The European Union is not currently ready to issue Eurobonds to fund spending needed to strengthen military power across the bloc through debt, EU Commissioner for Defense and Space, Andrius Kubilius, has admitted in an interview.
Member states should now look at other options listed in the recently unveiled “Rearm Europe/ Readiness 2030” plan as the Union is yet to figure out how to repay loans used for post-pandemic recovery funding, the European official suggested.
Brussels not prepared to fund defense readiness with EU debt
For now, EU nations are expected to utilize instruments already set out in the “Readiness 2030” plan rather than rely on joint debt for military spending, the Union’s defense chief has indicated. Andrius Kubilius told Euronews that the bloc is not ready to issue Eurobonds for that purpose.
Ahead of discussions on the next Multiannual Financial Framework (MMF), the commissioner emphasized that the European Union will have to spend a significant portion of its long-term budget to pay back pandemic-related debt, unless another solution is found.
The EU has to decide first how to cover debt resulting from recovery grants issued in the wake of Covid-19. Annual repayments are expected in the range of €25 billion to €30 billion (over $32 billion), amounting to 20% of the approximately €1.2 trillion MMF which represents 1% of the EU’s economic output.
“Eurobonds means that the European Union will have a bigger debt, which will need to be serviced again by all the member states, and now we have in some ways a challenge on how to repay the existing debt,” explained Kubilius, a former prime minister of Lithuania and ex-leader of the country’s conservative Homeland Union party.
PIC – https://audiovisual.ec.europa.eu/en/photo-details/P-066064~2F00-29
Andrius Kubilius, EU commissioner for defense and space, Brussels, March 19, 2025 (Source: EC Audiovisual Service)
The European Commission (EC) unveiled its “Rearm Europe” plan earlier this month and later rebranded it to “Readiness 2030” after objections from Italy and Spain. Their prime ministers called for widening the scope of the term to encompass spheres beyond simply buying armaments such as cybersecurity, anti-terrorism, artificial intelligence, and telecommunications.
The initiative seeks to ramp up the defense capabilities of EU member states and expand military production across the Old Continent. Its key goal is to mobilize up to €800 billion for defense and security over the next four years.
EU aims for 3.5% of GDP defense spending target in member states
The bulk of that total, around €650 billion, is supposed to come from member states increasing their defense spending to up to 3.5% of gross domestic product (GDP). To achieve that, the Commission has come up with a set of proposals, including to relax fiscal rules and attract private capital.
“For the next four years, in some kind of idealistic scenario, member states will start to spend 3.5% of GDP, so it will be €2.4 trillion spent on defense. The question is: will it cover all the needs,” commented Andrius Kubilius who expects to have more clarity on the matter in the next couple of months.
The remaining €150 billion should be provided by a newly established financial loan instrument called Security Action for Europe (SAFE). The latter will allow the executive body in Brussels to issue bonds and borrow on the capital markets to lend funds to the EU countries.
Within the scope of SAFE, the EC requires at least 65% of the value of some items, such as missiles, small drones and ammunition, to be purchased from within the EU, the European Free Trade Association (EFTA), the European Economic Area (EEA), or from war-torn Ukraine. “We want to incentivize member states to spend more money on European production,” Kubilius pointed out.
The Commission has estimated that the European Union will need hundreds of billions of euros in fresh investments by the end of the decade in order to remain competitive on the global stage, fight climate change and address rising defense needs.
Last week, the EC presented a plan to steer some of the €10 trillion in citizens’ savings toward capital markets. Meanwhile, Europe’s economic powerhouse, Germany, removed its constitutional “debt brake” to be able to borrow funds for infrastructure, climate and defense projects.
Cryptopolitan Academy: Coming Soon – A New Way to Earn Passive Income with DeFi in 2025. Learn More
Source: https://www.cryptopolitan.com/eu-not-ready-to-issue-eurobonds/