New ways of financial support for investments in defense and the development of new technologies will be sought today European leaders, which are meeting in Budapest with the aim of not remaining a “tail” of the European economy vis-à-vis China, but also the USA which will now be “guided” by Donald Trump.

The key question is ultimately whether they can give a “signal” of determination to strengthen the competitiveness of the European economy in the midst of the new reality in transatlantic relations.

The so-called “Budapest declaration” which is expected to be adopted at today’s informal European Council – on the basis of the relevant report by Mario Draghi – will in essence reflect the EU’s ambition to strengthen its defense capabilities, but also to make it more competitive its industries. However, the ambition – despite the new challenges – still remains limited, at least according to the latest draft of the text.

New tools are needed

The EU “will explore the development of new tools” in order to increase the financing of its future needs, the text states, without however clarifying the ways of new financing, to cover the investment “gap” of the “bloc” compared to its main ones competitors.

However, this phrase is a point of “compromise” with the so-called “frugal” countries, who did not even want to hint at the possible issuance of common debt as a possible new financial “tool”.

For a long time, Germany and the Netherlands have been opposed to new additional funding measures as they consider that there are several sources of revenue while they assess how the relevant proposal of the Commission in the summer regarding the new multi-year budget of the European Union, which starts in 2028, should be preceded.

The South is asking for new revenue

However, several countries, especially in the European South, are seeking new revenue streams, before the summer especially to strengthen Europe’s defense autonomy, according to European diplomatic sources.

In the draft anyway Declaration twelve key action “points” are included: stepping up efforts to ensure the full functioning of the internal market, making decisive progress towards an Economic and Investment Union, ensuring industrial renewal and de-gassing, starting to simplify the regulatory environment, increasing preparedness and defense capabilities, leading Europe in research and innovation, pursuing the twin goals of energy sovereignty and climate neutrality, building a circular economy, strengthening of technological capabilities, investing in skills and talent, pursuing an ambitious and sustainable trade policy, ensuring a competitive and resilient agricultural sector.

Europe cannot wait for the USA

The return of Donald Trump may “push” Europe to move more decisively towards strengthening its defense capabilities, European diplomats say. After all, during yesterday’s meeting in Budapest, several European leaders admitted that Europe can no longer wait on the USA for its protection and prosperity.

Otherwise, Europe will become “the north” of the sarcophagi, as the French president warned in the most typical way. However, the “27” leaders will ask the Commission and the new head of European diplomacy Kaya Kalas to “present without delay new developed options for public and private financing” for defense.

And while for defence, the Europeans recognize the necessity of immediate decisions, they do not show the same determination in others. Due to disagreements among the member states, the time limit until 2027 for an energy union was finally removed from the text as a “priority” for the EU’s energy autonomy, while no reference was finally made to the possibility of creating a new investment fund for critical technologies.