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The Polish government said on Tuesday that it would become the first EU country to use the bloc’s post-pandemic recovery funds for defence purposes.
Warsaw said it would funnel the equivalent of €7.2bn from its share of the Covid-era funding to build shelters and roads and to invest in domestic arms makers. Poland is set to receive a total of €60bn in loans and grants that were agreed by EU governments in a drive to stimulate economic growth after the pandemic.
“Thanks to European funds, we will be able to build a tool for financing our defence capabilities,” said Prime Minister Donald Tusk. “This is of great importance because until recently everyone, or almost everyone, doubted that European funds would be able to directly serve defence.”
Poland’s use of the money still needs approval from the European Commission, but the bloc’s executive has already signalled it would be open to redirecting more joint funding to defence, in response to the threat posed by Russia and to the US asking Europe to pay more for its security.
Warsaw has pledged to increase its defence spending — which at 4.7 per cent of GDP this year is already the highest in Nato — because of concerns about further Russian aggression should US President Donald Trump reduce US military support to countries on Nato’s eastern flank.
Katarzyna Pełczyńska-Nałęcz, the Polish minister for development funds and regional policy, said: “We will develop our industry and research into new technologies.”
The fund’s creation was expected to be finalised within two months, she said, with investment priorities set in co-operation with the defence ministry. The government said it had approved the fund after finding ways to allocate the EU’s Covid money to defence without contravening EU legislation.
Last month, Commission President Ursula von der Leyen floated the idea of using untapped pandemic recovery funds. But she instead opted for the Commission borrowing €150bn and disbursing the funds as loans to national governments to help them invest more in the defence sector.
European officials have been discussing a plan to set up an inter-governmental financing vehicle for defence, potentially including the UK and Norway, rather than the EU as a whole.
The commission did not immediately reply to a request for comment.
Additional reporting by Paola Tamma in Brussels
