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European defense overhaul: Billions sought for joint security fund

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Following US President Donald Trump’s call for peace negotiations in Ukraine, suspension of military aid to Ukraine, and increased defense spending by NATO countries, alarm bells have started ringing in Brussels and Berlin.

European Commission President von der Leyen aims to mobilize a Europe-wide defense budget to continue supporting Ukraine.

In this context, Leyen proposed a plan for the “rearmament of Europe.” EU member states need to invest in a joint defense budget to protect themselves independently of US aid. According to Leyen, an amount of up to 800 billion euros could be mobilized.

Leyen’s five-point plan, announced in Brussels on Tuesday, includes easing debt rules and providing incentives for increased defense spending.

Member states will be enabled to spend more on defense without falling into a debt trap. A new fund of 150 billion euros will be created to support the 27 member states investing in defense.

The Commission stated that the new 150 billion euro joint borrowing would be directed towards building Europe-wide capabilities such as air and missile defense, artillery systems, missiles and ammunition, drones, and anti-drone systems, or meeting other needs from cyber to military mobility.

Social spending to be redirected to arms procurement

“This will help Member States pool their demands and buy together, reducing costs, fragmentation, increasing interoperability, and strengthening our defense industrial base,” Leyen said.

Leyen argued that if member states increased their defense spending by an average of 1.5% of GDP, this could create a fiscal space of nearly 650 billion euros.

The Commission also proposed that EU countries could use the money they receive from the EU budget, intended to equalize living standards across Europe, for defense purposes.

Arguing that the real question is not “whether Europe is facing real threats or whether it needs to take more responsibility for its security,” Leyen said, “The real question is whether Europe is ready to respond decisively as the situation requires.”

Europe is ready to increase its spending to help Ukraine in the short term but also to protect itself in the long term. “Now is the time to take responsibility,” Leyen said.

Recommendations from Berlin: Implement social cuts, indoctrinate the public

Government advisors and foreign policy experts in Berlin are also calling on the next German government to significantly increase the military budget, make severe cuts in social spending, and strongly indoctrinate the public (“change of mindset”).

The demands are featured in the current issue of the journal Internationale Politik (IP), published by the influential German Council on Foreign Relations (DGAP). The cover story of this issue is the question of “what the world expects from Germany after the election.”

For example, the articles state that the new government must prepare the German people “for Germany to become the leading power in Europe, diplomatically and militarily.” For this, it is necessary to “embed the turning point in people’s minds.”

Strategies to reverse the EU’s decline

According to the current issue of IP, as reported by German Foreign Policy, the EU has been characterized by “a growing decline” for some time.

According to DGAP expert Josef Janning, who has been analyzing the EU for decades, there are several reasons for this. One of these reasons is that the “consequences of supranational political interdependence” are beginning to be felt in daily life, especially in “distribution conflicts and crises.”

These are often negative, especially for weaker member states and population groups that do not belong to the national elites. Janning writes, “[This situation] contributes to the … gain in weight of right-wing national currents and parties.”

At the same time, “at the latest with the failure of the 2004 Constitutional Treaty,” the goal of “a closer union of the peoples of Europe” disappeared from real politics and is, at best, only mentioned in “ceremonial acts … and coalition agreements,” he believes.

In addition, there are no longer “strategically oriented coalitions among member states,” probably due to increasing differences in interests. Finally, it should be noted that the US, under the Trump administration, lost interest in a “stable” and “cooperative Europe.”

The dissolution of the EU as a realistic scenario

Janning notes that political entities like the EU can “continue to exist institutionally” but can also “lose their importance and integrity.”

Institutions like the EU are in danger of becoming “obsolete” if they lose their ability to “further develop” or even act actively. Therefore, “national solo efforts” should be increasingly expected.

“If these trends reach the first pillar of the EU, the internal market and the common currency,” Janning continues, “then the Union will self-destruct in an ‘abundance’ of internal conflicts.”

The author argues that in no period since the 1950s has the centrifugal dynamic been stronger and more visible than in the current situation. “While institutions and processes function as usual, the essence of integration is eroding beneath the surface,” he says, suggesting that for the first time, the failure and dissolution of the European Union “seems like a realistic scenario.”

Seeking “ways out of the erosion,” the DGAP expert argues that the EU needs “an orientation towards political unity, strategic thinking.”

A Bundeswehr capable of war: New taxes for the public for the army

According to the author, this includes the “common defense issue.” Janning believes this too, saying, “Most, if not all, depends on Germany, the economically strongest power in the center of Europe.”

