A Proposal on European Defence Governance and Financing

• Europe must urgently strengthen its defence capabilities and secure strategic autonomy to avoid vulnerability to external pressures.

• The proposal outlines a European Future of Defence Architecture focusing on next generation military technologies and strategic enablers (like AI, cyber, and satellites) which have a distinct European dimension and are inefficient at the national level.

• Financing requires a joint approach through the issuance of European Future of Defence Bonds (with joint and several liabilities) to minimize costs. This joint financing is a critical step toward the emergence of a European safe asset.

• The governance structure relies on an intergovernmental treaty among a coalition of willing EU countries (the European Team). It proposes Steering Committees for both Defence/Technology and Financing, with the financing mechanism possibly housed within an amended ESM structure.

• A suggested spending profile involves a 1% of GDP annual catch-up phase for 10 years, potentially totaling 1.8 tn to 2 tn (depending on the team size). This debt would be stabilized thereafter by member country fiscal resources.

Kiel Institute Expert