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EU, economic benefits from rearmament plan
2025-03-09 19:25:29 / BOTA
European defense firms look set to benefit from the European Union's investment in rearmament, spurred by the United States' changing approach to European security under President Donald Trump.
But as Voice of America's London correspondent Henry Ridgwell reports, the $860 billion European Rearmament plan faces opposition from Hungary and Slovakia.
Shares of several European defense firms have posted double-digit gains in recent weeks, overturning general fears in global stock markets of the fallout from a potential trade war.
Europe is engaging in strengthening its defense after Washington signaled that European security will no longer be its priority.
"The stock market has also realized that Europe needs to protect itself in line with the new circumstances, because it seems that the United States is taking a secondary role as a reliable partner," says Tim Oechsner of German bank Steubing AG.
US President Donald Trump has long demanded that Europe spend more on its defense, arguing that Washington should no longer pay for it.
Meeting in Brussels on Thursday, European Union leaders, along with Ukrainian President Volodymyr Zelenskyy, discussed the $860 billion “Europe Rearmament Plan” financed by EU treasury bonds and relaxed rules on borrowing and spending.
"Money is less of a problem than determination."
"We saw after the coronavirus pandemic how Europe and the EU were able to quickly mobilize hundreds of billions of euros," says Mattia Nelles of the German-Ukrainian Bureau, a consulting firm based in Düsseldorf.
EU member states are also increasing defense spending. Friedrich Merz, expected to be Germany's next chancellor, has pledged to ease Germany's strict borrowing rules.
"I want to be very clear here. Whatever is necessary must also go towards our protection now, given the threats to our freedom and peace on our continent," he said.
The decision by President Trump's administration to suspend military aid to Ukraine and restrict the use of some American-made weapons has underscored Europe's desire to strengthen its own military capabilities.
"It is important that the money we spend at least stays in Europe. We should not buy American weapons systems with this money," says Robert Halver of the German bank Baader Bank.
European leaders have also pledged to continue supporting Ukraine.
But can Europe rearm and at the same time continue to supply Ukraine with weapons?
"You can't build a defense industrial complex overnight. This is not something that will suddenly appear and it certainly won't have a direct impact on the war in Ukraine," says British expert Mark Galeotti of the Mayak Intelligence firm.
Not all Europeans agree with this. Hungary and Slovakia have expressed opposition to continued support for Ukraine.
"Continuing the war is wrong and dangerous," Hungarian Prime Minister Viktor Orban said of the war in Ukraine.
Outside the building where the EU summit was being held, protesters called for Europe to seize $200 billion in Russian assets frozen in European banks and use that money to defend Ukraine./VOA
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