While Janning insists on addressing the “common defense issue” to save the EU, Carlo Masala, Professor of International Politics at the Bundeswehr University in Munich, calls on the future German government to “realize that the foundations of Germany’s security and defense policy must be renewed,” which means a “Bundeswehr capable of war.”

According to the professor, what is needed is a significant increase in the military budget. Masala proposes, among other things, “a solidarity surcharge for defense,” amounting to “1 to 1.5%” of income tax, “to be paid by everyone working in Germany.”

Besides, Masala believes that a significant increase in the number of personnel in the Bundeswehr is necessary because there will be a “disproportionately large wave of retirements” in the next few years.

An internal memo from the German Ministry of Defense recently considered increasing the current number of 180,000 personnel to 440,000 soldiers. However, the Two Plus Four Agreement provides for an upper limit of 350,000.

The Two Plus Four Agreement is the name given to the documents signed by the Federal Republic of Germany with the German Democratic Republic and the US-United Kingdom-France-USSR, paving the way for “German reunification.”

Independently of this, not only a return to compulsory military service but also a change in the Constitution is required, for example, to extend compulsory military service to women.

Change of mindset: Be ready for German leadership

Jan Techau, Director of the Europe Program at the Eurasia Group in Berlin, also argues in favor of mass armament in IP.

According to Techau, the next German government must prepare “the Germans, the Berlin bubble, and itself … for Germany to become the leading power in Europe, diplomatically and militarily.”

The learning process towards accepting this role will be “much more difficult” because “everything is very, very expensive,” and the next Federal Chancellor will “have to make and justify dramatic budget decisions,” according to the author.

Techau states that this is “clear to everyone involved,” but before the election, no one wants to be “caught telling the truth” about it.

According to the author, what is important now is to prepare the conservatives for “new debts” and the left for “painful structural reforms”: “Otherwise, there is a risk of resistance and blockade.”

But Techau also sees it as “the real task of the next government” to prepare the public for the fact that Berlin will “have to make some unheard-of decisions in the near future.” The author does not explain what this means beyond the enormous costs of weapons and other war equipment. However, he believes that “a change in mindset, a turning point in people’s minds” is necessary.

Armament should cease to be a moral issue for Germans

Ulrike Esther Franke from the European Council on Foreign Relations (ECFR) is also among those offering advice on this matter.

Franke criticizes the discussions on military issues in Germany as being “morally charged”; according to her, military experts are therefore faced with “considerable distrust,” and this situation “does not contribute to a better discussion environment.”

The author also suggests that war discussions in Germany are “driven by fear,” which she considers harmful for dealing with future “dangers.”

Franke believes that the war in Ukraine has created “a window of opportunity in the willingness to deal with defense issues”; therefore, the next government should use this to set a significant course before the “mood” changes.

Franke calls on the new German government, “Now is the time for political leadership.”


Europe

Fico accuses Merz of blackmail over threat to veto EU budget

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Slovak Prime Minister Robert Fico has hit back after German Chancellor Friedrich Merz threatened to veto the EU budget unless funding for Ukraine is secured.

Merz said he would block the EU’s seven-year budget if no agreement is reached on financial assistance for Ukraine.

The chancellor’s intervention has angered Central European leaders who are net beneficiaries of EU funds but do not want to take part in the next round of funding to support Ukraine’s war effort.

“What the chancellor is doing is typical blackmail, and I will not bow to it,” Fico told reporters in Bratislava.

Fico spoke alongside his Czech counterpart, Andrej Babiš, whose government has refused to participate in a future loan to Ukraine.

“I do not know why he said this,” Babiš said, referring to Merz’s stance.

Merz wants EU leaders to discuss Ukraine’s financing needs at a summit in Dublin on Friday.

In a letter to European Council President António Costa, who will chair the meeting, obtained by The Guardian, Merz wrote:

“We must maintain our support for Ukraine in its struggle to defend itself. This is our shared vital interest. Yet bilateral aid provided to Ukraine is distributed unevenly, with the burden shouldered mostly by only a few member states.”

The EU agreed last year to provide a €90 billion loan to Ukraine, intended to cover two-thirds of its military and civilian spending for 2026 and 2027.

Since then, however, Russia’s relentless bombardment has placed a heavier financial burden on Kyiv, prompting President Volodymyr Zelenskyy to ask for €70 billion to plug the budget deficit.

The EU has endorsed Zelenskyy’s figures and pledged to find €45 billion. Ukraine’s other allies, such as Britain and Canada, are expected to cover the rest.

