EU Approves €150 Billion Loans-for-Arms Scheme to Boost Defence Autonomy:

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It is noteworthy that the European Union has recently adopted a funding policy worth €150 billion which enables member states to loan money from the bloc’s budget to buy cutting edge advanced military weapons on a cooperative basis. This change of policy was mostly precipitated by the Russian aggressive attacks in Ukraine as well as the constant American urges for Europe to deepen its internal security expenditure.

With this move, one diplomat claims that the EU is now more strategically independent: “European security no longer relies only on NATO or the US.”

Non-EU Firms Under Strict Participation Requirements

As part of the agreement, a minimum of 65% of the project’s value must be provided by EU countries or friendly countries such as Ukraine, Norway, and Switzerland. Turkish participation is limited due to Greek and Cypriot objections over Turkey’s occupation of northern Cyprus.

UK companies such as BAE Systems may be allowed to participate to 35% of a project’s value if the UK formalizes a defence treaty with the EU. Otherwise, participation from non-EU firms is capped at 15% with the possibility of a rise if EU firms agree to take over within two years.

In Response To US Pressure And Decreased Certainty in NATO:

The new fund shows the response of the EU to the increasing calls by president Trump for NATO allies to spend more on their military. European policymakers regard the initiative as both a strategic necessity and a display of reduced reliance on American military support.

Since the plan was put in place through the emergency treaty powers, it skipped the normal EU Parliament approval mechanism, as its implementation was deemed urgent. The funds are expected to start disbursing immediately after going operational around the end of May.