By Valentina Gruarin, Sofia Lopes, Alessandro Spada - UK & EU Affairs Desk

Introduction

“If Europe wants to avoid war, Europe must get ready for war,” European Commission President Ursula von der Leyen declared in a speech at the Royal Danish Military Academy on 18 March 2025. This statement encapsulates the urgency driving the White Paper for European Defence – Readiness 2030, also known as the ReArm Europe Plan, presented by the European Commission earlier that month. Designed to respond to shifting geopolitical dynamics — including war on Europe’s eastern flank, the declining reliability of the Atlantic Alliance, and closer ties between the U.S. and Russia — the Plan proposes to equip EU member states with the legal and financial tools to significantly scale up defence spending. The Plan’s priorities include: increased national defence spending enabled by more flexible Stability and Growth Pact rules; a €150 billion EU loan scheme for member states; expanded use of the EU budget for further defence investments; and mobilising private capital through the European Investment Bank (EIB) and the Savings and Investment Union. Altogether, the plan could unlock nearly €800 billion in defence spending.

This blog article begins by analysing the implications of the ReArm Plan for the EU’s foreign policy and global positioning — asking whether it strengthens EU Strategic Autonomy or merely reinforces national militarisation. We then examine the political and economic consequences of the plan, including its legal architecture, its fiscal mechanisms, and its potential to fragment or unify EU defence efforts. Finally, we reflect on whether this initiative brings the Union closer to the vision of a coherent global actor — or drifts further from the integrationist ideals envisioned by Jean Monnet.

ReArm Europe: EU Strategic Autonomy or Fragmented Militarisation?

The ReArm Europe Plan, introduced by the European Commission under the pretext of urgent defense coordination, marks a controversial pivot point in the EU’s evolving security architecture. Situated between the agenda-setting and policy formulation phases of the EU decision-making cycle, the Plan is emblematic of a broader institutional tension: the divergence between supranational ambition and intergovernmental control.

The Commission’s reliance on Article 122 of the Treaty on the Functioning of the European Union (TFEU) to bypass the European Parliament (EP), ostensibly to accelerate the legislative process, reveals a deeper democratic deficit in the Union's handling of foreign policy. Article 122, traditionally reserved for exceptional economic crises or emergencies affecting member states, is here leveraged to justify a €150 billion defense fund — a measure which, in substance, does not seem to meet the urgency threshold. The European Parliament’s Legal Affairs Committee (JURI) unanimously rejected this procedural circumvention, underlining that such a far-reaching plan demands a legitimate and deliberative foundation, not a legal shortcut.

The EP institutional marginalisation reflects an unresolved tension in the EU’s foreign and defense policies: the persistent dominance of member states in security affairs, even as Brussels attempts to cultivate a semblance of strategic unity. Although the Plan rhetorically aligns with the discourse on EU Strategic Autonomy, it fundamentally reinforces national military capacities, not EU-level defense integration. It is not a blueprint for an EU army, but a financial mechanism to enable national armies to rearm — and to do so under their own command and discretion. In a geopolitical crisis, the presumption that these individually empowered forces would act as one unified military bloc remains largely aspirational.

From a foresight perspective, the implications are stark. As EU member states enhance their military arsenals with limited coordination, the risk of policy divergence — or even fragmentation — intensifies. Instead of reinforcing the EU’s cohesive external action, the ReArm Plan may exacerbate the already fractured landscape of European foreign policy. It equips states to act, but not necessarily to act together. The Differentiated Integration (DI) model, long proposed as a solution to political and capability asymmetries in EU foreign policy, appears to have been sidelined rather than operationalised. In its place, a de facto re-nationalisation of defense prerogatives is emerging, subtly undermining the Union’s strategic cohesion.

Moreover, the broader framing of the Plan raises profound questions about the direction of EU foreign policy in a multipolar world. As Europe finds itself navigating between cooperative multilateralism and the increasingly confrontational logics of great power rivalry — notably between the US, China, and Russia — the strategic choices made today will define its role in future global alignments. The ReArm Plan, while presented as a necessary measure to bolster the continent's security, may paradoxically increase its vulnerability: by deepening internal divides and by entrenching the logic of militarised competition. If the Union’s foreign policy continues to be shaped by fragmented defense planning and opaque legislative processes, its credibility as a coherent strategic actor will remain elusive.

ReArm Europe’s Political Fallout: Divergence, NATO Tensions, and Regional Rifts

Russia’s full-scale invasion of Ukraine had already propelled EU member-states to rethink their weak investment in defence, and the US’s increasing unreliability towards Europe further encouraged this plan. In this sense, the EU understands that defence and strategic autonomy are central to its action. The joint remarks of High Representative/Vice-President Kallas and Commissioner Kubilius on the 19th of March are very indicative of this new perspective: “450 million EU citizens should not have to depend on 340 million Americans to defend ourselves against 140 million Russians who can't defeat 38 million Ukrainians”.

Nevertheless, ReArm Europe’s plan of action may produce unexpected issues. Countries might employ the freer financial schemes to enhance their own national defence spending without coordinating with other member-states, resulting in “fragmentation and duplication of efforts, rather than strengthening Europe’s collective military capabilities” (Santopinto 2025). This is likely, as defence remains a sole prerogative of member-states.

