LONDON, March 18. /TASS/. The increase in defense spending in the European Union can drag the community into a debt crisis due to the increase in borrowed funds in state budgets, Pieter Omtzigt, Dutch politician, leader of the New Social Contract (NSC) party, which is part of the ruling coalition, told the Financial Times.
"Countries [of the EU] will get further indebted when they are already incredibly indebted compared to the rest of the world," he said in conversation with the publication.
The politician explained that the implementation of the EU leadership's plan to rearm the community by 800 billion euros could make deficits of the EU states’ budgets "explode" and lead to an increase in interest rates.
In this context, Omtzigt spoke out against uncontrolled borrowing, although he supported an increase in defense spending in general.
The party leader recalled that in 2020, the Netherlands agreed to a pandemic-era 800 bln euros recovery fund backed by joint debt on condition that it would be a one-off, the newspaper wrote.
Now the Dutch authorities fear that a similar situation will repeat itself in the defense sector. In this context, the FT recalls that the decision of Dutch Prime Minister Dick Schoof to support the rearmament plan at a meeting of EU leaders caused a negative reaction from the country's parliamentarians, since three of the four parties of the ruling coalition, including the NSC, voted against it.
On March 4, the President of the European Commission (EC) Ursula von der Leyen announced that she had proposed to EU leaders a plan for the rearmament of the community with a budget of 800 billion euros. The EC proposal implies that EU countries borrow up to 150 billion euros for defense. The EC will borrow this money on the capital markets and then lend it to countries on the condition that they jointly purchase weapons in Europe. These funds will be used to produce air defense systems in the EU and weapons for Ukraine. In addition, the EC proposed that countries increase defense spending by 1.5% in order to raise 650 billion euros for weapons production.