EU Unveils $843 Billion Defence Plan Amid US Aid Freeze For Ukraine

European Commission President Ursula von der Leyen has announced a plan to mobilise up to 800 billion euro ($843 billion) in defence investments aimed at strengthening Europe's security and stepping up military support for Ukraine, following the suspension of US aid, reported The Hindu.

The proposal, presented in a letter to EU leaders, is set to be reviewed at a 7 March summit focused on Ukraine and European defence.

The announcement comes just hours after US President Donald Trump confirmed a freeze on US aid to Kyiv, signaling a recalibration of Washington’s approach to the conflict.

EU’s Call for Stronger Defence Investments

In her address, von der Leyen emphasised that "Europe faces a clear and present danger on a scale that none of us has seen in our adult lifetime."

She underscored the EU’s readiness to step up in response to growing security concerns.

A key aspect of the plan is the concept referred to as "ReArm Europe," which aims to unlock close to 800 billion euro in defence expenditures to enhance the bloc’s military resilience.

The package also includes a 150 billion euro loan facility to boost defence investment across the EU’s 27 member states.

Five-Point Strategy to Strengthen European Defence

The proposal is structured around five key measures:

1. Relaxing Budget Rules for Defence Spending – The EU would ease its fiscal constraints, allowing member states to increase defence budgets by up to 1.5 per cent of GDP over four years. This step alone could free up 650 billion euro for military expenditures.

2. New 150 Billion Euro Loan Facility – A dedicated funding mechanism would provide targeted defence investments to member states.

3. Repurposing Cohesion Funds – EU states would be permitted to redirect funds originally meant for economic development in poorer regions towards defence projects.

4. Savings and Investments Union – A framework to facilitate private sector capital investment in the European defence industry.

5. Lifting European Investment Bank Restrictions – The EU's lending arm would be allowed to finance defence-related projects, removing long-standing limitations.

Mixed Reactions and Uncertainties Over Implementation

While it remains unclear how quickly these measures will translate into concrete military support for Ukraine, the proposal has received strong backing from several European capitals.

Germany’s Foreign Minister Annalena Baerbock welcomed the plan as "an important first step" towards bolstering Europe's defence.

Similar support has come from Italy, Portugal, Estonia, and Greece, signaling broad consensus among EU states.

However, the speed of implementation remains uncertain, as the plan requires unanimous approval from all EU member states.

The upcoming Brussels summit on 7 March will determine whether the bloc can urgently agree on the delivery of critical weaponry to Ukraine.

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