Leaders of the European Union have initiated talks about an $800 billion initiative aimed at strengthening the military capabilities of the union and enhancing deterrent measures against possible Russian aggression, as various analyses predict this could occur by the year 2030.

The proposal features easing budgetary regulations to unlock an extra €650 billion for defense investments along with a new initiative involving €150 billion in subsidized loans funded via collective debt issuance.

However, for certain capital cities, borrowing is insufficient.

Countries like Spain, Italy, Greece, Poland, and the Baltic nations are advocating for grants, similar to what was seen during the COVID-19 crisis. These grants differ from loans because they wouldn’t have to be repaid individually by each requesting government; instead, repayment would come from all 27 member countries collectively, easing the financial strain on those most in need of funds.

However, the Netherlands continues to firmly oppose any reference to grants, maintaining that a loan program totaling €150 billion is the absolute limit they can accept.

At the same time, High Representative Kaja Kallas is finding it difficult to stay above water. her ambitious initiative To secure up to €40 billion in military assistance for Ukraine, which, if reached, would double the support provided the previous year.

The Kallas plan is fraught with numerous technical issues that raise significant doubts regarding its feasibility. One major point of contention is her suggestion that a “part” of the military assistance should align with each nation’s “financial capacity,” primarily measured through their gross national income (GNI), to achieve an equitable allocation of funds. However, this approach faces strong opposition from larger nations such as France and Italy, which stand to contribute substantial amounts based on the GNI criteria.

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