Munich Security Conference. T

Ursula von der Leyen on Tuesday proposed a Rearm Europe Plan she said could see member states mobilise up to €800 billion to finance a massive ramp-up in defence spending, hours after Washington suspended all military aid to Ukraine putting pressure on the bloc to increase its own assistance.

“We are in an era of re-armament, and Europe is ready to massively boost its defence spending, both to respond to the short-term urgency to act and to support Ukraine, but also to address the long-term need to take on more responsibility for our own European security,” the European Commission president said.

The five measures she outlined, which she details in a letter to EU leaders ahead of an extraordinary summit on Thursday, include a “new instrument” to provide €150 billion in loans to member states to finance joint defence investments in pan-European capabilities including air and missile defence, artillery systems, missiles and ammunition, drones and anti-drone systems.

Von der Leyen, who did not take questions from journalists, did not provide details on how this money would be raised and if the roughly €90 billion in unused money from the post-COVID recovery fund would form part of i

Issuing so-called Eurobonds to fund the bloc’s defence needs has so far been vehemently opposed by several so-called ‘frugal’ member states.

The new instrument, von der Leyen wrote in her letter to leaders, would be established under Article 122 of the Treaty of the EU, which allows the bloc to deliver financial assistance to a member state facing “severe difficulties caused by natural disasters or exceptional occurrences beyond its control” without approval from the European parliament.

The Commission previously used this article during the COVID pandemic to set up the €100 billion SURE instrument for which it turned to the markets. It was also used to roll out emergency measures to shield European citizens and businesses from the worst effects of the energy crisis.

Activating the national escape clause of the Stability and Growth Pact is the other key measure from von der Leyen’s defence package, and one she had already communicated last month in a keynote speech at the Munich Security Conference.

This would enable member states to exclude defence spending from their national expenditures and thus not run the risk of falling foul of the bloc’s fiscal policy which mandates that government deficit and debt must remain under 3% and 60% of GDP respectively.

The Commission chief claimed that if EU countries increase their defence spending by 1.5% of GDP on average, €650 billion could be freed over the coming four years.

EU member states have massively ramped up their defence spending since Russia launched its full-scale invasion of Ukraine in 2022 but they spend unequally: Poland spent 4.12% of its GDP on defence last year, while Spain spent just 1.12%.

Negotiations are currently ongoing among NATO allies, which include 23 of the EU’s member states, to raise the defence spending target from its current 2% of GDP level. A decision is set to be announced at a summit in The Hague in late June.

The other three measures proposed by von der Leyen include allowing member states to make more ample use of cohesion policy programmes to increase defence spending, expanding the mandate of the European Investment Bank so it boosts financing of defence projects and accelerating the Savings and Investment Union to enable private banks to pour more money into the sector too.

“The real question in front of us is whether Europe is prepared to act as decisively as the situation dictates, and whether Europe is ready and able to act with speed and with the ambition that is needed,” she said.

EU leaders should discuss the proposed defence package at an extraordinary summit in Brussels on Thursday which Volodymyr Zelenskyy is expected to attend.

The summit was convened on 23 February in response to Donald Trump’s quick diplomatic overture to Russia but the sense of urgency ramped up on Friday following a contentious meeting between Zelenskyy and the American President in the White House that saw the Ukrainian leader leave before the end of his scheduled visit and without signing a minerals deal that Washington said could act as a deterrent against future attacks.

The fall-out continued on Monday with Trump announcing that the US is suspending all military aid to Ukraine, arguing that a peace deal “could be made very fast” and claiming that “maybe somebody doesn’t want to make a deal”.

Thursday’s summit risk highlighting divisions among member states on Ukraine as both Hungary’s Viktor Orban and Slovakia’s Robert Fico have threatened to veto any call for increased military assistance to the war-torn country.

Draft conclusions of the summit seen by Euronews suggest leaders will not take decisions on how to boost defence spending at the gathering and instead “revert” to the topic at a later summit in March that will follow the release of the Commission’s White Paper on Defence.