The European Union is in the midst of many calculations.

(CLO) In the context of constantly fluctuating global geopolitics and economics, the European Union is simultaneously facing many difficult strategic requirements: from foreign affairs, security, defense, energy... to economy.

Supporting Ukraine remains a major priority, but how to finance and allocate resources for the bloc’s defense and security programs is becoming a subject of extensive debate. In this “hundred-sided calculation”, the problem is not only finding resources, but also the long-term strategic positioning of the alliance in an increasingly uncertain environment.

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The situation regarding the maintenance of financial support for the Kiev regime is becoming more complicated due to a number of factors: governance and transparency issues, economic difficulties among the donor countries, caution among some European and American leaders, limited progress on the battlefield, and pressure from Ukraine’s projected public debt, which could exceed $190 billion by the end of 2025.

The war situation in Ukraine remains complicated and unpredictable. Photo: RIA Novosti

In this context, many European countries that support increased assistance have actively sought viable financial resources, while promoting their own defense capacity-building programs. According to a recent memorandum from the European Commission to member states, three financial options are being considered: (1) Using profits from frozen Russian assets; (2) Increasing direct contributions from member state budgets; (3) Implementing a common EU-wide borrowing mechanism. These initiatives will be integrated into the document presented to the European Council after the Summit scheduled for December 18-19.

Earlier in September, the European Commission proposed a plan to allocate up to 140 billion euros over two to three years from profits from frozen Russian assets to support Ukraine. However, this proposal met with a cautious response from Belgium due to concerns about legal risks, international reputation and possible litigation costs.

Another notable content is the EU's large-scale defense capacity building program called Readiness 2030 (formerly ReArm Europe), implemented in the period 2025-2028. Announced by European Commission President Ursula von der Leyen on March 4, 2025, the program aims to strengthen the European defense-industrial base, in the context of geopolitical fluctuations and uncertainty related to the level of US support. The expected financial target could be up to 800 billion euros, focusing on collective procurement and investment in key capabilities such as drones, air defense systems, tactical missiles, etc.

The plan includes five main components: (1) Financial flexibility, allowing for a temporary relaxation of budgetary rules within the Stability and Growth Pact, enabling member states to increase defense spending, mobilizing up to 650 billion euros over four years. Part of the support for Ukraine could come from increased spending commitments by individual countries, especially additional military spending under NATO obligations. (2) Defense loans, establishing a joint lending mechanism of 150 billion euros for cooperative defense projects, including air defense capabilities, long-range artillery, multiple launch rocket systems and aviation projects. (3) Budget reallocation, adjusting existing EU funds to defense priorities. (4) The role of the European Investment Bank (EIB), considering easing legal restrictions on direct support to defense companies and related funds. (5) Mobilizing the private sector and encouraging public-private partnership mechanisms to attract investment in the defense sector.

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On November 15, the EU approved the 2026 budget with a total size of 192 billion euros, including 4 billion euros in direct support for Ukraine under the Ukraine Support Mechanism, and loans of more than 7 billion euros. The total value of support under this mechanism is expected to reach 50 billion euros by 2027. The budget is adjusted annually, prioritizing increased spending on defense, security, humanitarian aid and increasing competitiveness.

In addition, the PURL (Ukraine Priority Request List) program continues to operate. This is a mechanism that allows Ukraine to access defense equipment from contributing countries, instead of using the US federal budget directly. After the countries pay their contributions, the US guarantees the delivery. A $500 million package has been implemented with the participation of Germany, the Netherlands, Canada and Denmark.

Europe is facing a serious financial problem. Photo: European Council

However, the EU’s macroeconomic and fiscal landscape also presents significant challenges. Although the bloc’s total GDP is around €17.9 trillion (18.2% of the global total), its average public debt ratio is already at 81% of GDP, well above the 60% benchmark. Some large economies, such as France (115%) and Italy (137%), have high debt levels. Even Germany, Europe’s largest economy, is facing slowing growth and fiscal pressures.

These pressures stem from a number of sources: the consequences of the COVID-19 pandemic, fluctuations in energy supplies, the high costs of green transitions, as well as supply chain disruptions amid geopolitical tensions. Large financial commitments to the US, including the purchase of $750 billion in energy by 2028 and an additional $600 billion in investment in the US economy, also increase the financial burden on the EU.

In this context, the question arises as to where the EU will mobilize resources to maintain its current commitments and implement the above large-scale initiatives. Some options are often discussed:

One is to adjust the current budget, but with sharp cuts to social programs that could cause domestic backlash, while green transition initiatives are still seen as strategic priorities and difficult to scale back.

Second, increase taxes, however this measure is likely to face opposition from people and businesses in the context of high living costs.

Third, increased borrowing within and outside the euro area. The European Central Bank and national central banks could continue to buy government bonds through programmes such as the PSPP or APP. This would be the least disruptive option in the short term, but would also increase the financial dependence of member states on common EU mechanisms.

Source: https://congluan.vn/lien-minh-chau-au-giua-tram-be-toan-tinh-10321580.html