On Tuesday 11 March, the European Finance Ministers will be discussing the arrangements for providing a framework at European Union level for the activation by Member States of the ‘national escape clause’ in the Stability and Growth Pact, which authorises them to increase their military spending.
These clauses will allow Member States to do so “for a limited period of time - we suggest four years - and up to 1.5% of GDP for each of these years”, said Valdis Dombrovskis, European Commissioner for the Economy and Productivity, on Monday 10 March, on his arrival at the Eurogroup meeting.
The Commission will set out its guidelines ahead of the European Council meeting on Thursday 20 and Friday 21 March.
In a note sent to Member States, the Polish Presidency of the EU Council argues for a broad interpretation of the types of investment that can be made, which would include expenditure on military personnel recruitment, plant construction and dual-use infrastructure. As regards the timeframes to be taken into account, it points out that public defence contracts often cover “periods of 10 years or more”.
See the Polish note: https://aeur.eu/f/ftq
The Polish Minister, Andrzej Dománski, welcomed the fact that “other Member States and the Commission support our position”, “allowing us to classify more expenditures as defence-related and exempt them from excessive deficit calculations”.
In particular, Germany would be in favour of activating the national escape clauses over 10 years. But “we remain sceptical about ‘European bonds’”, if this amounts to subsidising Member States through a common debt, said its Minister, Jörg Kukies.
Should increased public spending on defence be offset by budget cuts elsewhere? Belgium is in favour, with its Minister, Vincent Van Peteghem, arguing that increased military spending will put a strain on public debt in the future. The Dutch Minister, Eelco Heinen, also reiterated the importance of keeping in mind the issue of the sustainability of public debt.
On the other hand, his Spanish counterpart, Carlos Cuerpo, considered it “fundamental” that the flexibility of the Stability Pact designed to increase spending in the defence sector should not compete with “social” spending. He called for a broad definition of defence spending to include spending on “security”. (Original version in French by Mathieu Bion)