EU lives on debt

If the member states do not raise the money, the head of the European Commission is prepared to put the Union into debt again - in the name of solidarity, but on the backs of European taxpayers, who will be the ones forced to repay the principal and interest.

• The European Commission will have to repay by 2058 loans worth 421 billion euros and interest worth 222 billion euros, taken during the pandemic for the Recovery and Resilience Mechanism and for NextGeneration EU • To this amount, another 150 billion euros in loans under the SAFE program plus the related interest are added

Ursula von der Leyen is pushing Europe into a new debt spiral, invoking financial emergencies upon financial emergencies, which, at the end of next year, would increase the European Union's debt to the international financial and banking system to over a trillion euros, i.e. over 55% of the estimated European multiannual budget for the period 2028-2034.

Under these conditions, the EU budget is barely breathing under the weight of the loans already contracted. The amounts being circulated are staggering: 421 billion euros for the Recovery and Resilience Mechanism and for NextGeneration EU (to which will be added 222 billion euros of interest paid until 2058), up to an additional 150 billion euros for the SAFE program, to which is added support of almost 135 billion euros for Ukraine. If the member states do not raise the money, the head of the European Commission is ready to put the Union into debt again - in the name of solidarity, but on the backs of European taxpayers, who will be the ones forced to repay the principal and interest. It is a dangerous move, at a time when the Union is already paying the price for historic financial decisions, motivated by the pandemic and successive emergencies. Von der Leyen is asking European leaders to accelerate financing for Ukraine by the end of the first quarter of 2026, although the Commission's own estimates show that the military needs left uncovered alone amount to over 51 billion euros. In a recent letter, she admitted in black and white that, according to IMF calculations, the total need for the period 2026-2027 could explode to over 135 billion, figures that would shake even the most stable economies in the Union. And yet, Brussels insists, instead of putting its own debts in order.

Europe was not built on common debt, on the contrary: the central principle was budgetary responsibility. Everything changed with the pandemic, when for the first time in history the EU borrowed massively to finance all programs with 800 billion euros. To these are added other lending programs, such as the EU SURF service, with maturities until 2038.

The Union went from stability to dependence on financing on global markets, and now, with disturbing ease, there is talk of repeating the exercise. And all this while tens of billions remain unspent, stuck in cumbersome bureaucratic mechanisms, within the same programs that were supposed to revitalize the economy.

Germany and the Netherlands, but also other powerful European states, warn that the new approach risks transforming the Union into a permanent debt hub, in which prudent countries would guarantee for the excesses of the most vulnerable or less disciplined. It is a fear legitimized by the pandemic precedent: once Pandora's box is opened, the temptation to resort to debt becomes public policy. And if the loan is granted not for domestic investments with economic returns, but to a third country at war and shaken by corruption scandals - as is the case with Ukraine, then the risk becomes double: financial and political.

Brussels argues with strategic solidarity, but financial experts quoted by the European media see a growing gap between EU rhetoric and economic reality: inflation, industrial stagnation, decline in competitiveness, huge pressure on public budgets. How can a Union that barely supports its own social systems assume the repayment of a super-loan contracted on behalf of others? Who decides? Who is responsible? And above all: who pays?

At stake is not just an accounting decision, but the strategic direction of Europe for the coming decades.

• Central banks control over 25% of EU funding

According to a European Commission report published at the end of last year, the situation of creditors for loans contracted at European level was as follows: 25.1% of loans were granted to the Community Executive by central banks (e.g. the European Central Bank, the European Investment Bank, Deutsche Bank, etc.) or other official institutions; 22.5% of loans came from fund managers; 21.9% - from bank treasuries; 20.5% from insurance funds and pension funds; 7.3% from commercial banks; 2.6% from hedge funds.

In the cited report, the European Commission does not specify the names of the creditors, outside of the central banks, but in the European media and on the European websites that analyze capital market movements, we note that among the large investors are the companies Ares, Blackstone Credit, Goldman Sachs Private Credit, Claret Capital Partners, Columbia Lake Partners, HSBC Innovation Banking, BNP Paribas.

We reiterate that all the companies above do not appear in the report prepared by the European Commission on the financial institutions in the capital market from which loans were borrowed, so we do not have an official confirmation of the companies that appear in the specialized European media.

Regarding the value of investor lending depending on the country of origin, according to data published by the European Commission, most loans at the level of the Community Executive come from Germany and the Netherlands, without specifying the amounts borrowed.