Denmark has secured a significant victory early in its EU presidency by pushing for the integration of defense priorities into the core of the EU’s economic policy. This move comes as the EU begins crucial negotiations on its next seven-year budget, setting the stage for defining Europe’s future political and economic direction.

The agreement, spearheaded by Denmark, allows EU countries to redirect a significant portion of the budget, specifically the EU’s structural funds, towards defense and security initiatives. These funds were originally earmarked for public investments in green transition, entrepreneurship, innovation, and social inclusion.

This redirection represents a notable shift in the EU’s approach, potentially channeling billions of euros towards addressing Europe’s security challenges. The agreement circumvents a fundamental limitation within the EU treaty, which historically viewed financing weapons and military equipment as a breach of the Union’s founding values as a peace project.

The European Commission’s budget proposal suggests an increase from the current 1.2 trillion euros to 2 trillion euros for the period between 2028 and 2034. While substantial in monetary terms, this increase corresponds to a rise from 1.13 percent to 1.15 percent of the EU countries’ total gross income. Many member states often do not fully utilize their allocated structural funds, with an average utilization rate of 90 percent in the last seven-year period. This agreement provides an avenue for redirecting these unused funds towards defense, security, and competitiveness.

Countries like Italy and Spain, major recipients of structural funds, could see pressure to increase their defense spending. The agreement has faced some opposition, particularly from countries like Spain, where the perception of the threat from Russia is less pronounced.