On behalf of the Polish Council Presidency, the think tank Bruegel has presented a proposal on how the EU can finance its rearmament. The authors Guntram Wolff, Armin Steinbach and Jeromin Zettelmeyer propose a defense mechanism ("European Defense Mechanism," EDM) based on the model of the current European Stability Mechanism (ESM). Based on an intergovernmental agreement, the EDM would also be available to other states such as the UK.
The EDM would borrow money on the financial market based on guarantees from the member states. The institution would then use this money to issue military procurement contracts. In order to minimize the burden on the budgets of the member states, the EDM could retain the ownership rights to complex systems and allow the member states to use them for a fee. In this way, budgets would not be burdened immediately by the high acquisition costs. Instead, the burden would be spread over several years.
The EDM should also promote the internal defense market. According to the think tank's proposal, member states would have to commit to refraining from giving preference to national defense companies at the expense of companies from other EDM member states. They would also have to commit to refraining from national procurement for a number of weapons. However, it is unclear whether large states such as Germany and France would be able to accept these conditions.
Another option would be a strengthened European Defense Agency. In addition to the EDM, the Bruegel authors also develop this option in their paper. With a broader mandate, it could organize arms procurement centrally. However, the authors argue that their newly created EDM better meets the requirements. The EU finance ministers are expected to discuss the paper, which was published on Monday, at the informal Council meeting in Warsaw on April 12. János Allenbach-Ammann