Connect with us

Hi, what are you looking for?

Europe

Nine EU capitals: Bloc’s deficit rules should waive defense spending

Governments should be able to spend more on defense without worrying about the bloc’s cap on budget deficits, according to nine EU countries — predominantly from the East.

As Russia’s invasion of Ukraine rages on, representatives from Italy, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania and Slovenia have called over the last week for a waiver on defense spending, four treasury officials confirmed Monday.

The push comes ahead of this week’s informal gathering of EU leaders in Versailles, France, where they’re due to speak about reducing the bloc’s energy dependency on Russia, boosting its defenses and strengthening its economic fundamentals.

EU ambassadors are currently working on a declaration that leaders are set to publish after the informal summit. No direct reference to the EU’s deficit rules are expected to be included, the officials said.

Normally, EU treasuries are forced to keep their budget deficit below 3 percent of economic output while trying to limit their public debt to 60 percent. Brussels put those rules on ice during the pandemic to ensure governments could battle the outbreak without fearing punishment from the European Commission.

The so-called Stability and Growth Pact is supposed to come back into force starting next January. But the Commission has hinted that the rules could be delayed further amid uncertainty stemming from the war in Ukraine — and the war’s potential impact on the EU’s economy could extend that pause.

The war aside, the SGP is subject to change for other reasons. Indebted countries in the South are pushing for deficit waivers for green investments to ensure they can battle climate change and handle their debt burden at the same time.

Although the war has given support for a waiver for defense spending as well, that attempt is likely to face pushback from the likes of the Netherlands and Denmark, the officials cautioned.

This article is part of POLITICO’s premium policy service: Pro Financial Services. From the eurozone, banking union, CMU, and more, our specialized journalists keep you on top of the topics driving the Financial Services policy agenda. Email [email protected] for a complimentary trial.

Click to comment

Leave a Reply

Your email address will not be published.

You May Also Like

Europe

Miguel Poiares Maduro is dean of the Católica Global Law School and chair of the European Digital Media Observatory. Fabrizio Tassinari is executive director...

Europe

Press play to listen to this article A new plan to coordinate increased military spending among EU members is not just about bolstering Europe’s...

Energy

The European Commission will allow around €2 billion of its RePowerEU energy strategy funds to be spent on oil infrastructure, in an attempt to...

Europe

BONN, Germany — Washington is willing to let a provision allowing Russia to make bond payments expire, U.S. Treasury Secretary Janet Yellen announced Wednesday...

Technology

Kyiv’s “IT army” is waging a battle for eyeballs in Russia, Ukraine’s Minister of Digital Transformation Mykhailo Fedorov said. “Our capacity to reach the...

Europe

Press play to listen to this article Turkish President Recep Tayyip Erdoğan on Wednesday doubled down on his objections to any quick accession by...

Europe

A Russian soldier accused of killing an unarmed Ukrainian civilian has pleaded guilty in the first war crimes trial of the war in Ukraine....

Europe

Sweden and Finland on Wednesday formally applied to join NATO at the military alliance’s headquarters in Brussels. NATO Secretary-General Jens Stoltenberg gave a short...