When Andrius Kubilius considers Europe today, he thinks about the U.S. in the late 1930s. The former Lithuanian prime minister, now European commissioner for defense and space, sees many parallels. Americans lacked a sense of urgency about Nazi aggression. The U.S. had few reserves of manpower or weaponry. Its arms industry had been weakened by years of underinvestment. Manufacturers, uncertain about future orders, hesitated to ramp up production capacity, and money was in short supply.
In the 1930s, President Franklin D. Roosevelt defied this apathy and inaction with the historic defense buildup known as the “Victory Program.” Eighty years later, Kubilius says, Western democracies face a different form of totalitarian aggression. But if America could do it then, Europe can and must do it now. “We have the same responsibility,” the commissioner wrote recently in a personal post, “to define and to implement our ‘Victory Plan.’ This is our moral task. For our grandkids to live also in peace.”
Kubilius is one of the architects of the European Union’s ambitious new rearmament strategy, ReArm Europe Plan/Readiness 2030, approved in principle last month by 26 of the continent’s 27 heads of state. Unlike in the U.S. where it now seems unclear to many whether Russia is a friend or foe, few Europeans are confused about the need for the initiative. Kubilius sums it up with one fact: as things stand today, Russia can produce more weapons in three months than all the NATO member states, including the U.S., can produce in a year.
If approved by the full EU, the ReArm plan could unleash as much as €800 billion in defense spending. Its twin goals: to restructure and reinvigorate the European defense industry even as it produces a flood of weapons, ammunition, a continental air defense system, an eastern border shield, and a long list of “strategic enablers,” including logistics capabilities and military intelligence satellites. A third aim, equally important, is to support Ukraine, providing a sharply increased flow of weapons and ammunition, strengthening the Ukrainian defense industry and integrating it into European supply lines.
An unassuming, avuncular man, Kubilius seems remarkably undaunted by the challenges ahead, including where to find the money. “This is the message from FDR and Jean Monnet,” he told me in an interview this month, highlighting the role played by the French economist, later a founding father of the EU, who spurred FDR to launch the Victory Program. “In the face of an existential threat,” Kubilius says, “money cannot be an obstacle. You can always find a way to fund what you need.”
Still Needed: Consensus, Collaboration, Strategic Planning And Funding
The first task ahead for Kubilius and others implementing the ReArm plan will be getting full approval from the EU. It hasn’t been easy to forge consensus around earlier defense proposals. One relatively small initiative proposed nearly a year ago, the European Defence Industry Programme (EDIP)—it would provide €1.5 billion in grants to encourage countries to cooperate on weapons and ammunition production—is still languishing, unpassed. But after three years of debate, including a series of EU-sponsored reports designed to lay the groundwork for a military buildup, Kubilius expects the process to unfold relatively smoothly. He thinks the machinery to implement the ReArm initiative could begin moving as early as this month.
The second challenge, arguably the heart of the initiative, will be spurring collaborative planning and production across the EU’s diverse member states. As is, each country manages its own defense spending. National budgets support national industries. Despite NATO standards meant to guarantee “interoperability,” weapons manufactured in different countries are often incompatible. The continent’s three big land powers—Germany, France and Poland—each make a different kind of main battle tank, for example. Perhaps most damaging, each country produces what it thinks it needs for itself, with little thought to what its neighbors produce or what the continent needs—a recipe for duplication and gaps in military preparedness.
The ReArm initiative addresses this fragmentation in two ways: by spurring joint production and deregulating the defense industry. A big chunk of anticipated funding—€150 billion—will be set aside for loans to collaborative projects involving at least two countries, including, potentially, an EU member and Ukraine. Among proposed steps to deregulate defense production: streamlining the process to obtain construction permits, easing environmental requirements, and granting VAT exemptions for cross-border weapons flows.
