ESM chief: €500bn crisis fund could support defence spending
The head of the European Stability Mechanism has said the bloc’s crisis fund, with more than €430 billion in available lending capacity, could be used to help euro zone countries finance defence spending as Europe seeks to strengthen its military posture.
Pierre Gramegna, managing director of the ESM, told that the fund could provide precautionary credit lines for defence without demanding strict economic reforms in return, in an effort to avoid the stigma often associated with seeking assistance from the emergency lender, News.Az reports, citing Reuters.
“In these times of geopolitical turmoil, which have triggered higher defence expenditure for all countries, we must use the full potential of the ESM,” Gramegna said, pointing in particular to smaller euro zone states whose budgets are under strain.
The ESM was created during the euro zone debt crisis to prevent financial collapse in countries such as Greece but has since played a limited role. Gramegna suggested that repurposing the fund for defence would give it renewed relevance, especially as European leaders face pressure to boost military spending following Russia’s invasion of Ukraine and amid increasingly strained relations with the United States.
Any move to use the ESM for defence would require approval from all 21 euro zone member states. Only countries using the euro would be eligible, meaning non-euro EU members such as Poland would be excluded. Gramegna said the loans would be clearly earmarked for defence and would not be tied to broader economic restructuring.
The proposal echoes earlier ideas for a dedicated “defence support line” and mirrors an unused ESM credit facility created during the COVID-19 pandemic. Gramegna added that countries could also make joint requests to reduce any political sensitivity around tapping the fund.
By Aysel Mammadzada
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