The Joint White Paper for European Defence Readiness 2030 unveiled by the European Commission and the European External Action Service on 19 March 2025 marks a milestone in the European Union’s reluctant journey from a “peace project” to a defence union. It is both an ambitious rearmament plan and potentially an economic transformation strategy for the EU. But it may fall short on funding and speed, and prompt resistance from governments determined to keep the Commission’s hands off sovereign arms procurement.
The policy document was prompted by Russia’s full-scale war of aggression against Ukraine and given new urgency by US President Donald Trump’s rushed quest for an accommodation with Moscow, likely at Kyiv’s expense, and a reduction of the US military commitment to Europe. European NATO allies, 23 of whom are also EU members, have suddenly realised they may be left to fend for themselves in a cruel world of predatory great power
The White Paper outlines steps to sustain and increase support for Kyiv and a collaborative method to procure key capabilities that Europe needs within five years to face a possible Russian assault. It also proposes to finance a rapid surge in European defence by offering EU loans, authorising massive exceptional national deficit spending, repurposing unspent EU cohesion funds, easing European Investment Bank lending and tapping private investors.
The Commission is right to position itself as a supporting actor for national and NATO defence plans. However, the success of its strategy hinges on heavily indebted member states being willing and able to issue hundreds of billions of euros in additional national debt. That is far from certain, raising the risk that military spending may fall short of the envisioned extra 1.5% of Gross Domestic Product (GDP) by 2030, and that EU countries will end up belatedly having to borrow collectively – a step the Commission omitted for now in deference to frugal northern members.
Will strong incentives suffice?
The paper’s central proposal is for the Commission to raise €150 billion on capital markets, secured on the EU budget, and lend it on to member states that agree to collaborate on flagship joint arms procurement projects in a list of seven priority areas. Countries would receive not only cheap loans to be repaid over 45 years with a grace period of 10 years on principal repayments, but also an exemption from Value Added Tax (VAT) on approved joint purchases. This is a big incentive to aggregate demand. The so-called SAFE loans will fund only equipment with at least 65% European content. The Commission’s definition excludes US, UK and Turkish industries from that percentage, but opens the way for collaboration with countries that sign security and defence partnerships with the EU.
In addition, governments may apply to trigger an escape clause from EU deficit limits for four years, allowing them to fund up to 1.5% of GDP in extra defence spending with additional borrowing. If all countries took maximum advantage of that flexibility, the Commission estimates it would unlock €650 billion in additional defence outlays. But that is entirely theoretical money. And even that amount may not be sufficient. Defence Commissioner Andris Kubilius has said a European air-and-missile “sky shield” alone could cost €500 billion.
In its first official response to the White Paper, the European Council called on 20 March for “an acceleration of work on all strands to decisively ramp up Europe’s defence readiness within the next five years. It invites the Council and the co-legislators to swiftly take work forward on the recent Commission proposals.”
However, the most heavily indebted southern countries that spend the least on defence may not feel able to take on much more debt. In their first responses, Spanish Prime Minister Pedro Sánchez said Madrid would not request the escape clause and Italian Prime Minister Giorgia Meloni said Rome would be cautious about adding to its debt burden. France, the EU’s sole nuclear power, spends 2.1% of its GDP on defence and is also constrained by a high deficit, prompting President Emmanuel Macron to renew his call for joint borrowing to fund a European buildup. Paris blocked a plan to commit €40 billion in EU military aid to Ukraine this year.
Germany, the EU’s biggest economy and most populous nation, has just enacted a massive carve-out from its national debt brake to permit extra borrowing for defence and infrastructure. Since it can raise money more cheaply than the Commission on the markets, it may well decline SAFE loans. Significantly, the centre-right European People’s Party, which includes German chancellor-elect Friedrich Merz and many other EU leaders, mentioned the possibility of “joint debt instruments if needed”. The risk is that the EU comes around to this necessary solution too late to have the required impact by 2030, given the long lead times for defence production.
