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EU Agrees On €150b Loan Fund For Defense Spending

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The countries of the European Union (EU) have agreed to establish a loan fund worth 150 billion euros (169.5 billion dollars) to finance arms purchases, according to a report by The Financial Times on Monday, citing officials familiar with the decision.

The fund will be backed by the national budgets of EU member states. While member countries had already expressed support for the initiative, the agreement is expected to be formally signed on Wednesday.

On March 19, the European Commission unveiled a new defense strategy, initially called ReArm Europe, later renamed Readiness 2030, aiming to raise EU defense spending to 1.5 per cent of GDP.

The strategy’s estimated cost is 800 billion euros over the next four years, with 650 billion euros to come from national budgets and the remaining 150 billion euros through loans.

To support this plan, the European Commission would offer budgetary concessions to member states and reallocate some regional development funds toward defense spending.

The move came amid rising tensions in Europe. Russia had consistently raised concerns about NATO’s growing military presence near its western borders, calling it a threat to regional stability. The Kremlin had stated that while Russia posed no threat to other nations, it would respond to actions it considered potentially dangerous to its security.

In a 2024 interview with U.S. journalist Tucker Carlson, Russian President Vladimir Putin reiterated that Moscow had no intention of attacking NATO countries.

He accused Western leaders of exaggerating the Russian threat to distract from domestic issues.

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