How can European rearmament be financed?

The member states are divided on joint arms purchases, joint borrowing and the need to buy European.

Transcript

00:00Financing its rearmament is a difficult balance for the EU.

00:11On the one hand, public finances are in the red.

00:13On the other hand, the Russian threat and the prospect of a US isolationist retreat

00:17are looming over Europe.

00:21In the wake of the war in Ukraine, different solutions are on the table to finance the

00:25continent's defense, such as buying weapons together.

00:29However, the specific needs of member states in terms of armaments sometimes hinder this

00:34form of cooperation.

00:38The starting point needs to be what do we need to spend money on together to increase

00:46efficiency, become more cost effective, reduce the cost of what we're doing.

00:51I mean, talk about hypersonic missiles, air defense, cyber, satellites.

00:59These are all areas where if we work together, drone warfare also, if we work together in

01:04these areas, we will really get more bang for the buck.

01:10European common depth through Eurobonds could help finance the rearmament, but supporters

01:14of fiscal orthodoxy like Germany remain reluctant to borrow jointly.

01:21The idea behind more EU joint borrowing is the fact that quite a few member states have

01:28problems with their national finances, and here this would be in a way then to use the

01:34collective power of the EU as a borrower to make it in fact cheaper to borrow money.

01:44We have done that in other cases.

01:47Some like Emmanuel Macron call for buying European in the name of strategic autonomy.

01:52Others prefer to place orders elsewhere to reduce costs or delivery times.

01:56It's also a matter of security, to think about what we buy in Europe, because of course,

02:02what we manufacture in Europe, we are prioritized to consume it.

02:05What is manufactured elsewhere than in Europe, we are not prioritized to consume it.

02:08We may sign a contract if the conditions change, if something happens in the Indo-Pacific

02:14or in Taiwan, Europeans will not be prioritized.

02:17In fact, we have to secure our backyards, so it's not that we should only buy European,

02:22I don't think anyone has that in mind, but we have to revalue the part of what is European

02:27in what we buy.

02:28The EU's role in this matter has been and still is limited.

02:31Defense remains to be an exclusive competence of the member states.