Europe is exploring options to restore its military power in light of rising Russian rhetoric.

According to the EU’s top diplomat, Kaja Kallas, discussions have intensified on how to boost defense spending, with joint financing increasingly becoming part of the conversation. The bloc may also look into redirecting unused funds from the COVID recovery package.

“I think this is short-term financing that will enable us to act very quickly. However, regular bonds were also considered. This represents medium- and long-term financing that we need to evaluate,” Kallas remarked.

Brussels aims to redirect €93B of unused pandemic recovery funds to bolster its defensive capabilities. The EU’s overall defense financing requirements are estimated at €500B for the next decade. One possible way to meet those needs includes utilizing regional development funds and “joint European financing.”

The establishment of an intergovernmental financial mechanism, which would involve the UK and Norway, is also under discussion. Additionally, the EU is contemplating reallocating funds from the Recovery and Resilience Fund (RRF), which comprises €800B in grants and loans.