Europe needs to rearm in response to Russia’s invasion of Ukraine and the broader threat posed by President Vladimir Putin’s regime. The US has made it clear that Europe cannot rely on continued US support.
To finance the necessary increase in military investment, Europe could consider borrowing, excluding defense spending from EU fiscal rules, or setting up a special purpose vehicle to issue joint bonds backed by guarantees from participating governments. Defense spending needs to be increased to deter Russian aggression and avert Ukraine’s defeat.