Dear Mette,
First, let me express Europe's solidarity with the Member States whose airspace has been violated. Poland, Romania, Estonia, and most recently Denmark. They are part of hybrid war tactics. These are threats that demand a strong and determined European response. Every European citizen, and every square centimetre of our territory must be safe. So we must provide the strongest of deterrence. At scale and at speed. That was the focus of our discussions today. The sense of urgency is clearly shared. Because preserving peace has always been a core task of the European Union.
The good news is that the wheels are already in motion. An investment surge in our common defence is on the way. The success of SAFE and its EUR 150 billion is a case in point. Now, we need a precise, pan-European plan on how to fill the capability gaps and how to move forward. And indeed, this is the intention of the scoping paper we discussed today. Let me highlight a few points out of this scoping paper.
First, on capabilities. We have a single set of forces, assigned to different missions – NATO, EU, UN or coalitions of the willing. But from my words, you understand already that of utmost importance is that these armed forces and capabilities are interoperable. Otherwise, you cannot send in the different missions, the different types of troops. Therefore, in close cooperation with NATO, we are working on interoperability of capabilities that we want to have. Our Roadmap until 2030 will define not only common objectives but concrete milestones. Because it is a matter of time and only what gets measured, gets done. For each critical capability, we will propose so-called capability coalitions with the lead nation. In order to ensure not only the right scale but also the necessary speed.
Second, on flagship. Here I want to highlight the Eastern Flank Watch. This project aims to counter the full spectrum of threats at our eastern borders. A core element will be the 'drone wall'. It is a system for swift detection, interception, and if needed, neutralisation, here we draw a lot on Ukraine's expertise, and therefore we must move fast forward – together with Ukraine and in close coordination with NATO.
Third, Defence Industrial Readiness. We need a ramped-up, resilient and innovative European Defence Industry. We have launched our defence omnibus to simplify the procedures, to speed up in the whole process. And this defence industry needs a strong ecosystem that is composed not only of industry, of course, but also tech start-ups. There was a broad discussion about the importance of startups and academia, all of them are essential. This is why we propose to establish new Tech Alliances to connect tech innovators with defence users. This is in a nutshell some key elements from the scoping paper. In two weeks, we will present the full version to the European Council.
My final point is Ukraine. After more than three years and seven months since Russia's full-scale invasion, Ukraine continues to fiercely resist. At the same time, Russia is under rising economic pressure. And our sanctions are working. Interest rates in Russia are at 17%; inflation is well above 10%. At least 40% of the Russian budget is spent on defence this year. Russia's GDP is projected to slow down, from 4.3% in 2024 to 0.9% in 2025. This is the time to further increase the pressure on Russia. To this end, we proposed a new approach of sanctions: We do not approach the sanctions in incremental steps anymore– but we present much more robust measures on energy, financial services and trade. That is the 19th sanctions package that is on the table right now. Second, we need to provide military assistance to Ukraine. Because if we continue to believe that Ukraine is our first line of defence, and this is the case: Then we need to step up our military assistance to Ukraine. Concretely, we have agreed with Ukraine that a total of EUR 2 billion will be spent on drones. This allows Ukraine to scale up its drone capacities and it will allow the EU to benefit from this technology. However, for a more structural solution for military support, more is necessary. This is why we have put forward the idea of the Reparations Loan based on immobilised Russian assets. The Loan would not be disbursed in one go but in tranches and with conditions attached.
And we will strengthen our own defence industry by ensuring that part of the Loan is used for procurements in Europe and with Europe. Importantly, there is no seizing of the assets. Ukraine gets these loans. And Ukraine has to repay the loans if Russia is paying reparations. Because the perpetrator must be held responsible.
