EU members preliminarily agree to launch 150-billion-euro defense fund, source says

Editor's note: The article was updated with a confirmation from an EU official.

EU countries have agreed in principle to launch a common defense fund of 150 billion euros ($170 billion), an EU official told the Kyiv Independent on May 19.

The decision was previously reported by the Financial Times and Bloomberg.

The move comes as Europe faces an increasingly challenging security environment, with Russia continuing to wage its war against Ukraine and U.S. security commitments to its European partners growing uncertain.

The new mechanism, proposed by the European Commission in March, will allow member states to borrow money from the EU to purchase weapons and military equipment. A formal approval is expected next week, Bloomberg's source said.

Some non-EU countries will reportedly be able to participate in the program if their expenditures do not exceed 35% of the cost.

Despite agreement on the need to hike defense spending, several EU states have disagreed on whether these efforts should be coordinated with nations outside of the bloc, such as the U.K. or Turkey.

The U.K. and the EU concluded a new security pact on May 19, covering areas from maritime security to cyber threats, as London and Brussels seek to reset post-Brexit relations.

The 150-billion-euro fund was proposed as part of the European Commission's ambitious ReArm Europe program, which would also allow member states to spend an additional 650 billion euros ($730 billion) on defense by loosening fiscal rules.

Some of the funds raised under the ReArm Europe program will be allocated to military support to Ukraine, EU Defense Commissioner Andrius Kubilius said in a media interview in May.