(MENAFN) Southern European nations are resisting the European Union’s plan to boost military spending through loans, fearing it could worsen their already high debt levels, Politico reported on Wednesday.

The ‘ReArm Europe Plan’, introduced this month by European Commission President Ursula von der Leyen, proposes up to €800 billion ($850 billion) in funding for the bloc’s defense industry. The plan includes a €150 billion loan package and an emergency clause to relax EU fiscal rules.

However, some EU nations have expressed “serious doubts” about taking on additional debt, according to unnamed diplomats. France, Italy, and Spain are advocating for alternative funding methods, such as grants or ‘defense bonds’, which would require the EU to borrow collectively from capital markets—a decision that needs unanimous approval from all 27 member states.

Von der Leyen has avoided endorsing the idea, wary of opposition from Germany and the Netherlands, which strongly oppose shared EU debt.

“No Eurobonds,” Dutch Prime Minister Dick Schoof declared after a recent EU summit.

Italian Prime Minister Giorgia Meloni criticized the proposal’s reliance on national debt and called the April deadline “too soon”, arguing that more time is needed for discussion. Italy and Spain have also pushed for a broader definition of military spending, urging the EU to include border security, cybersecurity, and infrastructure resilience under defense exemptions from fiscal rules.

While France reportedly does not plan to invoke the emergency clause—fearing market instability due to its 110% debt-to-GDP ratio—Germany intends to use the provision to help fund a €500 billion military expansion but prefers to raise funds independently rather than take EU loans.

Economically weaker EU nations worry that being the first to request loans could signal financial instability and drive up borrowing costs.

The European Commission insists that the ‘ReArm’ plan is necessary to counter a perceived Russian threat, a claim Moscow has dismissed. The initiative also comes amid pressure from Washington, as US President Donald Trump has distanced himself from supporting Ukraine and urged the EU to take greater responsibility for its defense.

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