EU countries discuss creation of defense fund – media

EU countries are discussing the creation of a fund in the amount of 500 billion. euros for joint defense projects and arms purchases in anticipation of Donald Trump's return to the White House.

Trump's threat to withdraw American security guarantees from NATO allies that do not spend enough on defense has prompted European capitals to explore more radical defense financing options, including joint borrowing opposed by Germany, the Netherlands and Denmark , reports the Financial Times.

High-ranking European officials say that the bonds will be secured by national guarantees of countries that have decided to participate in this project. The fund's funding model will be open to non-EU countries, such as Great Britain and Norway. At the same time, EU states that do not wish to participate in the fund will be able to maintain their position.

“The EU has explored many ways to finance additional projects, and the intergovernmental fund has become the most ambitious option under consideration”, — the message says.

The European Investment Bank will be asked to take on a technical role, helping to administer the special purpose vehicle and manage treasury functions.

EU restrictions on the use of common funds for military purposes would not apply, and militarily neutral member states such as Austria, Malta, Ireland and Cyprus would be able to opt out without vetoing the plan.

As the IS group reported, EU authorities are changing their spending policies to potentially redirect tens of billions of euros to defense and security amid Russia's war against Ukraine and Donald Trump's return to the White House. The policy change will affect about a third of the total EU budget, or about 392 billion. euros in the period from 2021 to 2027 – funds aimed at reducing economic inequality between EU countries.