MNI: EU Eyes National Escape Clauses To Boost Defence Spending
MNI (BRUSSELS) - The European Commission is likely to allow member states to use national escape clauses to the bloc’s fiscal rules in order to make significant increases to defence spending beyond stipulated borrowing limits, officials in Brussels told MNI.
While Commission President Ursula von der Leyen mooted the idea of applying maximum flexibility in interpretation of the rules regarding defence spending in a speech in Munich on Friday, she left it unclear as to whether she meant a wholesale general escape clause or the newer national escape clauses.
This ambiguity was deliberate, several officials said, though they added that the national escape clause provision is the leading option.
"She is still taking the temperature of the room," one source told MNI.
Under Article 26 of the fiscal rules, any EU state can qualify for a national escape clause if "exceptional circumstances" "outside of their control" threaten a "major" impact on their public finances.
"First, countries have to decide whether they want to spend more on defence than what they planned in their medium-term fiscal-structural plans. If so, they can indicate this to the Commission and then the Commission could propose the activation of the national escape clause to the Council,” one source said. (See MNI: EU Paper Flags Savings From Rolling Over NGEU Debt)
ADDITIONAL OPTIONS
Italy, Spain, Greece and the Baltic states have already expressed support for Von der Leyen's ideas at EU meetings, sources said.
The Commission may also consider additional options, including extending the definition of spending which can receive flexible treatment from solely defence hardware to maintenance, training and salaries.
Also under consideration is the idea of generalising national schemes so that all countries are given the right to have any increase in defence spending removed from official Stability Pact scrutiny. Those countries wanting such an exemption might apply collectively, with the Commission making a single - positive - recommendation for this whole group.
However, while such an approach might reduce stigma, it is still not clear whether it would be compliant with the rules as they stand.
The Commission will set out its views in its Defence White Paper on March 19, but, given the urgency of the matter, Von der Leyen is likely to make a further announcement before then, in order to allow states to make an immediate start on boosting defence investments, officials said.