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EU’s New Defense Chief Says Air Shield May Cost €500 Billion

Andrius Kubilius Photographer: John Thys/AFP/Getty Images (John Thys/Photographer: John Thys/AFP/Gett)

(Bloomberg) -- European Union countries are discussing a joint air shield that would cost around €500 billion ($537 billion), the bloc’s nominee for defense commissioner, Andrius Kubilius, told the European Parliament.

Member states are now discussing financing options and which technologies to use, he said Wednesday during his confirmation hearing. “There are proposals on joint technologies with America, others based more on European technologies,” he said. “We need to come to prudent decisions. We need the best available products but also to take care of our own industries.”

European Commission President Ursula von der Leyen previously estimated that the EU needed €500 billion of additional defense spending over the next decade, singling out some member states’ calls for a European air defense shield, as well as the reinforcement of the bloc’s eastern land border. 

Kubilius’s remarks suggest that the cost of the air shield alone would reach that number. He added that additional billions would be needed for a “northeast border defense shield,” both physical and electronic.

“We hope that within the next year, we will proceed very much both in finding agreement with member states and pushing ahead” on the topic, he added, stressing that “we need to find money.”

The new defense commissioner would find himself with his hands tied if no additional funding is unlocked for the military sector ahead of the EU’s next long-term budget, which starts in 2028 for seven years.

A European air shield has been singled out as one of the defense projects of common European interest, which could receive additional funding ahead of the next budget, with no clarity yet on where the money could come from.

Leaders are pressing von der Leyen to come up with a written assessment of the investment gap in military spending, but diplomats expect that to come up as part of a white paper on defense that the new commissioner has pledged to present during the first 100 days of the new commission.

Former Finnish president Sauli Niinisto, who delivered a report to von der Leyen recently on the EU’s readiness to respond to crises, mentioned that a missile shield could be financed by joint borrowing.

While he didn’t make a straightforward statement on the issue during the hearing, Kubilius has previously said it’s worth exploring the option of issuing joint bonds in order to raise the additional hundreds of billions needed to bring the EU’s industry up to speed.

Countries including Germany have been opposed to more joint debt despite the call to reconsider it by former European Central Bank chief Mario Draghi in his recent report on competitiveness.

--With assistance from Jorge Valero, Alberto Nardelli and Kati Pohjanpalo.

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