[By Guancha Observer, Shao Yun]

As divisions emerged within the EU over a defense spending proposal worth 800 billion euros from the European Commission, the UK seized the opportunity to rally some EU member states to join an alternative plan it leads. According to a report by Politico Europe on April 3, British officials held a "secret dinner" in Brussels last week with representatives from several European countries to discuss setting up a "supranational bank" bypassing the EC, specifically for joint procurement of weapons to reduce purchasing costs.

According to知情 officials, this dinner was hosted by Poland, which currently holds the rotating presidency of the EU. Senior officials from the finance ministries of the UK, Sweden, Denmark, Finland, Poland, and the Netherlands were present.

It is reported that this plan led by the UK will allow this "supranational bank" to represent member states in borrowing money to purchase weapons, a power that the current EU lending institution, the European Investment Bank (EIB), does not possess. The report said that the advantage of this approach is that countries do not need to include the "initial capital cost" of purchasing weapons in their national budgets; instead, they can transfer this debt to the bank. Governments only need to bear the loan interest and maintenance costs of the weapons.

In this way, some countries can bypass union or national expenditure regulations to quickly increase defense spending. "We will not be under the control of the EC, which is why it is attractive," said an EU diplomat. Another government official familiar with this dinner said that the UK has high hopes for this plan because the UK itself faces "financial constraints."

The British side believes that, theoretically, the special nature of this new institution, which focuses solely on defense investment, will make it easier to obtain loans.

Politico Europe quoted documents seen from the UK Treasury: "As an institution purely focused on defense, it will be able to target specific investor groups willing to provide financing for the defense sector, rather than trying to persuade ESG-oriented investors to include defense assets in their portfolios."

On April 2, 2025, the EU Security Forum in Warsaw, Poland, held discussions on the "White Paper on the Future of European Defense." Visual China

However, there are still key issues that need to be resolved in the above plan, including who will manage or make the final decisions for this "supranational bank." It is reported that given its goal is to work independently of the EC's jurisdiction, such details are crucial.

Additionally, the report mentioned that some EU officials are uncertain whether this plan can convince southern European countries like France, Italy, and Spain. These countries have higher debt-to-GDP ratios and higher loan interest rates, so they advocate for the EU to jointly borrow money to buy arms and directly allocate funds to member states instead of having each country bear the loans themselves.

"I don't think southerners are interested in this mechanism, but they are interested in grants," said the aforementioned EU official. "I'm not sure if they can reach consensus on this."

The report believes that Baltic countries and non-EU countries like Norway may be interested in joining the UK's plan. It is understood that Poland has also asked Bruegel Institute to draft an EU version of the "armaments bank" plan, which will be discussed at the informal meeting of finance ministers on the 5th. Some analysts believe this indicates that the EU also wants to study similar mechanisms. However, some officials worry that if the plan is pushed forward without the participation of southern European countries, it may further widen the gap in defense spending within Europe, as the defense spending of southern European countries is already insufficient.

Previously, on March 4, European Commission President Ursula von der Leyen proposed a "Rearming Europe" plan worth 800 billion euros, aiming to enhance the defense capabilities of various European countries. At that time, AP analysis pointed out that the EU's plan was intended to mitigate the impact of potential US "supply cuts" to Ukraine and continue providing military aid to Ukraine after the US temporarily suspended its assistance.

Based on the information available so far, 650 billion euros of the 800 billion euros will be raised through separate borrowing by member states rather than joint borrowing. The remaining 150 billion euros will be loan assistance guaranteed by the EU budget, roughly equivalent to joint borrowing. This plan has been resisted by countries including France, Italy, and Spain.

As an alternative, southern European countries are promoting the "defense bond" proposal, hoping to raise funds through the EU's common borrowing in the capital market. But this demand may face opposition from fiscally conservative countries like Germany and the Netherlands, who are concerned that the "defense bond" will set a precedent for the "common debt" of the EU. It is understood that this plan must receive unanimous approval from all 27 EU member states to be implemented.

This article is an exclusive article of Guancha Observer and cannot be reprinted without permission.

Original text: https://www.toutiao.com/article/7489741322643849737/

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