Belgian Defence Minister Theo Francken's plans to establish a new Defence Fund will not consist solely of one-time deposits, with the establishment of the fund needing to happen soon.
Francken made this announcement on Wednesday in Parliament, stating that the fund should help build an "ecosystem" around defence. It was Francken’s first appearance as minister before the Defence Commission.
He received a gift from PS member Christophe Lacroix: a biography of Winston Churchill, a clear nod to the turbulent geopolitical times we live in. Lacroix also paid Francken a compliment, revealing that Francken had congratulated him when he became a Walloon minister in 2014.
The new minister faced numerous questions about the Defence Fund, which aims to raise the defence budget to 2% of GDP by 2029 in line with NATO commitments, and to 2.5% by 2034. The fund will be a subsidiary of the federal participation company SFPIM and will include a series of holdings retained by our country.
Some strategic holdings will be maintained to yield dividends, while less strategic shares will be sold. Francken provided no further details due to the involvement of listed companies. The first revenues are expected by the end of this year, so the establishment will proceed as quickly as possible.
Broadly, 90% of the funds will go towards strategic purchases like additional F-35s and ammunition. The remaining 10% will be invested in the defence industry. Minister Francken noted that an ecosystem already exists in Wallonia but not in Flanders.
In addition to the fund, €1 billion will be structurally added to defence spending. Part of this addresses the underfunding of the STAR plan, while another part represents an additional injection. In 2025, this will total €770 million, rising to €996 million by 2029.
The defence budget must grow roughly from 8 to 12 billion euros over the coming years. With €1 billion added structurally, €3 billion must come via the Defence Fund. “It is true that I would have preferred €4 billion, but that was not realistic,” Francken said. "But am I happy with this? Honestly, yes!"
The question, of course, is whether this will be sufficient. International pressure to spend a higher percentage of GDP on defence is well known. The minister did not want to elaborate further but acknowledged the geostrategic situation: "Nobody is blind to it."
Several MPs also warned the minister to consider the rise in Belgium’s GDP, as this will require more money to reach the 2% target.
