Yesterday, the High Representative for Foreign Affairs and Security Policy and the European Commission presented a White Paper for European Defence – Readiness 2030. 

As part of the ReArm Europe Plan/Readiness 2030, the Commission has also introduced a comprehensive defence package providing financial mechanisms for EU Member States to drive an investment surge in defence capabilities

While the ReArm Europe Plan/Readiness 2030 strengthens pan-European defence capabilities with new financial instruments, the White Paper establishes a new approach to defence and identifies key investment needs. These measures aim to address the short-term urgency of supporting Ukraine while also tackling the pressing long-term requirement of strengthening Europe’s security and defence at the EU level.

The White Paper outlines solutions to close critical capability gaps and build a robust defence industrial base, while also proposing ways for Member States to make significant investments in defence, procure advanced defence systems, and enhance the readiness of the European defence industry over the long run. 

To effectively address these challenges, the White Paper sets out several key actions:

• Closing capability gaps, focusing on critical defence needs identified by Member States.
• Supporting the European defence industry through aggregated demand and increased collaborative procurement.
• Strengthening military assistance to Ukraine and fostering deeper integration between the European and Ukrainian defence industries.
• Expanding the EU-wide defence market by simplifying regulatory frameworks.
• Accelerating defence transformation through disruptive innovations such as artificial intelligence and quantum technology.
• Enhancing European preparedness for worst-case scenarios by improving military mobility, stockpiling resources, and reinforcing external borders, particularly along the land border with Russia and Belarus.
• Strengthening partnership with like-minded countries worldwide.

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ReArm Europe Plan/Readiness 2030

As announced by President von der Leyen, the ReArm Europe Plan/Readiness 2030 facilitates over €800 billion in defence spending, structured around the following pillars:

1. Unleash the use of public funding in defence at national level

The Commission has invited Member States to activate the national escape clause of the Stability and Growth Pact, allowing them additional fiscal flexibility to increase their defence expenditure while remaining within the EU’s fiscal rules.

          To ensure fiscal sustainability, the deviation will be limited to:

• Defence expenditure increases only, based on the statistical category ‘defence’ in the Classification of the Functions of Government (COFOG).
• A maximum of 1.5% of GDP for each year in which the national escape clause is activated.
• A duration of four years. 

2. A new dedicated instrument for Security Action for Europe – SAFE:

Additionally, the Commission will raise up to €150 billion in the capital markets, leveraging its well-established unified funding approach to help EU Member States significantly increase investment in European defence capabilities. These funds will be allocated to interested Member States based on national defence plans.

Also read: EU defence industry | Council and European Parliament agree on new rules to boost common procurement

The disbursements will be structured as competitively priced, long-maturity loans to be repaid by the beneficiary Member States, backed by the EU budget’s financial headroom. SAFE will enable Member States to scale up their defence investments immediately through common procurement from the European defence industry, prioritising key capabilities.

This initiative will enhance interoperability, predictability, and cost-efficiency, fostering a stronger European defence industrial base. Ukraine, as well as EFTA/EEA countries, will be eligible to participate in joint procurements, and purchases from their industries will be possible.

SAFE will also extend participation to acceding countries, EU candidate countries, potential candidates, and nations that have signed Security and Defence Partnership agreements with the EU. These countries will be able to join common procurements and contribute to aggregated demand, while also negotiating mutually beneficial agreements for their respective defence industries.

3. Leveraging on the EIB Group and Mobilising private capital by Accelerating the Savings and Investments Union

The ReArm Europe Plan/Readiness 2030 will also rely on the European Investment Bank (EIB) Group to expand its lending scope to include defence and security projects while maintaining its financial capacity. In addition to unlocking significant funding, this move will send a strong positive signal to the markets.

However, public investment alone will not be sufficient to meet the defence industry’s financial needs. To address this, the Savings and Investments Union Strategy, recently adopted by the Commission, aims to facilitate the mobilisation of private savings into more efficient capital markets, thereby channelling investments into critical economic sectors, including defence, for those interested in participating.

Also read: European Committee | “Escape clause” for Defence Spending

What the “White Paper” Says About Turkey

According to the European Commission’s “White Paper,” Turkey is excluded from EU funding for European defence. Additionally, Ankara faces political conditions such as resolving the Cyprus issue and ensuring stability in the Eastern Mediterranean. The document, which also excludes the US and the UK, is not final, and negotiations will continue at the EU leadership level.  

Based on the Commission’s findings in the White Paper on the Future of European Defence, Turkey, along with the US and the UK, is not eligible to access the €150 billion in EU loans. According to Kathimerini, a specific section of the document highlights that Turkey is an EU candidate country and a “long-standing partner” in the Common Security and Defence Policy (CSDP). 

“The EU will continue to engage constructively to develop a mutually beneficial partnership in all areas of common interest, provided that Turkey commits equally to advancing cooperation on all key EU-related issues, in line with the conclusions of the April 2024 European Council,” the document states.  

The April 2024 European Council conclusions emphasise the need to resolve the Cyprus issue, ensure stability in the Eastern Mediterranean, and require potential third-party EU partners to be “like-minded.”

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The EU’s political stance aligns with Greece’s position, but the situation becomes more complex regarding the SAFE (Security Action For Europe) funding mechanism.  

For instance, joint procurement agreements require unanimous approval by the European Council, making Turkey’s access highly challenging. However, approval of the SAFE regulation itself only requires a qualified majority (15 out of 25 members or countries representing at least 65% of the EU population).  

Before Turkey can access EU loans—currently available only to Ukraine and Norway—it must sign a Security and Defence Partnership (SDP) agreement with the EU.

So far, only Norway, Moldova, South Korea, Japan, Albania, and North Macedonia have signed such agreements, making them eligible. Canada is also in negotiations for a similar agreement. This bilateral agreement is not just a general framework but specifically determines whether and how a third country can participate in the EU defence industrial production.  

Furthermore, to align with the EU’s priority of supporting its own companies, firms seeking European funding must be headquartered within the EU and not be controlled by non-EU entities.

Also read: Germany | Record Arms Exports to Turkey