MNI INTERVIEW2: Poland To Push For EU Defence Fund
MNI (LONDON) - Poland will use its upcoming EU presidency to try to secure a bloc-wide intergovernmental defence fund, though headwinds remain, a recent former senior Polish government official told MNI.
From an institutional perspective “there are plenty of ways to make it happen,” said Marek Skawinski, who served in roles including Director of Macroeconomic Policy at the Ministry of Finance between 2014 and September this year. “My view is that there will be a certain amount of building capital that countries will pay, and the rest will come from mutual borrowing on the basis of this capital.
“However, the details of how it will be made are crucial. If it is an opt-in fund it may be that a country like Spain, which only spends 1.3% of GDP on defence, could choose not to take part in this military fund. Then there are countries like Austria that require such an opt-in mechanism because of their neutrality and national legislation.”
Were the fund created along similar lines to the European Stability Mechanism fund, which is its own legal entity, any related debt incurred by member states would not be counted in terms of national debt.
Were it a special purpose vehicle, as has been reported in the Financial Times, such borrowing would be counted in debt-to-GDP ratios, carrying implications both for how much debt will materialise and debt sustainability, he said.
“Whenever there are debates around mutualising debt Germany has always been an important piece of the puzzle, but the same is also true of the Netherlands,” Skawinski said. “Both have historically been opposed to such an approach. The big advantage of this approach - certainly from the Polish perspective - is that it comes with much lower borrowing costs.”