InvestmentsPoliticsWar Europe rushes to create a €500B defense fund as Trump nears his return to the White House. Friday, December 6, 2024

EU countries are discussing a €500B joint fund for defense projects and arms purchases. US President-Elect Trump’s threat to scrap security guarantees for NATO allies that underspend on defense and support for Ukraine have prompted European capitals to explore more radical options for defense funding.

Senior European officials discussing the plan are now focused on creating a defense financing mechanism that would issue bonds backed by national guarantees from member states rather than the EU as a whole. A funding model that would be open to non-EU countries such as the UK and Norway is gaining traction among a core group of EU states. The fund could support joint defense projects such as a shared air defense system.

Brussels hopes funding joint arms purchases will encourage defense contractors to invest long-term. The Netherlands, Finland, and Denmark generally support the idea. Germany’s position is still being determined and will depend on the federal elections in February.