Dozen EU Countries Call to Suspend Fiscal Rules to Boost Defense Spending — Spain Stalls on the Sidelines
Europe, a continent that once congratulated itself on having “moved beyond war,” is now arguing about how to pay for it.
At a meeting of EU finance ministers in Brussels, twelve member states pushed for something almost unthinkable a decade ago: suspending the bloc’s fiscal straightjacket to pour money into defense. Their proposal would temporarily loosen the Stability and Growth Pact—that familiar rulebook capping deficits at 3% of GDP and public debt at 60%—to free up billions for tanks, jets, and the expensive illusion of security.
But one major player is missing from this military budget renaissance: Spain.
A Growing Security Imperative
The case for fiscal flexibility is, in one sense, brutally simple.
The war in Ukraine grinds on. The Indo-Pacific looks restless. U.S. politics have made transatlantic security feel about as reliable as spring weather. Suddenly, the EU’s neat fiscal rules—drafted in 1997, when dial-up internet was cutting edge and Russia seemed a partner, not a threat—look almost quaint.
“We are not in 1997 anymore,” Dutch Finance Minister Sigrid Kaag said flatly. “Europe must act like a geopolitical power, and that starts with ensuring our armed forces are adequately funded.”
The signatories—France, Poland, Italy, the Netherlands, the Czech Republic, Romania, Sweden, Finland, Lithuania, Latvia, Estonia, and Greece—argue that without fiscal wiggle room, Europe won’t hit NATO’s 2% spending goal, let alone invest in new defense tech.
Spain’s Strategic Ambiguity
Madrid, meanwhile, is caught in a familiar European drama: idealism versus spreadsheets.
Spain spends just over 1.2% of GDP on defense—one of NATO’s lowest ratios. Officials at Defense and Foreign Affairs insist the country must boost spending. But fiscal conservatives in the Ministry of Economy and Treasury see another story: higher borrowing costs, jittery bond markets, and a fragile recovery from pandemic debt and climate reconstruction bills.
Prime Minister Pedro Sánchez is playing for time, saying only:
“National security is a priority, but so is economic stability. We are evaluating all implications carefully before making a decision.”
Translation: Spain is still doing the math.
Defense vs. Fiscal Policy: An Old Rulebook Meets a New World
The EU has suspended its fiscal rules before—during the 2008 financial crisis and the COVID pandemic—but this is the first time the reason isn’t economic collapse, but existential dread.
“Defense is no longer optional—it is existential,” said Italy’s Defense Minister Guido Crosetto. “We need to treat it with the same urgency as a financial crisis.”
The pitch from proponents: defense isn’t just spending—it’s investment. It fuels R&D, high-skill jobs, and industrial autonomy.
Skeptics counter: rules exist for a reason. Tear them up too casually and you risk debt spirals, fractured trust, and a return to the EU’s old favorite pastime: austerity hangovers.
Brussels, Berlin, and Beyond
The European Commission is treading lightly. Economic Commissioner Paolo Gentiloni conceded the need for “flexibility,” but reminded everyone that “fiscal sustainability remains critical for the Union’s credibility.”
Germany, predictably, is cautious—but not deaf. Finance Minister Christian Lindner supports more defense spending but insists it should come from “reprioritization, not rule-breaking.”
Outside the EU, NATO Secretary General Jens Stoltenberg was more blunt: “Greater European defense capabilities contribute directly to our collective security.” Translation: spend more, and soon.
A Defining Question for Europe
At its core, this isn’t just a budget fight—it’s a test of EU identity.
Can a union built on postwar peace treaties and fiscal orthodoxy morph into a security actor without shredding its own economic rulebook?
Spain’s indecision is pivotal. A “yes” could tip the balance, a “no” could expose fractures. For now, Madrid lingers in that limbo so familiar to European politics: waiting, weighing, worrying.
The broader question, though, is harder to avoid:
How long can Europe cling to yesterday’s economic caution while today’s security order burns down around it?