IRIA News

5 minute read

European Commission President Ursula von der Leyen has unveiled an ambitious €800 billion ($841.5 billion) defense plan to bolster Europe’s military capabilities in the wake of evolving geopolitical landscape and the recent suspension of U.S. military aid to Ukraine.

The proposal, known as “ReARM Europe”, aims to significantly ramp up Europe’s defense spending, both to address immediate security needs and to establish long-term resilience for the continent. The announcement comes on the heels of the London summit.

“We are in an era of re-armament, and Europe is ready to massively boost its defence 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 more responsibility for our own European security,” the European Commission president said on March 4, 2025.

The plan, outlined in a series of proposals ahead of an emergency summit of EU leaders on March 6, comes at a critical time as the U.S. appears to reconsider its commitments to Ukraine and the European security framework. Von der Leyen’s announcement marks a decisive step towards European defense and security as the EU is facing growing security challenges—both from Russia’s aggression in Ukraine and from shifting U.S. priorities.

Bold Vision for European Defense

The ReArm Europe plan is designed to mobilize €800 billion for the enhancement of Europe’s defense capabilities, with a particular focus on supporting Ukraine in its ongoing conflict with Russia.

“We are living in the most momentous and dangerous of times,” Ursula von der Leyen said as she outlined the proposal.

“Europe is ready to assume its responsibilities.

ReArm Europe could mobilise close to €800 billion for a safe and resilient Europe.

This is a moment for Europe. And we are ready to step up.”

— President @vonderleyen on the defence package pic.twitter.com/OiE8kH8FnK

— European Commission (@EU_Commission) March 4, 2025

The plan is divided into five main components, each aimed at maximizing defense capabilities across the EU. The first proposal includes suspending EU budget rules that typically constrain member states’ spending.

Von der Leyen’s plan primarily involves loosening the EU’s fiscal constraints to allow member states to significantly boost defense spending without triggering penalties for excessive deficits. “So if member states would increase their defense spending by 1.5% of GDP on average, this could create fiscal space of close to 650 billion euros ($683 billion) over a period of four years,” von der Leyen said.

This would be topped up by a loans program, controversially backed by the common EU budget, of 150 billion euros ($157 billion) to allow member states to invest in defense.

Key Points of ReArm Europe Plan

• Overall Financial Mobilization: The plan aims to mobilize up to €800 billion for European defense, reinforcing both immediate military support for Ukraine and long-term security infrastructure within Europe.
• Activation of National Escape Clause: EU member states will be allowed to significantly increase defense spending without triggering the Excessive Deficit Procedure, creating potential fiscal space of €650 billion over four years if defense spending rises by 1.5% of GDP.
• €150 Billion Loan Instrument: A new fund will provide €150 billion in loans to member states for defense investments, facilitating joint procurement of military equipment such as air and missile defense systems, artillery, drones, and cyber defense capabilities.
• EU Budget Utilization: The EU will propose additional incentives for member states to direct cohesion policy funds towards defense-related investments, enabling immediate and short-term defense enhancements.
• Private Capital Mobilization: Efforts to accelerate the Savings and Investment Union and utilize the European Investment Bank to drive private capital into defense investments.

EU proposes €150 billion loan to strengthen defense and support Ukraine

This will also enable Europe to provide immediate military support to Ukraine, strengthening the defense industrial base and benefiting Ukraine. “So, this is Europe’s moment, and we must live up to it,” von der Leyen stated.

Von der Leyen’s plan also proposes the creation of a new €150 billion fund that would provide loans to EU member states for joint defense investments. The focus of these investments would be on improving Europe’s military capabilities, including air and missile defense systems, artillery, ammunition, drones, anti-drone systems, and enhanced cyber preparedness.

“This is about spending better—and spending together,” von der Leyen said. She emphasized the importance of collective European defense, particularly in enhancing capabilities that would directly support Ukraine’s defense efforts. With the U.S. scaling back its involvement, the EU must ensure that it has the capacity to provide Ukraine with immediate military aid while simultaneously investing in long-term defense infrastructure.

Turning point for European Security Policy

The announcement of ReArm Europe arrives at a time when transatlantic relations are undergoing significant strain. The recent suspension of U.S. military aid to Ukraine—coinciding with U.S. President Donald Trump’s calls for greater disengagement from Europe—has placed immense pressure on the EU to reassess its role in global security.

Von der Leyen acknowledged the shift in U.S. policy, noting that Europe must take greater responsibility for its own defense in terms of resources and strategic direction, as she wrote in a letter to EU leaders, underscoring the urgency of collective action.

The EU leaders will gather in Brussels on March 6 for a summit dedicated to defense and Ukraine. Discussions are expected to focus on the details of von der Leyen’s proposals, with particular emphasis on how to allocate funds efficiently and how to synchronize defense spending across the 27 EU member states.