Clearing the way for a transformative shift
The Commission also promised a drive to cut red tape for defence industries, with a simplification plan by June and a mixture of regulatory clarification. This drive also foresees further easing of the European Investment Bank’s restrictions on defence-related investments to try to attract private and institutional investors who have shunned defence in recent years on sustainability and reputational grounds.
If this combination of measures does trigger a significant leap in defence outlays, it could kick-start a technological and industrial transformation that will reshape Europe’s economy for decades. Defence contractors can expect long-term orders for weapons, ammunition, command and control systems, cyber and electronic warfare equipment. This will create work for thousands of small and medium-sized enterprises in the supply chain, and for innovative start-ups and scale-ups, notably in drones, AI, robotics and next-generation warfare. The decision to include Ukraine and Norway in the EU market on the same terms as member states is both a welcome boost for Kyiv’s cutting-edge defence sector and a boon for EU states that need to build innovation into their equipment much faster.
The White Paper made clear that NATO capability requirements and technical standards will guide the investments, but it stopped short for now of proposing EU regulatory tools to enforce those goals and norms, or to harmonise certification of defence equipment. Without greater standardisation of equipment and testing, EU countries could squander their extra spending without achieving significant economies of scale or gains in interoperability.
The main objective of the paper is to produce the capabilities required by NATO’s new regional defence plans, to be approved at an alliance summit in June. The drafters did not attempt to quantify what the EU would require in a scenario where Europe faced a major war of aggression without any US support. That hypothesis would have been too politically sensitive for many member states. Yet it can no longer be ruled out, given Trump’s disruptive unpredictability.
The Commission is not a defence organisation. Its added value lies in shaping strong industrial policies, as outlined in the White Paper and last year’s European Defence Industrial Strategy. It can implement innovative financing, facilitate military mobility by funding hubs and transport corridors, and promote whole-of-society resilience and preparedness. It can also seek to develop the EU’s jointly owned space assets for military intelligence, surveillance and reconnaissance missions as well as secure communications.
Member states must now end the time-wasting debate over how to implement the principle of “European preference”. The Commission’s proposal of a minimum 65% of European content for SAFE-funded projects, with European “design authority” over complex weapons systems to avoid foreign restrictions, makes sense. Capitals remain free to spend their national defence budgets on US or other third-country products if they wish. But a major goal of this exercise must be to build a stronger European defence technological and industrial base.
Much-needed emphasis on military mobility
Finally, the White Paper gives welcome attention to military mobility - the ability to move forces and equipment rapidly and smoothly across Europe to reinforce the eastern flank in peacetime. Apart from physical bottlenecks such as the capacity of road and rail tunnels, bridges, rail hubs, sea ports and airports and rolling stock to accommodate military traffic, many administrative hurdles persist with no harmonised procedures between member states.
The document identifies four priority transport corridors (rail, road, sea and air) and, within these, 500 dual-use infrastructure projects to be upgraded urgently. It also proposes to assist joint procurement of specialised and dual-use transport assets to increase the capacity to transport military equipment. Extending EU military mobility corridors into Ukraine to ensure smoother delivery of equipment is also essential, both to support Kyiv and for the long term enhancement of military mobility on the European continent.
The White Paper sets the right objectives. Implementing them in time will be a great challenge, requiring a national effort in every member state.
Paul Taylor is a Senior Visiting Fellow in the Europe in the World Programme and a member of the Defence/Security EUrope project at the European Policy Centre.
Chris Kremidas-Courtney is a senior visiting fellow at the European Policy Centre.
Juraj Majcin is a Policy Analyst in the Europe in the World Programme at the European Policy Centre.
Maria Martisiute is a Policy Analyst at the European Policy Centre focusing on defence, security and foreign affairs at the European Policy Centre.
Mihai Sebastian Chihaia is a Policy Analyst in the Europe in the World Programme at the European Policy Centre.
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