Last year, Merz launched an initiative to tap €210 billion in frozen Russian state assets held in the EU, but the plan fell through due to opposition led by Belgium, which holds most of the funds in Brussels.

The €90 billion loan was the backup plan. Having opted out of that loan, Hungary, Slovakia, and Czechia indicated that they would not take part in the next round either.

Bulgaria joined these three member states following the election of Prime Minister Rumen Radev last April.

The question of funding for Ukraine is now spilling over into the fraught negotiations on the 2028-34 EU budget.

Germany, the largest net contributor, wants substantial cuts to the proposed budget and opposes the EU providing generous funding to member states that refuse to contribute to Ukraine’s financial needs.

Merz states in his letter that a “collective commitment without exceptions” is a “fundamental prerequisite” for closing Ukraine’s financing gap and for “discussing other matters, particularly those with financial implications.”

He also notes that, in the context of the EU’s next seven-year budget, known as the Multiannual Financial Framework, all member states must contribute to a “robust” financial perspective for Ukraine from 2028 onwards.

A German government official said:

“For the Multiannual Financial Framework (MFF) to be successfully concluded, it is vital that all EU member states provide financial support to Ukraine.”

Berlin is also aiming to shift decision-making on funding for Ukraine from unanimity to qualified majority voting, in an effort to prevent a single government from blocking EU decisions.

The letter reflects mounting frustration among the EU’s northern member states, Ukraine’s most generous backers, over lower contributions from other EU countries in Central and Southern Europe.

The task of brokering an agreement on the budget falls to Costa, the former Portuguese prime minister.

Costa wants a deal by the end of the year, ahead of elections in France, Poland, and Italy in 2027 that could complicate the process.

A spokesperson for Costa confirmed receipt of the letter without elaborating on details. “President Costa will dedicate time to the Ukraine issue at the informal European Council meeting in Dublin this week,” the spokesperson said, adding that funding for Ukraine would be addressed at a dedicated summit on the EU budget scheduled for 26-27 November.

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EU expects next Israeli government to adopt less aggressive posture

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The EU expects the next Israeli government to mend its “difficult relationship” with Brussels and adopt a more constructive approach toward Gaza and illegal settlements.

Israeli President Isaac Herzog tasked Gadi Eisenkot, the leader of the anti-Netanyahu bloc, on Sunday with forming a government.

Eisenkot stated that the country faces a “catastrophic diplomatic crisis” as traditional allies begin to reassess their relations with Israel.

Speaking to Rapporteur, several European diplomats stationed in Tel Aviv said they expect ties to get back on track.

“Whatever government comes in, we can try to revitalize relations because Israel is clearly a very important partner,” one European diplomat said, adding that Brussels expects the next administration to be “less aggressive”.

The diplomat noted that relations with Europe are currently “not very good”.

Israel cut off communication with Kaja Kallas, the EU high representative for foreign affairs and security policy, after Rapporteur revealed in June that she had compared Israel to apartheid-era South Africa during a visit to Mexico.

The diplomat stated that this decision, taken ahead of elections, was political in nature. A second European diplomat based in Brussels explained that the announcement came only a few days before an official visit by Dubravka Šuica, the European commissioner for the Mediterranean.

“This could have been interpreted as a tactic to divide Europe, but Israel had asked Kallas to deny the report; she did not do so,” the second diplomat said.

Brussels has repeatedly voiced its frustration with Israel over the humanitarian crisis in Gaza and the expansion of West Bank settlements.

However, EU governments blocked almost all sanctions proposed by the European Commission.

A third diplomat said opposition parties would “almost certainly take the issue more seriously” when it comes to tackling violence by West Bank settlers:

“We see Palestinians being expelled from their homes and new illegal settlements being built in the West Bank. There is a reluctance on the part of the current government to address this issue, which causes problems in our relations.”

The new government is expected to ease pressure on Palestinians and halt construction of the E1 settlement project, a controversial plan to build settler housing in the West Bank east of Jerusalem.

“They will probably try to deal with the problem of extremist settlers in the West Bank,” the diplomat added.

On Gaza, the diplomat described the situation as “a complete nightmare”, with two million Palestinians crowded into an area that accounts for roughly 35% of the territory.

“There are not enough tents for the winter, and not enough vaccines are reaching the area despite an increase in diseases,” the diplomat said.

The European official argued that Donald Trump’s peace plan met all the conditions for Europe. Although the EU had much to offer, neither the US nor Israel appeared interested in EU involvement in the process.

“We are currently training Palestinian police in the West Bank, and if permitted, we could do the same in Gaza,” the diplomat said.

