EU Chief Urges Member States to Use New Defense Loan for European Purchases, Not American Products

European Union nations are required to acquire military equipment produced within Europe through a new loan initiative aimed at enhancing the continent’s self-sufficiency in security, according to a senior EU official on Tuesday. This comes despite the fact that a significant portion of their defense supplies is sourced from U.S. manufacturers.

During a summit last week, the leaders of the EU’s 27 member states considered a proposal from the European Commission for a new loan program valued at 150 billion euros ($163 billion). This funding is intended for the procurement of air defense systems, drones, and essential strategic assets such as air transport, in addition to strengthening cybersecurity measures.

Commission President Ursula von der Leyen emphasized to EU lawmakers that these loans should be directed towards purchases from European manufacturers to bolster the continent’s defense industry. She also noted that contracts should be structured over multiple years to provide the necessary predictability for the industry, advocating for collaborative purchasing among countries to maximize effectiveness.

In recent years, European NATO allies have directed approximately two-thirds of their defense orders to U.S. firms. However, they are now being motivated to take action by the Trump administration’s insistence on self-reliance for their own security and that of Ukraine in the future.

France is advocating for the commission to increase funding for the loan initiative, emphasizing that the funds should be allocated exclusively within Europe. Meanwhile, Spain, one of five nations utilizing the euro and facing a debt exceeding 100%, is seeking grants instead of loans.

EU leaders are expected to approve the loan initiative at a summit scheduled for late next week, which the commission estimates will assist approximately 20 countries facing higher borrowing costs than the executive branch.

This initiative is part of a broader set of measures, which includes relaxing budgetary regulations for defense expenditures and reallocating EU funds, with the commission aiming to raise up to 800 billion euros ($874 billion) for security-related priorities.