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Dublin MEP Barry Andrews said that the bonds could instead be used to strengthen the EU single market. Alamy Stock Photo
Eurobonds

Barry Andrews says he supports joint borrowing, despite McGrath ruling out defence bonds

Defence bonds will see member states buy-in to financing EU defensive infrastructure and later sharing a mutual debt.

FIANNA FÁIL MEP Barry Andrews has matched calls by finance minister Michael McGrath that Ireland should not support so-called defence bonds at EU level – but said he is in favour of joint borrowing initiatives for other projects.

Defence bonds are a French-led idea and were pitched to European leaders last month. Member states would buy-in to financing EU defensive infrastructure and later share a mutual debt.

Sources in Brussels have expressed concern over how vulnerable the EU is in terms of defending itself, in the wake of the Russian invasion of Ukraine and the heightening tensions globally. 

Joint-debt schemes were introduced to the EU as a way to avoid financial crises during and in the aftermath of the covid-19 pandemic. Defence bonds have yet to be formally proposed to European leaders.

Speaking at a live event by The Journal, the Irish European Parliament Liaison Office and DCU’s Brexit Institute in Dublin this afternoon, Andrews said he was in favour of the schemes – but said the initiatives should not be used to finance defence spending.

“To have joint borrowing and mutual debt for the first time after the covid pandemic was transformative to be honest. It broke new ground that was never anticipated and now, the question is, ‘Can we do this again?’

“And I really hope that we do do it again. But I’m very reluctant to do it on defense,” Andrews said.

Last week, finance minister Michael McGrath told the Business Post that he is not in favour of supporting the bonds, citing concerns it would create risks for financial stability in the EU.

McGrath instead said Ireland should focus on using up existing EU money.

Andrews today agreed that the existing funds should be used before Government move to jump on board with mutual debt schemes.

However, he said that the bonds could instead be used to strengthen the EU single market and allow member states to invest in the green and digital transitions (plans to strengthen the single market as ‘future-proofing’ legislation such as the Green Deal and digitisation take effect).

In Brussels yesterday, Taoiseach Simon Harris made similar calls: “I think we need to be very careful in terms of how we leverage the European Union.

“There’s already very significant [financial] requirements, particularly around the green transition and the digital transition, and I think we need to be cognisant of that,” he added.

‘I don’t think we can be called out on our support for Ukraine’

The bonds have also been framed as a method for States to increase their support for Ukraine, however Irish representatives believe more can be done through diplomacy to avoid a large investment of arms by the bloc.

Andrews said today that Ireland has already supported Ukraine financially, through various rounds of macro financial assistance, as well as introducing and applying temporary protection measures.

He added that Ireland has “expertise and credibility in certain areas” and highlighted that the Defence Forces were also involved in a EU military mission to demine Ukraine and teach Ukrainian soldiers how to defuse mines themselves. 

Harris last night also defended Ireland’s record on the invasion Ukraine and claimed that the State and the EU are steadfast in their support for the war-torn country.

irelands-prime-minister-simon-harris-speaks-with-the-media-as-he-arrives-for-an-eu-summit-in-brussels-thursday-april-18-2024-european-union-leaders-vowed-on-wednesday-to-ramp-up-sanctions-against Harris speaking to reporters in Brussels earlier today. Alamy Alamy

He added that there is an important conversation to have among EU leaders around the repairing immobilised Russian assets for Ukrainian fighters, as well as strengthening the “leadership role Europe needs to play”.

Support to invest internally in EU market

There was some shared hesitancy to jump into defence bonds from fellow-neutral states Malta and Austria. But a report into how the EU single market can improve, written by former Italian Prime Minister Enrico Letta and published yesterday, has supported the idea of investing in defence.

“The Single Market should bolster European defence capabilities, envisioned as a common market guaranteeing all members access to the military capacity needed for the defence of their citizens and the promotion of global peace,” Letta wrote in his report.

author-of-the-high-level-report-on-the-future-of-the-single-market-enrico-letta-address-a-media-conference-at-an-eu-summit-in-brussels-thursday-april-18-2024-ap-photoharry-nakos Former Italian prime minister Enrico Letta speaking to the European Council summit in Brussels today after his single market report. Alamy Stock Photo Alamy Stock Photo

Letta’s report also said significant internal investment needed to be carried about by the EU so that its Single Market can keep up with the United States and China. Andrews suggested that the eurobonds scheme could later and also be used to deepen the market.

Speaking to reporters this morning, Harris reiterated his calls for Government to “appropriately leverage” before choosing to opt-in to the bonds idea.

He added: “I understand there’s a number of member states including some larger member states that may have concerned because it’s not just an issue around defense or defense policy.”

Today’s live event by The Journal was one of three events as part of a series which aims to inform readers of the topics which will impact Europe and the EU within the next five years. The event was in partnership with the Irish European Parliament Liaison Office and Dublin City University’s Brexit Institute.

This work is co-funded by Journal Media and a grant programme from the European Parliament. Any opinions or conclusions expressed in this work are the author’s own. The European Parliament has no involvement in nor responsibility for the editorial content published by the project. For more information, see here

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