EU discusses creation of joint fund for arms procurement
On Saturday, European Union finance ministers began discussing the creation of the European Defense Mechanism, a fund that will centrally purchase and own defense equipment.
According to Censor.NET, Reuters reports.
The creation of a fund called the European Defense Mechanism was proposed by the Bruegel think tank in a document for ministerial discussions as a way to solve the problem of how countries with high levels of debt can pay for expensive military equipment.
How will the fund be financed?
Member states will pay contributions for the use of this equipment, according to a document by the Bruegel think tank, which was presented to ministers for discussion.
As noted, the new mechanism could allow financing large defense procurements without introducing costs into national budgets, which is especially important for countries with high levels of public debt.
Portugal's Finance Minister Joaquim Miranda Sarmiento noted that several EU states have already preliminarily supported the initiative, noting that it could be implemented on the basis of the existing European Stabilization Mechanism.
"We still have questions about the mandate, funding, contributions and impact on markets. There are both technical and military aspects," Sarmentu added.
The initiative is part of a broader effort by Europe to strengthen its defense capabilities amid threats from Russia and the realization that security dependence on the United States is no longer sustainable.
The fund may have significant capital and borrow from the market. It is planned to be created on the basis of an intergovernmental agreement. Potential participants include not only EU member states, but also the United Kingdom, Ukraine, and Norway.
According to Bruegel, centralized ownership of weapons will make it possible not to include the corresponding debts in the budgets of individual countries, which will reduce fiscal pressure.
In addition, EDM will contribute to the formation of a single European market for defense equipment, which will help reduce costs, increase system compatibility and pool resources.
Currently, defense procurement in the EU remains fragmented: there are at least seven types of tanks, nine types of self-propelled howitzers, and seven types of infantry fighting vehicles across 27 countries, making it difficult to share equipment and increasing costs.
The fund could focus on "strategic assets" - the expensive military infrastructure and equipment that armies need to fight, which are now often provided by the United States.
The document on the fund states that Europe has a chance to reduce its military dependence on the United States by 2030 only if it maximizes procurement and creates a common European defense market with the UK as the main industrial defense player to increase competition.
As a reminder, the UK has sent European governments a plan for European countries to create a "supranational" fund. According to the plan, this fund should centrally purchase military equipment, accumulate weapons stocks, and help finance rearmament on the continent.
