The European Union should come together and borrow jointly to finance defence, Chairman of the Board of the Bank of Lithuania Gediminas Šimkus told Politico.
“We are Europeans: we have a single market, we have a single currency. We should have more unity in defence because this is our strategic priority – and it’s very natural to have this single financing via a certain level of debt,” Šimkus told Politico.
He described joint EU debt as “directionally right”.
Šimkus also welcomed recent pledges to more than double NATO defence spending targets to 5 percent of gross domestic product (GDP).
According to him, “it is a very clear signal to the European allies and to the potential adversaries that Europe is serious about its commitment to increase its defence spending”.
“I think the time of peace dividends is over,” he added.
The Bank of Lithuania governor acknowledged that many European countries are already grappling with high debt levels and are struggling to square the conflicting tasks of bringing down their budget deficits while also boosting military investment.
However, he stressed that raising defence spending could create economic opportunities, such as driving innovation, as seen in countries with substantial military budgets like Israel and the United States.
“The defence industry market – it is very fragmented in Europe. And a lot of governments are still buying from their domestically incorporated companies,” Šimkus said.
The EU has already approved plans to raise €150 billion in common loans to finance rearmament under its Security Action for Europe (SAFE) initiative. Funds will be distributed to member states as repayable loans.
Lithuanian Finance Minister Rimantas Šadžius has said Lithuania and neighbouring countries are already preparing loan applications from this facility.
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