Defense spending: Mixed reactions to escape clause

"I will propose activating the escape clause for defense investments," said Commission President Ursula von der Leyen last Friday in Munich. "This will allow member states to substantially increase their defense spending."

The announcement seems to have taken not only the EU member states but also the Commission services by surprise. EU diplomats confirm that no proposal has yet been submitted to the member states. On Monday, the Commission could not yet publicly confirm whether von der Leyen was talking about the general escape clause or the national escape clause. "We will work on the modalities in the coming weeks," said Economic Affairs Commissioner Valdis Dombrovskis on Monday.

No conditions are attached to escape clauses

In Brussels, however, it is assumed that the Commission is referring to the national escape clause. According to the relevant regulation, the general escape clause requires a "severe economic downturn," while the national escape clause requires "exceptional circumstances beyond the control of the member state."

In her speech, von der Leyen announced that the escape clause would be introduced in a " controlled and conditional " manner. However, with the exception of member states in an excessive deficit procedure, the EU debt rules do not provide for a mechanism to introduce such conditions when the national escape clause is used. Lucas Guttenberg of the Bertelsmann Foundation argues that the national escape clause will allow Germany and other less indebted countries (especially in Northern, Central and Eastern Europe) to spend more money.

Kukies wants to change debt rules

Federal Finance Minister Jörg Kukies (SPD) reacted cautiously to von der Leyen's proposal on Monday. "We are still waiting for more concrete details," he said in Brussels on the sidelines of the Eurogroup meeting. He campaigned for a reform of the EU debt rules, which German Chancellor Olaf Scholz had proposed in Munich on Saturday. According to this, defense spending that exceeds the NATO two percent target should be exempted from the fiscal rules for a limited period of time.

"Perhaps we should take this as the new normal, that we also need permanently higher spending, which by definition would be the case with defense spending," said Kukies in Brussels. The EU must therefore " think about the European debt rules as a whole and act outside the regime of exceptions," he added.

The BMF also fears that the repeated use of the escape clause will ultimately lead to the EU debt rules simply no longer being applied. However, changing the debt rules is likely to take more time anyway, as Parliament would also have to give its consent.

Restraint in Spain, Belgium, France

Von der Leyen's proposal is also being viewed critically in more indebted member states. Belgium, France and Spain appear to be open to using the escape clause. However, they want to avoid it being seen as an alternative to more Europeanized financing.

"National funding is one of the essential elements, but there are other areas that we need to talk about," said Spanish Finance Minister Carlos Cuerpo. Defense is "a European public good." Joint financing must therefore also be part of the solution, said Cuerpo.

Activation of the national escape clause would have to be confirmed by the Council. It can therefore be assumed that Spain, France and other states will try to attach conditions to their approval. The Commission is expected to present more details on the use of the escape clause in its White Paper on the future of European defense on March 19.