New EU escape clause for defense expenditures a fiscal relief for Greece

European Union member states interested in activating the newly introduced escape clause for defense expenditures must apply so to the European Commission by the end of April.

The Commission will examine the requests and issue recommendations in June, with the final decision to be made in July at the European Council, following intense negotiations.

The escape clause will be in effect for four years (2025-2028), after which the European Commission will decide if it is necessary to extend it, allowing EU member states the greatest possible fiscal flexibility to increase defense expenditures without violating the strict rules of the European Stability and Growth Pact member state budget caps.

Government officials said the move would benefit Greece, which has had to allocate a greater ratio of GDP to defense compared to other European countries because of its geopolitical location, among other issues. In 2022, defense expenditures in Greece amounted to 2.6% of GDP, more than covering NATO's goal for expenditures of at least 2% of GDP and the Euroepan average of 1.3% of GDP. 

At the same time, as the flexibility will include investments and running costs in defense, it will allow the possibility of hiring and training more soldiers, officials, and cyberdefense specialists. According to Commission officials, there is a margin of allowance so that defense expenditures that may rise can include expenditures for new salary raises for Armed Forces personnel. 

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