Spain, for now, ducks out of race to reach 5% target
As European countries prepare for a key NATO summit in The Hague tomorrow, national media is reporting that Portugal is among nine other European Union countries that have “already expressed their interest in using the European programme (SAFE) of €150 billion in loans on favourable terms to strengthen defence”.
Sources add that nothing as yet has been formalised, largely because the moment for applying for these loans comes at the end of July, “and there are still no allocation envelopes”.
Other countries reportedly keen to borrow funds are Poland, France, Lithuania, Estonia, Romania, Bulgaria, Slovakia, Greece and Latvia.
Spain has already said that, for the time being, it is not commiting to the race to reach the 5% spending of GDP on defence, as pushed by US president Donald Trump.
“We fully respect the legitimate desire of other countries to increase their defence investment, but we are not going to do so,” Spanish prime minister Pedro Sánchez said in an address on Spanish television. His reasoning was that if the government did move forwards as pressured, it would have to increase taxes and/ or implement drastic cuts in social benefits, including pensions.
NATO boss Mark Rutte has proposed that countries reach the 5% figure by increasing core defence spending to 3.5%, and then spending an extra 1.5% of GDP on ‘related items, like cyber security and adapting roads and bridges for military vehicles’.
In an interview with Lusa news agency published over the weekend, Portugal’s finance minister Joaquim Miranda Sarmento suggested that the government could resort to SAFE – but he also defended joint acquisitions in the EU, namely for the sale of a military aircraft produced in Portugal.
“It is possible that (…) SAFE (the EU’s Security Action for Europe (SAFE) instrument) will be used, although the financing conditions of SAFE, at this moment, are not particularly more favourable than the financing conditions of the (Portuguese) Republic, but we are analysing all the alternatives that exist”, he said.
One idea is to be part of European projects – and even to be able to sell equipment produced in this country (the so-called defence cluster the prime minister talked up late last year).
“What the Ministry of Defence is doing (…) is establishing protocols with other countries so that these countries can acquire this aircraft that is mainly produced in Portugal”, said Miranda Sarmento, referring to the KC-390, a twin-engine aircraft produced with components made in Évora and from Brazilian company Embraer.
Thus, on the eve of the NATO summit, with heightened geopolitical tensions in various parts of the globe powering the urgency to increase investment in security, there is a lot of ‘talk’ in the right direction, but not quite so much concrete commitment
SAFE was adopted by the EU Council at the end of May, and will be available to member states until the end of the year.
The package has been created to facilitate joint purchases of military equipment and will be financed through joint debt issued by the EU and then transferred in the form of credits to the member states requesting loans.
SAFE is one of the measures in the €800 billion EU defence plan.
Also included in this plan are €650 billion in budgetary space that countries can have to invest in defence, after the activation of the national safeguard clause in EU budgetary rules that allows up to 1.5% of GDP in military spending to be excluded from the deficit limits. Lisbon has already had the ‘green light’ from Brussels for this.
NATO’s 32 allies are meeting tomorrow and Wednesday in The Hague, and it is anticipated that President Donald Trump, and possibly President Volodymyr Zelenskyy, will be attending. The presence of both men however is not confirmed, due primarily to the former’s involvement in Israel’s war on Iran. ND
Source material: LUSA
