Nine EU member-states seek lifting of cap on Budget Deficit to fund military build-up

Photo Credit : Polish Ministry of National Defence,

Dramatic Defence budget increases are being planned across Europe in the aftermath of the Russian invasion of Ukraine. 

Following sharp increase in Defence spend by Germany and Denmark, Poland is reported to have initiated a whopping a 47 per cent hike in its Defence budget. Poland is a frontline NATO state. 

Reports suggest that Poland is hiking its Defence spending to 3 per cent of its GDP. This far surpasses the 2 per cent target set by NATO.

In actual terms, the spending is set to go up from $15.1 Billion in 2022 to $22.2 Billion in 2023. 

“Relative to national wealth, Poland’s revision will make the country one of the largest funders of defence within NATO (in terms of percentage of GDP spent on defense),” notes Madeline Wild, Associate Defense Analyst at GlobalData, a leading data and analytics company. 

Part of the budgetary increase on Defence will fund a more than 100 per cent increase in Poland’s troop strength from 143,500 to 300,000 over five years, reports indicate.   

Plans of arming up of Europe, as its itself against the disturbing prospect of the Russian threat, are accompanied by reports of the US pushing a tripartite deal which involves the transfer of US F-16 fighter jets to Poland in return for Poland giving its MiG-29 fighters to Ukraine. The F-16s for Poland would address the threat of Poland becoming the next battleground in the face of Russian aggression. 

Analysts have pointed out the risks of the sharp hikes on Defence running into caps set by the European Union (EU) on Budget deficits. As many as nine EU member-countries have asked for a waiver of the cap in the context of the Russian threat. 

Embattled Europe is also looking at alternate methods to finance a military build-up. “During the COVID-19 pandemic, the Polish government financed its response through bonds issued by the national development bank (BGK) and the state fund PFR, which are not included in the Budget. The Polish Ministry of National Defence (MoD) has suggested that these channels could be used again, but now to fund a response to a different crisis,” Wild pointed out. 

In New Delhi, German Ambassador to India Walter Lindner said Vladimir Putin has awoken Europe to the fact that there is a price to keep peace. 

Europe has used the almost 8-decade peace dividend after World War-II and the virtual absence of external military threats after the end of the Cold War three decades ago to create welfare states. The absence of inter-state military conflict has allowed Europe to dramatically reduce Defence spending. But there is now a realisation that the era of the peace dividend is over.