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EU to Launch €150 Billion Arms Loan Program to Boost Defense Industry and Counter Russia, FT Reports

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Dariia Mykhailenko
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EU to Launch €150 Billion Arms Loan Program to Boost Defense Industry and Counter Russia, FT Reports
European flags ahead of a European Union Economic and Financial Affairs Council (ECOFIN) at the European Council headquarters in Brussels on May 13, 2025. (Source: Getty Images)

The European Union has formally agreed to establish a €150 billion ($167 billion) defense loan fund, underpinned by the bloc’s collective budget.

This strategic initiative represents a significant policy shift, prompted by Russia’s ongoing war against Ukraine and growing international pressure, most notably from US President Donald Trump, for Europe to increase its defense spending and self-reliance, Financial Times reports on May 19.

Originally proposed by the European Commission earlier this year, the fund will enable EU member states to access joint financing mechanisms to invest in weapons systems and military platforms through coordinated procurement processes. The objective is to accelerate the rearmament of the continent and enhance the EU’s collective defense capabilities.

Beyond addressing immediate security concerns, the initiative aims to revitalize the European defense industrial base, which has faced decades of decline. Under the agreement, a substantial portion of the funding will be directed toward EU-based defense firms, while also incentivizing non-EU subcontractors to relocate operations within the Union to qualify for participation.

According to the Financial Times, which reviewed the details of the agreement, the fund reflects one of the EU’s most ambitious steps toward bolstering strategic autonomy, enhancing industrial capacity, and ensuring long-term security and resilience across the European continent.

Earlier, Denmark had unveiled its 26th security assistance package for Ukraine, committing approximately $634.74 million in military support over the next four years to strengthen Ukraine’s defense capabilities.

An official statement from the Danish government reports that a portion of the funding is expected to be reimbursed through the European Union’s European Peace Facility, which co-finances military aid provided by member states.

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