In a publication published on Wednesday 11 June, the Bruegel Institute suggested that the EU should adopt a new own resource based on a “defence spending deficit levy”.
The idea of getting EU countries lagging behind in defence spending to “contribute more to the common budget” had already been put forward at a workshop on own resources at the European Parliament on Wednesday 4 June (see EUROPE 13654/23).
The variance in investment in defence poses a “free-rider problem”, according to Bruegel: “countries spending less effectively benefit from higher spending elsewhere”, since “peace and security are vital for all of Europe”. This own resource would thus respond as much to an EU political priority as to the need to increase the EU budget.
Bruegel has anticipated two ways of implementing this own resource: in relation to the average defence spending of EU Member States or in relation to a fixed threshold (2% of GDP, for example).
Under the second option, a State’s contributions would stop “once a specific defence spending value is reached”. With the first, the “levy based on deviation from the EU average would continue to generate revenue indefinitely” (unless EU countries spent equally). In both cases, the Institute explains that it would be necessary to establish a levy rate (25%, for example) applied to the difference between what a country spends on defence and the set threshold.
While the current target for defence spending within NATO is 2% of GDP, a new target of 5% (3.5% for defence spending and 1.5% for defence and security-related investment) could be agreed at the Hague summit on 24 and 25 June (see EUROPE 13654/13).
To see the publication, go to https://aeur.eu/f/h9j (Original version in French by Florent Servia)