Billions spent: Much approval for Merz package in the EU

Friedrich Merz is facing a lot of criticism in his own camp for the planned billion-euro package. In the EU, however, the CDU candidate for chancellor has met with great approval in many member states for the additional spending on defense and infrastructure agreed with the SPD on Tuesday. "Good for Germany, and good for Europe," praised one EU diplomat. Merz will take part in the EPP pre-summit today, while Olaf Scholz will represent Germany at the special summit at 12:30 p.m..

The plans are an important signal to those countries with low defense spending, according to Brussels. Italy, Spain and Belgium, for example, are currently well below the two percent target set by NATO. The Union and SPD exploratory parties had agreed to relax the debt brake for defense spending. Expenditure above one percent of economic output is to be exempt. In Berlin, expenditure of around three percent of economic output is considered realistic. This would currently correspond to a defense budget of around EUR 130 billion, of which only EUR 44 billion (one percent of GDP) would be taken into account when calculating the debt limits.

The Merz package has met with approval even in the EU member states, which are keen on budgetary discipline. The plans are a sign of how exceptional the times are, said a high-ranking EU diplomat. If Germany invested in infrastructure, French, Dutch and Polish companies would also benefit and boost the economy, said another high-ranking diplomat. The CDU/CSU and SPD negotiators had agreed on a special fund of EUR 500 billion to be invested over ten years in the modernization of schools, railroad lines and power grids.

Defense spending is also at the heart of the discussions between EU heads of state and government on Thursday.The ReArm Europe package, which the Commission President presented on Tuesday, has met with broad approval in the member states. The EU is opening a new chapter and demonstrating that the will is there to do what is necessary for more sovereignty in defense, said a high-ranking diplomat. However, the initiative, with which the member states are to be supported with loans amounting to EUR 150 billion, is only a first step. Although the German government still has reservations about the use of the escape clause, the Commission's decision is nevertheless welcomed in the draft conclusions.

A point of contention is emerging over possible Buy European criteria. The new instrument for concessionary loans for defense financing is generally well received by the member states. However, the question arises as to the extent to which spending under this instrument will be limited to EU producers. A decision on this is not expected on Thursday. In the dispute over the Buy European criteria, the European Defense Investment Program (EDIP), which the Commission presented almost a year ago and which is endowed with EUR 1.5 billion, is already blocked between the Council and Parliament.

In addition to European defense, support for Ukraine is also on the agenda of the special summit. President Volodymyr Zelenskiy will be attending the summit in person, diplomats confirm. However, there will be no direct reaction from the Europeans to the USA's announcement to suspend military aid. An initiative by Kaja Kallas to support Ukraine with up to an additional EUR 20 billion is not even mentioned in the conclusions.

The EU foreign policy chief's initiative directly after the Munich Security Conference was not agreed, diplomats criticize. With her initiative, Kallas wanted to finance 1.5 million artillery shells, missile defense systems and the training of two brigades. However, Hungary and Slovakia objected early on. Other capitals were also critical, as the funding would have been in line with the economic performance of each member state. The financing of Ukraine's requirements for 2025 is already secured via the G7 initiative, diplomats said. Specifically, Ukraine can expect a total of EUR 30.6 billion this year. On the question of Russian state bank funds, a diplomat said that these could be used for reparations payments following a peace agreement.

Either way, it is unclear in the run-up to the summit whether Hungary or Slovakia will agree to the summit's conclusions. Conclusions from just 25 member states or the EU Council President are conceivable, according to diplomats. The problem for Budapest is not the part on European defense, but the one on Ukraine. In the conclusions, the EU reaffirms that there can be no solution to Ukraine without Ukraine and without the participation of the Europeans. Peace must also respect Ukraine's independence, sovereignty and territorial integrity. A position that not only Putin but also Donald Trump is now questioning.