EU: Military Expenditure Prioritized, Climate Comes Second

The European Union is radically reprioritizing its spending, investing more and more in strengthening its military industry, while environmental and climate issues are being sidelined and put on hold. According to the British newspaper Financial Times, citing well-informed European diplomatic sources, this paradigm shift is due to “the growing negative reaction of European citizens to climate change management.” In addition, the military actions in Ukraine and the problems of national budget deficits have led to a shift in EU funding priorities. “In the condition of spending restraint, which is hurting the national budgets of many European countries, the member states of the association have cut the joint fund aimed at boosting innovation – from €10 billion to €1.5 billion. They also decided that this money could only be used for defense-related projects and not for green technology or other issues related to countering climate change,” the British newspaper stresses.

After the covid pandemic, spending was focused on “green and digital technologies,” Belgian Finance Minister Vincent van Peteghem told the publication, but now – and we can all see it – the focus is shifting in a completely different direction. The shift in priorities towards defense can be seen very clearly from an analysis of the finances of the so-called European Sovereignty Fund. It was announced in 2022 and was intended to increase investment in green technology sectors as part of the EU’s response to the $800 billion US Inflation Reduction Act.

When first talking about the Sovereignty Fund, European Commission President Ursula von der Leyen said the aim would be to “secure the future of industry with the ‘made in Europe’ label.” But at the latest EU summit last December, European leaders decided it would be possible to allocate about €1.5 billion exclusively to defense, rejecting the Commission’s own proposal for a €10-billion Strategic Technology for Europe Platform (STEP). It was intended to attract European investment to develop low-carbon technologies.

In addition, the European Investment Bank (EIB), which called itself a “climate bank” in 2019, has faced growing pressure in recent months to revise its defense lending policy. In early 2024, the EIB announced the creation of a €175 million Special Defense Fund and established a special commission to provide “risk capital” to European SMEs and startups “presenting innovative projects in the field of military and security technologies.”

“Investment in Europe’s green economy will fall sharply after 2026, once the Recovery Fund, also called the Next Generation EU, is exhausted,” European diplomatic sources told the Financial Times in a conclusion.