Escape Clause for Defense Spending: Greece Seeks Infrastructure Investments to Boost Fiscal Space

Investments in dual-use infrastructure are currently under negotiation as part of activating the national escape clause for increased defense spending. According to sources familiar with ongoing discussions in Brussels, countries like Greece, Spain, and Italy are exploring ways to allocate additional fiscal space effectively. Greece, which already spends 3.1% of its GDP on defense (2024), may not fully utilize the 1.5% GDP fiscal margin provided by the escape clause due to regional conditions and extensive borders. Instead, Athens might use 0.5% for defense and reserve 1% for other priorities, such as tax cuts or social measures. These percentages align conveniently with NATO’s 2% target, allowing Greece to argue it has fulfilled its obligations while redirecting funds elsewhere. Furthermore, discussions include infrastructure investments that enhance both defense capabilities and public welfare, echoing similar debates in Germany. Funding mechanisms, including a proposed €150 billion European fund, could support these initiatives without resorting to international loans. The timeline remains uncertain, with key decisions expected at an extraordinary EU summit before April’s deadline.