Von der Leyen signals ‘extraordinary’ measure to boost EU defense spending – POLITICO

The revived spending rules were criticized in many ways, not least for straightjacketing countries in the case of unexpected events such as war, which require immediate fiscal responses. The invasion of Ukraine had not only triggered an abrupt reassessment of EU member countries’ defense preparedness, but had also required heavy government subsidies to keep a lid on energy prices.

Defense of the realms

Under the rules, which are an attempt to enforce collective fiscal discipline, each country is required to precommit to four- or seven-year plans to get their deficits and debt levels within agreed limits.

The pandemic and the Ukraine war left many EU countries with excessive budget deficits, and the need for such adjustment plans. But those plans are now under fresh pressure from U.S. President Donald Trump’s demand for a sharp and immediate rise in defense spending above and beyond the reference level for NATO members, which is 2 percent of gross domestic product.

The current rules offer a number of small concessions for countries that want to scale up their military budgets. Countries that commit to stronger defense capabilities are allowed “a more gradual fiscal adjustment,” according to a Commission spokesperson.

Moreover, increases in defense spending can be considered a mitigating factor for countries whose expenditure levels would normally trigger the Commission’s sanctions procedure.

In a further concession, national capitals are discussing broadening the definition of what constitutes defense spending, as critics such as Poland argue that the current framework is too conservative.