the EU, such as Britain, Ukraine or Norway. Because the fund would own the equipment it buys, the debt incurred to pay for it would stay on the EDM's books, rather than national accounts. The EDM would also promote a single European market for defence equipment to lower costs and pool resources. Defence procurement and production in the 27-nation EU is highly fragmented with at least seven different types of tanks, nine types of self-propelled howitzers and seven types of infantry fighting vehicles, which increases costs, reduces interoperability and hinders economies of scale. "We have to consider the possibility of creating new instruments ... to reinforce the defence capacities of Europe," Sarmento said. The fund could focus on "strategic enablers" - costly military infrastructure and equipment armies need to operate - now often provided by the United States. These include joint command and control systems, satellite-based intelligence and communication, development of expensive new weapon systems such as fifth- or sixth-generation fighter jets, integrated weapon systems needed by multiple countries like strategic air defence, strategic large-scale air transport and maritime logistics, missiles and nuclear deterrence. The Bruegel paper on the EDM said Europe had a chance to reduce its military dependence on the U.S. by 2030 only if it pooled procurement to the greatest extent possible and created a common European defence market including Britain as a major industrial defence player to boost competition. ($1 = 0.9128 euros)
Yahoo
07-04-2025
- Business
- Yahoo
EU ministers push for joint defence fund to secure a more self-reliant Europe
European Union finance ministers are preparing to explore an ambitious new initiative that could mark a turning point in the bloc's approach to collective security. At the heart of this week's discussion is the proposed European Defence Mechanism (EDM) – a joint fund designed to reshape how Europe procures, funds, and manages its military capabilities, while reducing its long-standing dependence on the United States. The proposal, which will be discussed at an informal gathering of EU finance ministers in Warsaw this week, lays out a framework for a shared defence fund that would purchase and own military equipment, offering member states access for a usage fee. Crucially, the EDM would operate outside national budgets, easing concerns among high-debt countries like Italy, Greece, and France about increasing public debt. The concept, though developed by the Bruegel think tank, has been picked up with growing interest by policymakers across Europe. Commissioned by the Polish presidency of the EU, the plan is gaining traction at a time when European leaders are acutely aware of the need to bolster their own defences in light of Russia's ongoing aggression and a shifting transatlantic security landscape. One of the most notable features of the EDM is its potential inclusivity. Read more on RFI EnglishRead also:France's Dassault says stepping up Rafale warplane outputFrance remains world's second largest arms exporter behind USFrench, UK military chiefs discuss options to strengthen Ukraine's army
