EU leaders present 2 mechanisms for financing defense investments worth €800 billion, agree on coordination of strengthening Ukraine

European Council President António Costa and European Commission President Ursula von der Leyen, together with EU High Representative Kaja Kallas, held a video call on Friday with Icelandic Prime Minister Kristrún Frostadóttir, Norwegian Prime Minister Jonas Gahr Støre, Turkish President Recep Tayyip Erdoğan and UK Prime Minister Keir Starmer, in which they presented the funding mechanisms for needed defence investments and the opportunities this offers for partner countries.

“The first point – the national exemption clause – will free up up to 650 billion euros of fiscal space in the budgets of member states. It will not contain any conditions regarding the origin of the defence equipment. Military equipment from partner countries will therefore benefit directly from it,” the document states.

“The second mechanism is SAFE, which includes up to 150 billion euros in loans. Norway and Iceland can already participate directly as members of the EU single market. Other countries, such as the UK, Canada or Turkey, can immediately provide up to 35% of defence production. To increase industrial participation above 35%, a Security and Defence Partnership and subsequent association agreement would be required,” the document states.

President Costa and President von der Leyen underlined the clear understanding of the European Council of the extraordinary times Europe is facing. They agreed that Europe needs to step up investment in security and defence. In this context, they referred to Readiness 2030, a roadmap aimed at ensuring that the EU has a defence industrial base and defence capabilities that can act as a credible deterrent.

“The participants agreed to continue coordinating efforts aimed at strengthening Ukraine and increasing security in Europe. The governments of Australia, Canada, New Zealand and Japan will subsequently be informed of the results of the European Council meeting,” the document says.

Following the European Council meeting, Costa and von der Leyen expressed support for strengthening Ukraine's position to achieve a just and sustainable peace.

“We will continue to actively coordinate European support for Ukraine. As Europe goes beyond the EU. Readiness 2030 is part of this strategy. Cooperation with like-minded partners will be crucial to meet European defense challenges,” von der Leyen wrote in X.