MNI INTERVIEW: National Escape Clauses Key To EU Defence Boost
MNI (BRUSSELS) - The European Commission would have to grant "national escape clauses" exempting EU member states from the full force of the bloc's revised fiscal rules in order to allow to them to meet demands by U.S. President Donald Trump for boosts to defence spending, senior fellow at Brussels think tank Bruegel Zsolt Darvas told MNI.
The new rules allow individual states to deviate from multi-year fiscal adjustment plans in "exceptional circumstances beyond the control of the Member State,” Darvas noted in an interview.
"The only thing I can see is the national escape clause. I don't see any other option in the regulation which would allow deviations from the approved plans," he said. "You can say look at the threat from Russia, Trump's commitment to defence cooperation now seems to be weakening. It's an emergency, which is outside the control of government." (See MNI: EU To Talk With US, Boost Industry Protection-Officials)
NATO Secretary General Mark Rutte told EU leaders at a summit Monday that defence spending would need to rise from a current EU average of around 1.9% of GDP to a "number close to 3%" while Trump has called on EU states to raise defence spending to 5%.
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A national escape clause would only be applied to the extent that a state actually increases its defence spending, Darvas said.
"If countries don't increase defence spending, they don't ask for it. If they do ask for it, it will only be applied to the extent that defence spending is increased."
The EU's “general escape clause” could not be justified under the rules as it requires a "severe economic downturn" in the EU or the eurozone as a whole, he added.
Discussions continue around the idea of an EU Defence Investment Fund outside of the EU budget, which is forbidden by treaty from financing military spending. That could be joined by non-EU countries, such as the UK and Norway, while neutral states and those unwilling to join, such as Hungary, could remain outside. (See MNI INTERVIEW: EU Defence Boost Likely To Be Off-Budget)
The fund would rely on national guarantees to raise money for big, one-off cross-border defence projects like the much-mooted Air Defence Shield.
If the Commission does allow states to invoke national escape clauses it will mean that the bulk of the required increase in defence spending would come from national budgets rather than any new common borrowing schemes. The Commission is due to publish its White Paper on the Future of European Defence on March 19.