Messages from the European Council Summit: "Spend, Spend, Spend on Defence and Deterrence"

The war in Ukraine has undoubtedly changed Europe's way of thinking, and the return of Donald Trump to the White House has taken that change to a new level. Feeling increasingly isolated, the EU has come to realise that it cannot rely on anyone but itself. Although some member states were slow to accept this reality, the European Commission, led for a second term by Ursula von der Leyen, has now taken the initiative to outline the direction the Union should take to respond to the evolving global order. What she called the "Defence Package" was approved on 6 March 2025.

This summit was particularly significant as Ukrainian President Volodymyr Zelensky attended in person. After a disappointing visit to Washington, Zelensky turned to Brussels for reassurance and support - and that is exactly what he received. The EU sent a clear message that it would not tolerate peace negotiations on Ukraine without Ukraine’s direct involvement. The Union made it clear that it would not allow Putin and Trump to determine the course of events behind Zelensky’s back. At the same time, the EU sees itself as a key player that must be involved in the process, especially given that any arrangement for Ukraine would have consequences for the rest of Europe.

However, there are still unresolved issues. While there is consensus on the need for "security guarantees" as a prerequisite for peace, member states have yet to agree on what form these guarantees should take and who should provide them - individual nations or the Union as a whole. As far as Hungarian Prime Minister Viktor Orbán is concerned, no Hungarian soldiers will set foot in Ukraine. Meanwhile, French President Emmanuel Macron envisions a more proactive role for the entire EU, backed by France’s nuclear deterrent.

In the meantime, the Union will continue to adopt new sanctions packages and provide military, financial, and humanitarian aid to Ukraine.

The EU is ready to invest more in its defence

Greater defence spending will also mean higher levels of borrowing. However, EU member states face strict borrowing limits, as fiscal stability is one of the Union’s fundamental principles. To overcome this challenge, the EU will rely on special emergency clauses that allow temporary exemptions from fiscal rules in response to the urgent need to increase military spending due to extraordinary circumstances. Given the EU’s reputation for bureaucratic rigidity, the decision by its leaders to adopt a more flexible interpretation of the rules marks a significant shift, and a much-needed move in light of new geopolitical realities.

The goal of this move

The aim of this initiative is for individual EU member states to increase their defence spending by 1.5% of GDP, which, according to Commission estimates, could create fiscal space of nearly €650 billion over four years. Additionally, borrowing - now a favoured term within the Union - is also planned at the EU level.

During the fight against the pandemic, the EU collectively took on debt for the first time, which also meant a shared responsibility for repayment. Building on this positive experience, leaders have now reached an agreement to establish a new financial instrument that would allow member states to access loans of up to €150 billion, guaranteed by the EU budget.

According to Commission estimates, combining this mechanism with the aforementioned individual defence spending could generate up to €800 billion in the coming period. This reaffirms Ursula von der Leyen’s recent message: "We are living in an era of rearmament."

What does this mean for Serbia?

Serbia, of course, will not be directly bound by these decisions, as they primarily apply to EU member states. However, it is important to note that as the EU continues to introduce new sanctions packages against Russia, expectations for Serbia to gradually align with the EU's Common Foreign and Security Policy will continue to grow.

In the meantime, it is crucial for Serbia to closely monitor the geopolitical shifts and defence trends outlined above, especially given its goal of meeting all EU membership criteria by the end of 2026.