Moreover, this new defence plan might antagonize NATO, despite repeated reassuring statements made by the Commission that “Rebuilding European defence requires action across several dimensions, in close coordination with NATO”. ReArm Europe might be seen as a European wish to become more autonomous in defence matters, as well as a competition and an unnecessary duplication of efforts regarding NATO. Furthermore, “many member-states are sceptical about the Commission becoming more deeply involved in defence” (Scazzieri 2025), as it is a relatively new actor in defence matters. This is particularly the case for eastern EU member-states, which rely heavily on NATO and have a strong relationship with the USA.

Finally, ReArm Europe may lead to unintended frictions between member states. As previously mentioned, defence is a sole competence of member-states, and perspectives on this subject vary across the continent. Poland, the Baltic States, Greece and Finland are strongly pushing for bigger GDP defence spending and are big enthusiasts of the EU’s firmer role in defence, while countries like Spain, Ireland, or Austria – traditionally neutral states in defence matters – have emphasised that, first, the EU needs to achieve the 2% spending before thinking of increasing this percentage. These different outlooks on defence spending have yet to be surpassed. This shows the fragmentation of perspectives within the EU, and how the urgency of ramping up budgets dedicated to defence is perceived differently. Spanish Prime Minister Pedro Sánchez argued that “the threats faced by southern Europe are 'somewhat different' than in the East”, illustrating this ongoing struggle.

ReArm Europe’s Economic Impact: A Double-Edged Sword

ReArm Europe aims to unlock €800 billion in defense investments through five main measures:

1. Raising €150 billion via the Security Action for Europe (SAFE) loan instrument.
2. Activating the Stability and Growth Pact's national escape clause to unlock €650 billion over four years.
3. Increasing flexibility in defense investment with EU instruments.
4. Reinforcing the EIB’s role in defense financing.
5. Leveraging the Savings and Investments Union to mobilize private capital.

Given the significant amount of military spending, the Rearm Europe plan will have positive and negative economic consequences, according to some economists. It could mean powering economic growth, promoting regional development, boosting technological innovation, and supporting European competitiveness as a positive impact. For example, the plan could lead to  +0.2% per year in growth in the Euro area. It would increase the creation of new production lines and factories, generating good jobs in the EU and decreasing the import of defence equipment from the USA. Last but not least, an important financial investment in the defence sector could support great technological innovations. Indeed, in the past, the military industry has been the origin of diverse innovations, of which the civil world obtained relevant benefits, such as the internet, GPS positioning, satellite imaging, the three-point seat belt, and the development of Silicon Valley.

The economic negative effects could derive from an excessive rise of budget deficit for some countries like France, Belgium, and Italy, exacerbating long-term debt issues. Other countries “that already have positive output gaps may run into inflationary pressures more quickly given the extra spending”. There are concerns about loan requests that rely on grants from the European Defence Fund (EDF), because repayment obligations could discourage some countries. On one hand, governments with limited financial resources may take advantage of loans; on the other hand, Daniel Fiott of the Centre for Security,  Diplomacy, and Strategy (CSDS), “highlights the risk that wealthier Member States might not require such financing, potentially undermining the scheme's impact”. Moreover, competitiveness in the EU defence sector could be affected negatively and much lowered. The underlying reason would be due to possible risks of persisting duplication and fragmentation originating from the absence of any guarantee of cross-border investments in the EU, in favour of more national defence spending. A deeper risk in the ReArm Europe Plan lies in its financing logic. By opening the door to substantial loans from institutions like the IMF, World Bank, or the EIB, the Plan normalizes debt for military spending. However, such loans often come with conditionalities, pushing countries toward fiscal consolidation, public spending cuts, and tax increases. As a result, accessing the European Defence Fund (EDF) may not simply strengthen defense capabilities but could also tie countries to austerity measures that harm sectors like health, education, and social services. This raises concerns about prioritizing defense over social cohesion and the political trade-offs member states are making for "strategic autonomy." Ironically, by securing military sovereignty through debt and fiscal constraint, the EU risks undermining the resilience it aims to build.

Conclusion

The ReArm Europe Plan represents the EU's ambition to become a credible geopolitical actor, yet it highlights contradictions in its institutional structure and member-state relations. Rather than uniting the Union behind a cohesive defense identity, the plan risks reinforcing national silos, with each state rearming on its own terms. Its reliance on Article 122 to bypass the European Parliament underscores the democratic fragility of the EU in foreign and security matters.

Economically, while the Plan mobilizes significant resources for defense, it may come at the cost of fiscal sustainability and social investment, particularly for weaker economies burdened with conditional loans. The intention to enhance resilience may inadvertently deepen vulnerabilities through debt dependence and fragmentation.

Ultimately, the question remains: Will strategic autonomy become a militarized funding mechanism reflecting disunity, or can it evolve into a genuine opportunity for the EU to project a coherent, independent voice on the global stage? If successful, this vision would allow Europe to move beyond the reactive logic of great power rivalry and embrace a model of principled global engagement.

However, both the ReArm Europe Plan and the 2022 European Political Community (EPC) reflect the EU’s intergovernmental nature — coordinating but not integrating foreign and defense policies. This is in stark contrast to Jean Monnet’s vision of shared sovereignty, capable of shaping global affairs with legitimacy and purpose. Until the EU transitions from fragmented militarization to unified strategic action, its autonomy will remain more rhetorical than real. Two key events in June — the NATO Summit and the European Council meeting — will force EU member-states to clarify their defense strategies.