BRUSSELS, Feb 14 (Reuters) - European Commission President Ursula von der Leyen announced on Friday that the Commission would propose exempting defense from EU government spending limits. The proposal comes amidst pressure from U.S. President Donald Trump for Europe to self-finance defense.
The U.S. urges European NATO members to increase military spending to prepare for potential Russian threats, rather than relying on U.S. assistance due to a shift in focus towards threats from China.
Von der Leyen likened the lifting of defense spending restrictions to the removal of borrowing limits during the COVID-19 pandemic, stating, "This is why I can announce that I will propose to activate the escape clause for defense investments."
She explained that this would permit member states to significantly raise defense expenditure in a controlled and conditional manner.
The European Union's debt and spending regulations, updated recently, aim to safeguard the euro by curbing excessive government borrowing. These rules establish spending limits to ensure a decrease in public debt over several years.
However, in extenuating circumstances, such as the threat of a Russian attack, the Commission can enact a one-year "escape clause" for a country, extendable annually. Alternatively, a general escape clause may be activated for the entire EU in severe economic downturns.
While the option von der Leyen will pursue remains uncertain, activation of any escape clauses necessitates consent from other governments, with concerns about potential negative market repercussions.
Italian Prime Minister Giorgia Meloni viewed the Commission's move positively, hoping for increased joint financing opportunities. Discussions are ongoing among EU officials to expand the definition of "defense spending," which currently focuses mainly on physical military assets.
Addressing concerns, MEP Markus Ferber emphasized the need for precise exemptions under the escape clause to prevent misuse of funds.