Eurobonds could finance EU air defence shield, leading think tank says

Brussels should issue eurobonds to pay for a new European air defence shield, leading economics think tank Bruegel has recommended in a report issued today (17 September). 

Bruegel’s proposals meet a key electoral promise of Commission President Ursula von der Leyen – but could also set alarm bells ringing in Berlin, which has consistently opposed joint borrowing.  

Russia’s invasion of Ukraine may have highlighted Europe’s vulnerability – but an Israeli-style air defence shield could cost hundreds of billions of euros, potentially requiring creative thinking, the Brussels-based think tank said in its report.  

“You have to use debt funding to pay for the big upfront capital stock,” co-author Guntram Wolff told Euronews, adding: “You cannot really fund it with current budgets.” 

“Any individual country will not provide a sufficient amount of air defence; doing it together makes a lot of sense,” said Wolff, who is a senior fellow at the think tank.  

While Russia’s huge drone and missile capacity is the main threat, he says Europe also needs to be prepared for attacks from non-state actors or hybrid warfare, such as Houthi-style militias on its borders.  

In a July manifesto for her second term in office, von der Leyen said she’d make a European air shield, alongside  bolstering cyber defence, a project of common interest – implying they’d benefit from established EU funding. 

European Council President Charles Michel has also promoted the idea of EU defence bonds to raise funds for military capability – but the idea is controversial among hawks in Germany, who resent what they see as subsidies to weaker EU economies.  

Any EU system would have to choose among multiple options on the market, including the US-made Patriot system,