Defense Spending: How von der Leyen’s New Military Fund Affects Greece

New data for European defense spending, including Greece, is being shaped by the proposal of Ursula von der Leyen for the creation of a massive military fund. This plan aims to enable the European Union to respond to the U.S.’s withdrawal from the region and its decreasing involvement in Ukraine. The grand scheme includes joint borrowing to boost defense spending by €150 billion and the creation of a mechanism allowing member states to spend an additional €650 billion on defense over four years without financial strain, thanks to an escape clause. Overall, the Commission package could mobilize nearly €800 billion for defense, with an additional 1.5% of each country’s GDP directed towards related expenses. However, as the continent is moving towards reducing defense budgets rather than increasing them, questions arise about the feasibility of von der Leyen’s vision. Countries like Greece, which spends around 3% of its GDP on defense, may face challenges despite planning significant increases due to arms acquisitions like Rafale and F35 fighter jets and Belharra frigates. Von der Leyen’s plan introduces an escape clause that could provide Greece with more fiscal flexibility, but uncertainties remain regarding its application and impact on public debt indicators.