Nifty engineering
The British-led initiative stands in direct competition with a European Commission plan to offer a €150 billion loan package to support joint defense procurement — a plan that currently excludes the U.K., which since Brexit has not signed a security agreement with the EU.
Compared to the EU’s current initiatives, London’s scheme engineers a fiscal advantage for governments by shifting the “upfront capital cost of purchasing” military equipment to the new institution’s balance sheet, freeing up theirs. Governments would instead only be liable for debt interests and maintenance costs.
That structure, officials added, is tailored to appeal to states under geopolitical pressure — particularly those near Russia — as fears grow over renewed aggression from Moscow and the prospect of U.S. military disengagement under Donald Trump.
Still, key questions remain unanswered, including how the proposed institution would be governed or who would ultimately make decisions — a critical detail given the aim of operating outside the Commission’s remit.
The U.K. isn’t the only one eyeing alternatives, however. Poland, currently holding the EU Council presidency, has asked the Bruegel think tank to draw up its own version of a “rearmament bank,” which will be discussed at an informal finance ministers’ gathering in Warsaw on Saturday.
“That shows the appetite to look into a mechanism like this,” said a second EU diplomat.
This article has been updated.