The diplomat disclosed that Israel had agreed with Šuica that Europe would finance two projects aimed at improving sewage and water infrastructure in Gaza, continuing:

“However, none of these projects has started yet because there is a serious problem with dual-use goods. Getting materials into Gaza is very difficult because the Israelis say they could be misused if they fall into the wrong hands of Hamas.”

Israel insists that Hamas must be disarmed before subsequent phases of Trump’s plan can proceed.

With disarmament unlikely to happen in the near term, the EU argues that certain measures can be carried out in parallel.

“We can begin rebuilding sanitation systems in Gaza. We can start building desalination plants. We can begin providing energy and water to Gaza,” one diplomat said.

While Brussels hopes for progress on Gaza and the West Bank, it maintains that expectations regarding the establishment of a Palestinian state need to be “managed”.

The EU continues to advocate a two-state solution, yet most leading Jewish parties oppose the creation of a Palestinian state.

The diplomat noted that the next Israeli government will likely have “a very slim majority and not much room for manoeuvre”.

There is also a “major misunderstanding” between the EU and Israel that must be addressed. According to the diplomat, Europeans fail to recognize the “psychological impact” of 7 October on Israelis.

“This event changed the country and made the two-state solution even more distant than before,” the diplomat said.

In return, some Israeli politicians believe Europe has betrayed Israel despite what they view as a fight against “Islamist terrorism”.

“Their argument is that European politicians are somewhat afraid of the Muslim population in Europe,” the European diplomat said.

Europe strongly opposes Iran and the possibility of Tehran acquiring nuclear weapons, imposing sanctions in response.

However, the diplomat argued that the EU would not participate in a war because it lacks a common army:

“We are a diplomatic and economic power, which is why we resort to sanctions and diplomacy. The expectation that we would take part in a military operation is unrealistic.”

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Germany threatens EU budget veto over long-term Ukraine aid

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Germany has threatened to veto the European Union’s joint budget for the 2028-2034 period, which is currently under negotiation, unless every member state commits to providing financial support to Ukraine in 2027 and subsequent years, German Chancellor Friedrich Merz warned.

According to a report by the Financial Times (FT), Chancellor Merz set out Berlin’s condition for the budget talks in a letter addressed to European Council President António Costa.

In his letter, Merz wrote: “A collective commitment that every single one of us, without exception, will make a fair contribution to closing Ukraine’s budget deficit is an indispensable prerequisite for resolving this budget issue and, in particular, for addressing subsequent matters that carry financial implications.”

The German Chancellor stressed that a formula backed by all member states must be established to provide Ukraine with a reliable, multi-year financial perspective starting from 2028.

Merz also insisted that any agreed solution must cover the interest payments on debts incurred to finance the assistance provided to Kyiv.

Conversely, several countries within the bloc have cut financial aid to Ukraine, and the number of capitals adopting this stance is projected to rise next year.

In December 2025, Hungary, Slovakia, and the Czech Republic approved the EU’s 90 billion euro loan package for Kyiv only on the condition that they would not contribute to its costs themselves.

Alongside these three countries, Bulgaria has also stated that it does not plan to participate in subsequent financial assistance packages for Ukraine.

In France, far-right leader Marine Le Pen, who could potentially win the presidential election scheduled for spring 2027, recently told the FT that Paris has run out of funds.

Le Pen assessed: “The honest approach is to tell Mr Zelensky clearly, and even warn him: ‘Look, we cannot do more. We have already allocated the 90 billion euro EU loan, in which France’s share amounts to 18 billion euros. 18 billion euros is genuinely a huge amount of money.'”

The EU’s 90 billion euro loan, covering the 2026-2027 period, aims to meet two-thirds of Ukraine’s financing requirements.

Brussels expects the remaining 45 billion euros to be covered by other partners, including Canada, the UK, Norway, Japan, South Korea, and Australia.

Germany remains the largest net contributor to the EU budget.

In contrast, the four Eastern European countries seeking to avoid financing Ukraine rank among the largest net beneficiaries of the bloc’s budget.

Leveraging this balance, Chancellor Merz aims to use his influence in the EU budget negotiations to secure uninterrupted support for Kyiv in 2027 and the years beyond.

According to the FT, Berlin is also demanding that future aid packages be decided by qualified majority voting rather than unanimity, which is required under the current system.

A German government spokesperson told the newspaper:

“The issue of Ukraine’s financial needs must be resolved within the framework of the next EU budget. Financial support for Ukraine from all EU members is decisive for the successful conclusion of the budget talks.”

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