EU and the War in Ukraine: More Funding, Not More Europe

Key Chapter Title List

1. EU Fiscal Integration and the Prospects of Rearmament
2. EU Bond Issuance and Total Outstanding Bonds (2009–2026)
3. Historical Crises and the Path Dependence of EU Institutional Integration
4. European Responses and Policy Tools Triggered by the Russia-Ukraine War
5. Military Expenditure and the Formation of Modern State Fiscal Capacity
6. Defense and Military-Related Expenditures in the New EU Budget
7. The Model of Coalitions of the Willing and the Marginalization of the EU in Defense
8. Collective Action Dilemmas and Differences in Geographic Threat Perception
9. The Future EU Role: Financial Supporter and Coordinator
10. Assessment of the Future Prospects for EU Institutional Integration

Document Introduction

Since Russia's full-scale invasion of Ukraine in 2022, the European Union has faced the most direct geopolitical military threat since the end of the Cold War, coupled with a perceived weakening of U.S. commitment to NATO. However, unlike the historical pattern of responding to crises over the past decades by moving towards deeper integration, the 27 EU member states have failed to leverage this crisis to advance common defense building. Instead, each member state has adopted its own disparate response based on its national interests, geographic proximity to Russia, government debt levels, and other national conditions. This failure of collective action has not only missed an opportunity to deepen EU institutional integration but may also have profound negative implications for the EU's future fiscal and institutional capacity to pursue other common goals.

This briefing systematically reviews the historical path of crisis-driven integration in the EU, from the Maastricht Treaty and the Economic and Monetary Union paving the way for German reunification, to the European Financial Stability Facility and the European Stability Mechanism established in response to the global financial crisis and the European debt crisis, to the European Border and Coast Guard Agency created during the 2015-2016 refugee crisis, and the NextGenerationEU recovery fund totaling 650 billion euros set up to tackle the COVID-19 pandemic. However, in the face of the direct military threat posed by the Russia-Ukraine war, the EU has not continued this pattern. Although the EU has provided flexibility for member states to increase defense spending by activating the general escape clause of the Stability and Growth Pact and establishing the European Peace Facility's common loan instrument totaling 150 billion euros, and has provided Ukraine with 73 billion euros in financial assistance and 2.7 billion euros in humanitarian aid between January 2022 and October 2025, these measures have not given rise to a genuine EU-level common defense policy or substantive institutional integration.

The analysis points out that the collective action dilemma is the core obstacle. When addressing specific geographic security threats, differences in threat perception weaken the incentives for collective action. Member states bordering or near Russia bear the primary responsibility, while geographically distant member states lack sufficient motivation to support comprehensive joint efforts. Consequently, the process of European rearmament and establishing long-term military deterrence against Russia is not led by the EU as a single institution. Instead, it is driven by various coalitions of the willing, composed of some EU member states and non-EU countries, in cooperation with Ukraine's military-industrial sector. This model may lead to the marginalization of the EU in matters of continental military defense and national security.

Looking ahead, the EU's primary role will increasingly be confined to that of a financial supporter: continuing to provide financial support to Ukraine, increasing pressure on Russia through sanctions, overseeing Ukraine's EU accession process, and attempting to play a coordinating role in EU defense-related research and development. The European Commission's proposed new seven-year budget draft for 2027-2034 includes only about 18 billion euros in annual defense-related allocations (0.1% of the EU's 2024 GDP), while establishing a 100 billion euro special reserve for aiding Ukraine. This positioning indicates that any additional EU-level military defense initiatives would need to be launched outside the regular budget, facing extremely high political thresholds. Given the legal requirement for unanimous member state approval for joint debt issuance, the prospects for financing more EU-level public goods through additional common debt in the future appear slim. The report ultimately concludes that the EU may be approaching the limits of crisis-driven deepening of institutional integration and will find it difficult to replicate the integration model of the past few decades in the future.