Defense expenditure becomes a priority element for the current mandate of the European Union, an attempt to increase spending in this game and that the block is prepared in an uncertain geopolitical scenario. However, euro countries do not agree on formulas to increase this item. The conversation begins to take shape after the European Commission’s proposal to suspend fiscal rules to increase the budget for defense, although the positions differ between countries as Spain advocating common formulas at European level and the most frugal, such as Germany and the Netherlands, that reject more common debt.
Upon arrival at the Eurogroup meeting that took place this Monday in Brussels, the Minister of Economy, Carlos Body, bet that the EU explores financing instruments at European level to increase the expenditure in defense, to the detriment of using items at level national. In statements to the press he talked about Use the rescue fund (the Mede) or the European Investment Bank (BEI) to channel financing at the community level for Spain and argued that there is room to issue more joint debt at European level. A position for which Belgium has also been inclined.
On the opposite side are Germany and the Netherlands. Traditionally frugal countries reject common instruments and leave in national responsibilities the increase in defense expenditure. The starting point is the proposal wielded by the president of the European Commission, Ursula von der Leyen, last Friday, that defended suspend the fiscal rules, Through the general exhaust clause, to grant some exceptionality to defense spending and that does not compute when accounting for compliance with the economic governance framework, which sets a 3% limit on GDP for deficit and the 60% for debt.
“There is a link between the market response, the rules that we are preparing and financial needs. Precisely for that reason we have said that the standards have to do with the fiscal stability and the sustainability of the long -term debt. We have to be aware of That anything we do has to respect the principle of fiscal stability and long -term sustainability. It is not Eurobones, It is not common financing, but about modifying European norms to allow new potentially common defense objectives at the national level, “German Minister of Finance, Jörg Kukies told the press.
A similar position has defended Dutch Finance Minister Eelco Heinen, who considers that the increase in defense expenditure is a national budget decision. “Money is not free, what we spend on the one hand cannot spend it on another,” he said. In addition, he has ruled out that “More joint debt is the formula for Europe”since “we need more defense but also a strong economy and a strong currency.”
It is not entirely clear if the activation of the exhaust clause, which was referred to von der read to proceed to the suspension of fiscal rules would be at European or national level. Although the Economy Commissioner, Valdis Dombrovskis, has given certain clues in that regard: “There is no final decision on whether it will be general (at European level) or national. Although there are reasons that point out that the use of the national clause adapts to current circumstances. But there is still a job to do. ”
The Eurogroup has coincided in its meeting on the need for “urgency”, as explained by its president, Paschal Donohoe. Although economics holders remain awaiting a proposal by the Community Executive to provide flexibility to fiscal rules to increase this item. A proposal that will arrive “in the next few days or weeks”, according to the late commissioner.
“It is absolutely evident that defense spending in Europe will increase even more in the coming years. With these fiscal rules we will find a way to increase defense spending while economic stability is maintained. And The debate about how we will do it exactly will open“Donohe said, in a statement that leans more for the Spanish position than by that of frugal countries.
The transatlantic relationship between the EU and the US “cannot be taken for granted”
The Economy Commissioner, Valdis Dombrovkis also spoke on the tariff measures announced by Donald Trump last week. Put on the table that “The transatlantic relationship cannot be taken for granted” And, although he has lamented the measures announced by the US administration, he has also assured that the EU “is ready to respond.” In addition, he acknowledged that Brussels economic projections for this year could be slightly worse to what is announced in autumn.
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