"Member States Can Increase Defense Spending by an Additional 1.5% of GDP"
The European Union (EU) has unveiled a funding mobilization plan for 'rearmament' amounting to at least 800 billion euros (approximately 1,229 trillion won).
On the 4th (local time), Ursula von der Leyen, President of the European Commission, announced in Brussels, Belgium, that she proposed the so-called 'REARM Europe Plan' to the heads of state of the 27 member countries.
According to the plan, the executive branch, the Commission, proposed activating a national escape clause that temporarily exempts the application of the EU fiscal rules, allowing individual member states to actively mobilize public funds for the defense sector. Under the fiscal rules, member states must keep their fiscal deficits and national debt below 3% and 60% of GDP (Gross Domestic Product), respectively, and exceeding these limits may result in EU-level sanctions, but this exemption means that such sanctions would not apply to the defense sector.
President von der Leyen explained that if the escape clause is activated, "if member states increase their defense spending by an average of about 1.5% of GDP, they can create fiscal space of approximately 650 billion euros (about 998 trillion won) over four years without the burden of sanctions."
According to the EU, among the 27 member states, the average defense spending of the 23 countries belonging to the North Atlantic Treaty Organization (NATO) is about 1.99% of GDP. If increased by 1.5 percentage points, the average would arithmetically rise to about 3.5%.
However, the 'national escape clause' that the EU intends to activate is a temporary suspension of the fiscal rules applied to specific member states. This differs from the general escape clause, which is applied uniformly to all member states. The general escape clause was activated during the COVID-19 pandemic.
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