As of Friday, 13 EU member states have filed applications to exclude defense spending from budget rules, according to European Commission data. Countries subject to excessive deficit procedures will gain flexibility, said EC spokesman Balazs Ujvari.
According to fiscal rules, member states' deficits cannot exceed 3% of GDP and debt cannot exceed 60%. Defence spending by countries that use the exit clause will be exempt from these rules.
Ujvari reported that by Friday, the following countries had submitted applications for a defensive exit clause: Belgium, Denmark, Estonia, Finland, Greece, Germany, Lithuania, Latvia, Poland, Portugal, Slovakia, Slovenia and Hungary. This number is still lower than the one given by Finance Minister Andrzej Domański on Wednesday. The EC is only taking into account countries that have submitted applications through the formal channel, while the EU Council, which is presided over by Poland, is also taking into account an oral commitment. The Polish Finance Minister also mentioned Bulgaria, the Czech Republic and Croatia.
Therefore – as Ujvari explained on Friday – the number announced by the EC should increase in the coming days.
The EC will assess the applications in May and issue its decision on June 4. The EC spokesman did not want to prejudge whether all countries that request the exclusion of defense spending from EU budget discipline will receive such an exemption, but stated that it can be expected with great similarity. “We believe that there is a good reason for these requests to be considered,” he emphasized.
The applicants include countries subject to the excessive deficit procedure: Poland, Belgium, Slovakia and Hungary.
“If a country subject to the excessive deficit procedure applies for the activation of the so-called national exit clause and this application is considered positively (by the EC – PAP) and the EU Council agrees to it, this will be taken into account during the assessment, as well as the flexibility that these Member States will gain thanks to the clause,” said the Ujvari spokesman.
The suspension of spending rules for defence spending is one of the elements of the EU rearmament package that EC President Ursula von der Leyen proposed in February and to which the leaders of the member states agreed.
The application of such an exception is intended to allow countries to spend an additional 1.5 percent of GDP on defense between 2025 and 2029, with 2021 as the reference year.
According to EC estimates, the European rearmament plan is to allow for the mobilisation of an additional EUR 800 billion across the EU. EUR 150 billion will be made available to the EC under the SAFE loan programme, and the remaining EUR 650 billion is the sum that, in the EC's opinion, can be obtained by suspending defence spending rules.
Large EU economies such as France, Italy, Spain and the Netherlands have not yet applied for an exemption. Asked whether it is still possible to mobilise the €650 billion earmarked by the EC for defence in national budgets without their participation, the EC spokesman pointed out that not all countries need an exemption from expenditure rules, as there are countries that have sufficient fiscal space to increase military spending without being exposed to the excessive deficit procedure.
From Brussels Magdalena Cedro (PAP)
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