(Bloomberg) -- The European Union should issue joint debt to help support its defense sector and provide more backing for Ukraine, according to Estonia’s premier, part of a new push in the region for such a move.
Prime Minister Kaja Kallas said that a joint bond issuance program, like the one put in place to help EU member states recover from the pandemic, would counter criticism from the defense industry that there aren’t enough orders to scale up production of arms.
Still, such a move to issue more debt on top of the EU’s €750 billion ($815 billion) Covid-19 borrowing program would likely face opposition from states with tighter fiscal policies, such as the Netherlands, Austria, Finland and Sweden — known colloquially as the frugal four. Kallas said that Russia’s invasion affected all member states, and so they should provide support.
“Security is still for some countries a nice intellectual discussion to be having or something that we can do in the future,” Kallas said Friday in an interview on the sidelines of the COP28 climate summit in Dubai. “And you don’t see the imminent need for this because you have much better neighbors than we do. But eventually it’s everybody’s problem.”
The idea, first touted by Estonia, received the backing of Charles Michel, the European Council president, earlier this week as Russia’s invasion of Ukraine grinds on. The defense sector is seeing a resurgence of support from the region’s leaders, while investors are also adding stocks from such companies to portfolios with environmental, social and governance mandates.
Kallas noted that Russia and China were more than doubling defense spending more and that the EU was falling behind. She said that Moscow had also tried to use migrants to help destabilize the country, mirroring a similar move in Finland.
Read More: Finland Shuts Last Open Road Border With Russia Over Migration
China, meanwhile, hadn’t been constructive with requests by Finland and Estonia to help investigate damage to the the Balticconnector pipeline after a vessel identified as “Newnew Polar Bear” — whose registered owner is Hainan Xin Xin Yang Shipping — sailed over the pipeline on Oct. 8.
The investigation “depends on the ship’s key logs,” Kallas said. “Why do they they lower the anchor? Why did they sail with the anchor down for hundreds of miles?”
--With assistance from Ott Tammik.
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