Joint defense bonds strengthen Europe's security for tomorrow
Europe should jointly finance next-generation defense technologies. This is significantly more efficient than national solutions, according to a new Kiel Policy Brief. The authors suggest that Europe should issue joint defense bonds totaling around €2 trillion over ten years to pool investments in areas such as artificial intelligence, cyber defense, and satellite infrastructure. The funds would also establish a secure European bond market independent of the US.
“Our proposal outlines a European defense architecture for the future,” says Moritz Schularick, president of the Kiel Institute for the World Economy and co-author of the paper. “Europe must substantially expand its military capabilities and strengthen its strategic capacity to act. This also includes emancipating itself from an increasingly imperialistic US. Joint defense bonds are a decisive step in this direction.“
Read Kiel Policy Brief now: "A Proposal on European Defence Governance and Financing"
The authors propose EU bonds worth around €2 trillion over a period of ten years, to be issued by a ”coalition of willing EU member states.” This would correspond to around 1 percent of aggregate gross domestic product, depending on the participating states. The borrowed debt would then be stabilized through national budgetary resources.
The funds would be targeted at key military technologies where European cooperation is particularly efficient and from which civilian industry can also benefit. These include artificial intelligence, cyber defense, and space-based systems. National solo efforts in these areas have often led to duplicate structures, higher costs, and ongoing technological dependencies on geopolitical rivals.
Governance and financial market effects
Institutionally, the model would be based on an intergovernmental treaty. Independent steering committees are planned for defense and technology as well as for financing.
In addition to the security policy impact, the authors highlight an additional effect. The issuance of joint European defense bonds would create a large, liquid, and secure European bond market, thereby strengthening Europe's role in the global financial system.
