Title page 1

Contents 1

1. Introduction 2

2. EU fiscal integration and prospects for a new rearmament component 3

3. Drivers of rising EU defence expenditures and military aid for Ukraine 12

4. The coalition(s) of the willing and usurped European policy space 18

5. Concluding remarks: the EU's indirect role in shaping Europe's defence goes through Ukraine 22

References 25

Figures 5

Figure 1. EU bond issuance 2005-2026, € billions 5

Figure 2. Member state interest in SAFE loans 2025, € billions 9

Figure 3. Requests for SAFE loans, distance to Moscow and domestic bond spreads over EU bonds 10

Figure 4. Change in defence spending levels of EU NATO members, 2021-2024, and 2021 general government gross debt levels, % change and % of GDP 13

Figure 5. Bilateral military aid to Ukraine allocated between January 2022 and August 2025, % of GDP 14

Figure 6. Bilateral military aid to Ukraine, January 2022 to August 2025, and distance to Moscow 15

Figure 7. Bilateral military aid to Ukraine, January 2022 to August 2025, and general government gross debt, end-2021 16

Figure 8. Actual and predicted (non-negative) bilateral military aid to Ukraine from EU countries, January 2022 to August 2025, % of GDP 17

Boxes 8

Box 1. The EU Security Action for Europe (SAFE) loan initiative 8