European Parliament Research Service Briefing: European Rearmament Program Annual Readiness: Analysis of the €100 Billion Defense Investment Plan

List of Key Chapter Titles

1. Introduction
2. Re-armament of Europe Plan / 2030 Readiness
3. Other Defense Financing Options
4. European Parliament's Position
5. Increasing Defense Spending by Relaxing Fiscal Rules
6. New Loans for Defense Investment (SAFE)
7. Redirection of Cohesion Funds
8. Accelerating the Savings and Investment Union
9. Evolving Role of the European Investment Bank
10. Other Defense Financing Concepts (Re-armament Bank, etc.)
11. Increasing the EU Budget
12. Discussion on Unused Loans from the Recovery and Resilience Facility

Document Overview

This briefing, published by the European Parliamentary Research Service (EPRS) in 2025, provides an in-depth analysis of the landmark defense investment initiative "Re-armament of Europe Plan / 2030 Readiness" proposed by the European Commission in March of the same year. Born in the context of a dramatically changed European security environment following Russia's full-scale invasion of Ukraine in 2022, the plan aims to address Europe's urgent need to enhance strategic autonomy and strengthen deterrence and defense capabilities. Its core objective is to leverage a diversified portfolio of financing instruments to mobilize total defense investments exceeding 800 billion euros.

The report first systematically outlines the plan's five pillar financing mechanisms. The first is the proposed "Security Action for Europe" (SAFE) financial instrument, which plans to raise up to 150 billion euros in market loans based on Article 122 of the Treaty on the Functioning of the European Union (TFEU) — an emergency clause — to support member states in joint procurement. It particularly emphasizes investment in the European Defence Technological and Industrial Base (EDTIB) and includes "Europe First" procurement clauses. The second pillar encourages member states to activate the National Exceptional Clause (NEC) within the Stability and Growth Pact, allowing countries, under specific conditions (such as an expenditure ceiling of 1.5% of GDP for a maximum of four years), to gain additional fiscal flexibility for defense spending. Estimates suggest this could unlock approximately 650 billion euros in additional defense expenditure over the next four years. Furthermore, the plan involves redirecting uncommitted cohesion funds, expanding the scope of support from the European Investment Bank (EIB) to the defense and security sector, and mobilizing private capital by advancing the Savings and Investment Union.

The report delves deeply into the widespread controversies and expert opinions surrounding the plan. While the plan's political ambition and intent to elevate the EU's defense role are welcomed, numerous critical issues raise concerns. At the legal and governance level, the use of Article 122 as the legal basis for the SAFE instrument, which excludes the European Parliament from the decision-making process, has sparked criticism regarding a lack of democratic oversight. On the economic and efficiency front, experts warn that simply increasing national defense spending without structural reforms could exacerbate procurement fragmentation, duplication, and interoperability shortcomings, failing to effectively build an integrated European defense industrial base. Regarding the SAFE loan instrument, questions exist about allocation, selection criteria, and how repayment obligations might deter participation by some countries.

This briefing also comprehensively outlines other key concepts and developments within the current EU defense financing ecosystem. This includes the increasingly discussed proposals to create an independent "Re-armament Bank" or "Defence, Security and Resilience Bank," institutions designed to provide low-interest loans and risk guarantees, potentially involving non-EU countries. The report details the significant shift in the European Investment Bank's defense financing policy, including relaxing restrictions on investments in dual-use technologies and establishing a dedicated Security and Defence Office. Additionally, the report explores potential options such as increasing the defense proportion within the EU's long-term budget (MFF) and utilizing unused loans from the Recovery and Resilience Facility (RRF), analyzing their respective feasibility and legal hurdles.

Finally, the report summarizes the main positions of the European Parliament from the relevant debate in March 2025. While most political groups support strengthening European defense capabilities, they expressed concerns about the absence of a long-term strategy, the potential weakening of parliamentary oversight due to over-reliance on emergency measures, and the view that defense spending should not come at the expense of the green transition, social programs, and R&D investment. Overall, this briefing provides an authoritative, multi-dimensional analysis based on treaty law, budgetary mechanisms, and geopolitical realities for understanding the EU's financing blueprint for large-scale re-armament in the post-Ukraine war era, its inherent tensions, and future directions.