More than 1,000 days after Russia’s military assault on Ukraine, there can be no return to business as usual: “a common European solution” is needed to enable Member States to increase their military spending and provide regular support to the Ukrainian army, said Polish Finance Minister Andrzej Domański on Wednesday 11 December. He was speaking in Brussels, while presenting the economic and financial priorities of the Polish Presidency of the Council of the European Union, which begins on 1 January 2025 (see EUROPE 13542/22).
Acting as an “honest and active intermediary”, Mr Domański did not wish to favour any particular financing formula among those that are currently being considered, such as a joint loan managed by the European Commission or the creation of a specific ‘SPV’ financial instrument that would be managed in an intergovernmental manner by the countries wishing to move forward. He simply noted that an intergovernmental instrument would make it possible to create a greater leverage effect.
However, Member States cannot simply spend more on defence at a national level, insisted the Polish minister, while noting the importance of standardising equipment.
He nevertheless pointed out that Poland was going to devote 4.4% of its GDP to this sector in 2024 and 4.7% in 2025, specifically using it to finance the construction of a munitions factory. He also referred to discussions that are underway with the European Commission to accurately identify which military expenditure can be considered a ‘relevant factor’ when examining an excessive public deficit, since Poland is the subject of an infringement procedure.
As for the timetable, Mr Domański felt that the first step would be the presentation of the ‘White Paper’ on defence by the European Commission (see EUROPE 13539/21). Discussions will take place at the informal meeting of finance ministers in Warsaw in the spring.
However, the Polish minister does not expect to hold discussions on the possibility of confiscating frozen Russian assets in the EU.
Competitiveness. Following the introduction of the new legislative mandate at EU level, and with the second Trump administration due to take office shortly, Mr Domański has called for the pace of the work to accelerate.
In his opinion, the entrepreneurs he meets with, predominantly ask him to lighten the administrative burden. In Brussels, “I was told the word is simplification not deregulation”, he joked.
Action taken by the Polish Presidency will consist of analysing any opportunities to reconsider legislative initiatives that are already on the table, such as the ‘retail financial investment’ package, or even whether other texts in preparation are to be halted. “I would like to discuss whether not too often we are pretending that we are protecting clients while actually we are making it more difficult for them to allocate their savings in a way they would like”, he added.
Mr Domański also spoke of the capital markets union, praising the proposals put forward in the ‘Noyer’ report (see EUROPE 13399/26). “We’re certainly not going to create a European stock exchange, because the Member States don’t want that”, he said. In his opinion, however, modest progress is possible in the areas of “securitisation” and post-trade operations.
It should also be noted that in January, the Ecofin Council will be discussing the issue of high energy prices, one of the reasons why European companies are relocating.
Finally, concluded Mr Domański, Poland’s membership of the euro area is out of the question at this stage, because Polish citizens do not want it. (Original version in French by Mathieu Bion)