The meeting comes as the bloc faces growing pressure to boost its military spending, in light of Russia's continuing invasion of Ukraine and growing expectations from the United States to increase EU military investments.
Unlike usual EU summits held at the European Council headquarters, this meeting is taking place at Egmont Palace in Brussels, in a move aimed at fostering a more open discussion, Polish state news agency PAP reported.
No formal decisions are expected, with key choices likely postponed until after Germany’s federal elections at the end of February.
The summit will begin with a discussion on transatlantic relations, two weeks after Donald Trump returned to the US presidency.
Trump has repeatedly urged European allies to increase their defense spending. Even before taking office, he suggested that NATO members should allocate 5 percent of their gross domestic product to defense, more than double the current commitment of 2 percent.
During a working lunch, NATO Secretary-General Mark Rutte will join EU leaders before they turn to the central topic of the summit: how to jointly finance European defense.
A senior EU diplomat emphasized the urgency of the matter, saying that the goal is to secure agreement on shared defense funding immediately, rather than waiting for the next EU budget cycle, the PAP news agency reported.
The current seven-year budget framework runs until 2027.
If there is consensus on the need for increased and collective defense spending, the next challenge will be finding the necessary funds.
Before considering the more controversial option of issuing joint EU debt, leaders will explore whether the European Investment Bank (EIB) can expand its role in financing defense projects.
The EIB, which traditionally funds infrastructure and economic development, has already begun supporting projects with dual civilian and military applications.
Nineteen EU member states, including Germany, France, Italy, Spain, Sweden and Finland, have backed a proposal for the EIB to establish a dedicated defense financing mechanism.
Poland’s Prime Minister Donald Tusk received the letter outlining this proposal as Poland currently holds the EU Council presidency.
Hungary has rejected the idea of joint defense spending altogether, while Austria, Ireland and Malta, which maintain policies of neutrality, did not sign the letter.
Even if the EIB expands its defense investments, it will only cover a fraction of the necessary funding, some have warned.
The bank has allocated just EUR 2 billion for defense projects this year, far below what EU leaders believe is needed. As a result, they will also consider issuing joint EU debt, similar to the pandemic recovery fund established in 2020.
An EU official acknowledged that some member states could finance their own defense budgets independently, according to the PAP news agency.
However, for countries already struggling with excessive budget deficits, increasing military spending without cutting social programs would be difficult. For them, a collective EU financing approach could be the most viable solution.
Beyond securing funding, leaders must also decide how the money should be spent. One unresolved issue is whether EU funds can be used to manufacture defense components under licenses from non-EU allies, such as the United States and Britain.
Poland supports this approach, while France opposes it.
Later in the evening, British Prime Minister Keir Starmer will join the meeting. He will be the first UK leader to attend an EU summit since Brexit five years ago.
Both sides are looking to strengthen defense cooperation, though some EU countries argue that any defense partnership should be accompanied by closer collaboration in other areas.
The summit will conclude with a press conference featuring European Council President António Costa, European Commission President Ursula von der Leyen, and Poland's Tusk, who is attending in his role as the leader of the EU’s rotating presidency.
(rt/gs)
Source: IAR, PAP