President of the European Commission Ursula von der Leyen arrives to give a press conference on the “Defence package” at the EU Commission headquarters in Brussels on March 4, 2025. (Photo by Nicolas TUCAT / AFP) (Photo by NICOLAS TUCAT/AFP via Getty Images)
Nicolas Tucat | Afp | Getty Images
New plans from the European Union to increase defense spending could potentially mobilize as much as 800 billion euros ($841 billion), European Commission President Ursula von der Leyen said Tuesday.
“Europe is ready to massively boost its defense spending. Both, to respond to the short-term urgency to act and to support Ukraine but also to address the long-term need to take on much more responsibility for our own European security,” she said in a press statement.
Europe is in its “era of rearmament,” she noted.
Von der Leyen said she had written to European leaders ahead of the European Council meeting later this week to propose the “ReArm Europe Plan,” designed to enable EU member states to increase spending in defense capabilities. She added that this was needed “urgently now but also over a longer time.”
“ReArm Europe could mobilise close to EUR 800 billion for a safe and resilient Europe,” she said. “This is a moment for Europe. And we are ready to step up.”
The plan will include 150 billion euros of loans that member states can access to invest in what von der Leyen described as “pan-European capability domains.”
“For example: air and missile defence, artillery systems, missiles and ammunition drones and anti-drone systems; but also to address other needs from cyber to military mobility for example,” she added.
In the letter sent to EU leaders, and seen by CNBC, von der Leyen said the new loan instrument would be backed by the EU budget.
The ReArm Europe plan would also enable EU member states to use public funding for defense on a national level by activating the national escape clause in the EU’s Stability and Growth Pact. First announced at the Munich Security Conference last month, this move would give countries more flexibility on how they spend their money.
Von der Leyen also pointed to options such as making changes to the EU’s budget and mobilizing private capital to boost defence spending.
The 27 EU leaders will gather in Brussels on Thursday for a meeting dedicated to defense and support for Ukraine where the ReArm Europe proposals will be discussed.
Trump has repeatedly pushed for European countries and other NATO allies to increase their defence spending above the current NATO target of 2% of their gross domestic product each year.
A number of countries have struggled to meet even this target and have voiced concerns about increasing their spending closer to Trump’s preferred 5%. Others, like Poland, have called for major increases in spending, especially given Russia’s invasion of Ukraine.
The way the Trump administration has responded to the ongoing conflict in recent days and weeks — including the spat with Ukrainian President Volodymyr Zelenskyy at the White House last week, as well as reports that the U.S. has halted military aid to Ukraine — has increased pressure on Europe to act.
German foreign minister Annalena Baerbock on Tuesday said von der Leyen’s proposals were an “important first step.” In a post on social media platform X translated by CNBC. she said that to achieve “peace through strength,” two things were needed — additional military and financial support for Ukraine, and a “quantum leap” to boost defense.
— CNBC’s Silvia Amaro contributed to this report.
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