MNI: EU Moots Extending 4-Year Defence Exemption To 10-Paper
MNI (BRUSSELS) - European Union finance ministers will discuss the possibility of extending the proposed four-year exemption for defence spending from the bloc’s fiscal rules to 10 years when they meet in Brussels on Tuesday morning, according to a Polish Presidency paper.
The ministers will be invited to discuss whether longer-term solutions are needed "up to 10 years to match the length of military contracts,” or whether the exemption should be seen as just a medium-term "transition to higher defence spending,” after which states would be expected to maintain defence as a permanent top-priority budget item
The discussion follows Germany's request to make the proposed exemption for defence spending longer term and to review the EU's fiscal rules in order to align the exemption with changes to its own domestic debt brake. (See MNI: European Commission Eyes EUR100Bln Defence Tool-Source)
The paper also moots widening the definition of defence spending, noting that the current definition "excludes essential spending, such as personnel costs for soldiers and other expenditures related to defence production, including factories and dual-use infrastructure".
It calls for a "broader scope of defence expenditure" based on COFOG (Classification of the Functions of Government) instead of the currently used ESA classification.
The breakfast discussion among ministers will also debate whether 2021 should serve as the benchmark year when assessing the defence exemption from EU fiscal rules in order not to penalise countries which made an earlier start on ramping up defence spending in the wake of Russia's invasion of Ukraine in 2022.