EU’s Frontline Nations See €100 Billion in Urgent Defense Needs

(Bloomberg) -- The European Union must double its defense spending as it faces at least €100 billion ($104 billion) of immediate investment needs, according to four member states that border Russia.

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A paper prepared by Lithuania, Estonia, Latvia and Poland calls for the EU to harness joint borrowing, enable the European Investment Bank to spend on core defense needs and work with European partners outside the bloc, an apparent reference to the UK.

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The countries, which have led the charge to defend Ukraine against Russia’s invasion, cite estimates that put current military spending by EU member states at about €326 billion in 2024. The paper concludes that figure must double if the bloc wants to reach an expenditure target of least 3% of gross domestic product, as well as be ready for “extreme military contingencies.”

The EU is currently preparing a new defense strategy and the bloc’s leaders are due to meet informally Monday in Brussels to provide input.

That blueprint is due in March, with the aim of adopting a plan by the end of the year. While most member states agree on the need to overhaul Europe’s defense capabilities, industry and overall preparedness, the bloc’s member states have different views on how to do that.

Some nations, particularly Germany, have long resisted using joint borrowing for defense purposes. US President Donald Trump has said he wants NATO members to spend 5% of GDP on defense, a level that even the US doesn’t currently meet.

European Commission President Ursula von der Leyen has previously said that the EU needs to invest at least €500 billion over the next decade in defense but the paper seen by Bloomberg says that there are immediate needs that cannot wait until the next budget cycle in 2028.

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The document from the four countries warns that Russia has already started to scale up its military forces and produces three times more artillery shells than Europe and the US combined. The bloc also faces other challenges due to its supply chain’s reliance on Beijing and Moscow’s deepening ties with China, Iran and North Korea.

The EU’s requirements include at least €50 billion to ramp up the production of artillery and strategic stockpiling, according to the document.

The bloc also needs to ensure continued and sustainable military support to Ukraine. Kyiv has a growing industrial capacity but needs funding support, the paper notes. To facilitate that, the paper says the EU should move to seize frozen Russian central bank assets. The bloc has so far only tapped the profits generated by the immobilized funds and confiscation is a controversial step that Germany and Belgium among others have so far rejected.

Other top priorities should include a European air and missile defense shield, strengthening the bloc’s borders with Russia and Belarus, and bolstering its ability to move and deploy forces, according to the document.

The EU should cooperate closely with NATO and ensure that its standards and targets are coherent and closely aligned with those of the military alliance, the four member states said. In that regard, they argue the EU could consider setting surge capacity targets for critical capabilities, such as air defenses, ammunition and electronic warfare tools, that could be rapidly deployed in a specific timeframe.

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The four nations also urge the EU to not limit its procurement efforts to suppliers within the bloc, but embrace a non-restrictive approach to defense industry cooperation beyond member states. Some capitals have been pushing for the vast majority of EU funds to be spent in the bloc, despite a lack of capacity.

--With assistance from Andrea Palasciano.

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