Europe to “spend, spend, spend” on defense – but how?

EU leaders met in Brussels on Thursday to answer two big questions: How can Europe defend Ukraine in the short term and defend itself in the long term?

“We are very thankful that we are not alone,” said Ukrainian President Volodymyr Zelensky, who was celebrated at the summit just a week after his disastrous visit to the White House.

The context? Trump. He has cut support for Ukraine to force the country into possible peace talks with Russia, browbeaten the EU over free speech, and threatened it with tariffs while raising doubts about the US commitment to European defense.

To muscle up, the EU must “spend, spend, spend,” said Danish Prime Minister Mette Frederiksen. European Commission President Ursula von der Leyen has proposed an $860 billion “ReArm Europe” plan, including new loan facilities of about $160 billion.

But finding that money won’t be easy, particularly after years of debt-fueled pandemic stimulus. The bloc is considering loosening strict limits on debt levels so that member states can borrow money for defense spending.

What’s more, tariff jitters are adding to concerns about Europe’s sluggish economies. On Thursday, the ECB cut rates for the sixth time in nine months in a bid to boost growth.

And the bloc faces a familiar problem: spoilers. The 27 member states all support more robust military spending, but Hungary, the bloc’s most Russia-friendly member, opted out of the summit statement supporting Ukraine.

What’s next: Another EU summit in about 10 days.