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Story summary
- The European Stability Mechanism may lend up to 2% of GDP for defense, according to the European Stability Mechanism's managing director Pierre Gramegna.
- The loans would help smaller euro zone states with stretched budgets facing rising defense costs amid geopolitical tensions.
- The proposal faces challenges, including approval from euro zone member states, particularly Germany.
- The Baltic states, which have boosted defense spending since Russia's invasion of Ukraine, could benefit.
