A broad consensus among European leaders is evident: Russia’s invasion of Ukraine has underscored the imperative to reinforce Europe’s armaments, to rearm after years of inertia, and to increase defense spending. Yet they continue to debate how to fund this substantial push. The 27 EU heads of state and government rolled up their sleeves at the summit, but they stopped short of naming a funding source. “We had a constructive debate. This is the start, not the finish,” said Ursula von der Leyen, president of the European Commission, reflecting a shared sense of urgency and cautious momentum. (Citation: EU Summit Communiqué, 2024)
The urgency feels acute. While ideas such as issuing joint debt, proposed by France or Estonia, or reforming the European Investment Bank BEI’s lending policy to accommodate defense projects have been floated, consensus remains elusive among the Twenty-Seven. The summit conclusions, however, leave room for June to explore all options for funding and invite the BEI to tailor its loan policies to defense needs while preserving the bank’s overall financing capacity and the existing dual-use goods framework. (Citation: EU Summit Commitments, 2024)
Forty-four hours later, a coalition of fourteen countries urged direct involvement by the BEI, a move supported in principle by Spain’s government. Madrid advocates flexibility in dual-use investments but resists directing BEI funds solely toward defense projects, arguing such a move could dent the bank’s credibility and its ability to support broader policy objectives. (Citation: EU Ministers Report, 2024)
Like other EU members, Spain recognizes that defense spending should rise, yet the goal is not to morph into a full military economy — a stance shared particularly by the Baltic states. Still, they keep the door open to exploring options such as common debt issuance or defense eurobonds. “These proposals are new and still maturing,” officials noted, but they are open to pursuing avenues that strengthen defense capabilities to meet evolving security threats and ambitions, as highlighted in the summit’s conclusions. (Citation: EU Strategic Review, 2024)
Frozen Russian Assets
On Ukraine, European leaders reaffirmed support to prevent Russia from prevailing by delivering political, financial, economic, humanitarian, military, and diplomatic aid for as long as necessary and at the required intensity. This stance could soon translate into using extraordinary benefits from frozen Russian central bank assets to fund arms for Kyiv, a move proposed by the European Commission this week. Brussels’ plan calls for allocating 90 percent of the gains to the European Peace Fund and routing the remaining 10 percent through the EU budget. Von der Leyen indicated broad agreement that these funds may be used for military purposes, and if the Twenty-Seven reach quick consensus, the initial tranche of 1,000 million euros from the 3,000 million generated annually could be unlocked by early July. (Citation: Commission Proposal, 2024)
Any settlements by the Twenty-Seven show that military support and security commitments will respect the defense policies of individual member states while considering all EU partners’ safety needs. This careful language helps reassure countries more hesitant to finance arms for Ukraine, such as Hungary, or those favoring neutrality, such as Austria, that there is an escape route within the framework. (Citation: EU Summit Outcomes, 2024)