But as important as financial incentives and deregulation will be planning and coordination from Brussels, and here, too, Kubilius tells me he learned from Jean Monnet—what he calls a “balance sheet” approach. “It doesn’t have to be complicated,” the commissioner explains. “You need to know what you need [for continent-wide defense]. You need to know what you have now. You determine the difference, and then you produce it.” This strategic planning is already under way, with the EU canvassing member states to determine their NATO “capability targets” and calculating what Kubilius calls the continent’s “aggregate demand.”
The third challenge—funding a historic surge in defense production—will be the hardest to address. EU leadership has a plan, but it may not be as easy to implement as Brussels hopes.
Finding the first tranche of money should be straightforward. Brussels will raise €150 billion on capital markets for what it calls the Security Action for Europe (SAFE) initiative—EU-backed loans for collaborative cross-border projects. But the second tranche, which leadership says could add up to €650 billion, will depend on EU member states. Brussels hopes to incentivize national governments to increase their defense spending by loosening its strict budgeting rules—specifically, allowing member states to go into debt for military procurement without running afoul of EU fiscal requirements.
Will Member States Meet Expectations For Collaboration And Funding?
The problem, and this is where Kubilius’ historic analogy bumps up against reality: the EU is not America. The union is much looser—still an unruly collection of proud, independent nations, not a federation of states. Brussels isn’t going to buy or produce weapons—the EU’s founding treaty prohibits both. The union can achieve its ends only by what Kubilius calls “creating opportunities.” But member states invariably have their own agendas. Both rich and poor may hesitate to take on new debt, no matter what EU rules allow, and as democracies with ever changing elected leadership, they are inherently unpredictable.
“The EU is not replacing what nations do, just facilitating action by the member states,” says Giuseppe Spatafora, associate analyst at the EU’s Institute for Security Studies. “That’s the beauty of the plan but also the risk—leaving so much to member states who may have different interests.”
Kubilius is convinced EU inducements will be effective. Previous incentives like the 2024 Act in Support of Ammunition Production (ASAP) program—€500 million in grants to enhance industrial capacity—spurred significant activity by member states. ReArm’s VAT waiver will lower the costs of manufacturing weapons and ammunition. Economies of scale will enhance profitability. The plan also envisions that the surge in public spending will unleash increased private investment in the defense industry, and a parallel initiative will unlock additional capital by making it easier for Europe’s vast, untapped pension funds to invest in weapons production.
Brussels is already running into trouble persuading member states to implement elements of the ReArm initiative. The union’s top diplomat Kaja Kallas, who worked with Kubilius to coauthor the white paper that laid the groundwork for the plan, had hoped to convince European capitals to set aside €40 billion this year in aid for Ukraine—more than doubling the €17 billion spent each year for the last three years and all but replacing what the U.S. spends. Instead, leaders agreed in March to an additional €5 billion for ammunition.
But Kubilius is not worried. “I see several member states announcing bigger packages of Ukraine aid,” he tells me. He expects many to use funding unleashed by the ReArm fiscal waiver to help Ukraine. And as long as the money adds up, “it’s not important exactly how it’s provided—whether it’s under this plan or not.”
Besides, in the long run, ReArm’s impact in Ukraine may depend less on aid than on marrying Ukrainian and European defense production. Kyiv’s capacity to produce weapons and ammunition—drones, missiles, and howitzers, among other items—has grown 35-fold since the Russian invasion of February 2022. “Better integration is not only important for Ukraine,” Kubilius says. “It’s of big value for us.”
The commissioner is also unfazed by alternative options for European defense spending that have surfaced in recent weeks, including mechanisms for collective purchasing proposed by British officials and Bruegel, a Brussels think tank. Today, as in 2020, when the EU worked through several responses to the Covid-19 pandemic before settling on a consensual €750 recovery fund, Kubilius welcomes the debate—as long as it doesn’t dilute the urgency of acting.
“What we don’t want is to create the impression that member states can wait for something more attractive,” he says with a hint of steel. The stakes are too high to be waylaid. “[Vladimir] Putin will not be deterred [just because] we read him our white paper,” the commissioner warns. “We must move ahead with implementation.”
