EU Should Consider Joint Defense Budget, Says ECB's Kazaks

ECB's Martins Kazaks proposes a joint European defense budget financed by jointly-issued debt, citing efficiency gains. He also supports using frozen Russian assets to support Ukraine and believes the ECB's current monetary policy stance is appropriate, with no bias towards cuts or hikes.

European Central Bank (ECB) Governing Council member Martins Kazaks has advocated for a joint European defense budget financed by jointly-issued debt, citing efficiency gains. Speaking to Bloomberg Television on October 10, Kazaks emphasized that pooling resources on defense spending would be more efficient than individual national efforts Europe Should Consider Joint Defense Budget, ECB’s Kazaks Says^[1].

Kazaks argued that the current fragmentation in defense procurement makes the process longer and more expensive. He believes that a common European defense budget would serve as the cornerstone of European security. However, the proposal faces opposition from governments like Germany, which are reluctant to engage in more common borrowing Europe Should Consider Joint Defense Budget, ECB’s Kazaks Says^[1].

In addition to his defense spending proposal, Kazaks has urged European decision-makers to deploy frozen Russian assets to support Ukraine more quickly and to a greater extent. He suggested that using the aggressor's money is a better option than taxing European societies. European governments are discussing plans to use up to €185 billion ($217 billion) of frozen Russian assets as collateral for a loan to support Ukraine's war effort Europe Should Consider Joint Defense Budget, ECB’s Kazaks Says^[1].

Regarding the ECB's monetary policy, Kazaks stated that the current stance is "very appropriate." He does not see a need for immediate bias towards cuts or hikes, noting that there are both upside and downside risks to the inflation outlook. Kazaks stressed that the ECB's deposit rate of 2% is neutral and neither restricting nor stimulating growth Europe Should Consider Joint Defense Budget, ECB’s Kazaks Says^[1].

The article also highlights recent developments in the Ukraine-Russia conflict. On October 9, Russian strikes reportedly destroyed over half of Ukraine's gas output before winter, causing significant disruption to energy infrastructure Ukraine war latest: Russian strikes reportedly cut over half of Ukraine's gas production ahead of winter^[2]. Ukraine's gas network, which previously met the country's needs, has been repeatedly targeted by missiles and drones, threatening millions of households that depend on gas for heating.

In response to these strikes, Ukraine has appealed to its G7 partners for urgent equipment to repair damaged facilities and additional air defense systems to protect energy infrastructure. The EU's plan for frozen Russian assets is gaining momentum, with the gradual realization that Russia's war will not end soon and that Ukraine will continue to need large amounts of external funding Ukraine war latest: Russian strikes reportedly cut over half of Ukraine's gas production ahead of winter^[2].

The article concludes by noting that while the ECB's Kazaks has been identified as the policymaker sending the most reliable signals about the future of ECB rates, he remains coy about his potential candidacy for an upcoming opening on the ECB's Executive Board.