Kallas brushes off Hegseth criticism as EU adopts €150bn defence package

European Union foreign policy chief Kaja Kallas dismissed US criticism of European defence spending as "tough love" on Saturday, telling reporters at the Shangri-La Dialogue in Singapore that Washington's pressure is preferable to American disengagement. Her remarks came days after EU member states formally adopted a €150 billion military spending package, the largest coordinated defence investment in the union's history.

The Singapore exchange

The exchange between Kallas and US Defense Secretary Pete Hegseth played out at Asia's premier security summit, where Hegseth had told delegates that the United States is "pushing our allies in Europe to own more of their own security, to invest in their defense." He credited President Donald Trump with forcing European nations to increase military outlays, adding: "Thanks to President Trump, they are stepping up." Hegseth singled out Poland and the three Baltic states, Estonia, Latvia and Lithuania, as "model allies" for meeting or exceeding the NATO target of spending 2% of gross domestic product on defence.

Kallas, a former Estonian prime minister whose country has consistently met the 2% threshold, responded with characteristic bluntness. "You heard his speech. He was actually quite positive about Europe, so there's definitely some love there," she said. "It's love nonetheless, so it's better than no love." The formulation captures a widespread European calculation: American hectoring is irritating but American withdrawal would be existential.

The €150 billion package

The backdrop to Kallas's sanguinity is concrete. On Wednesday, the Council of the European Union formally adopted the European Defence Industry Programme (EDIP), a €150 billion financing tool designed to incentivise joint procurement and cross-border defence industrial cooperation. The programme, which runs from 2025 to 2027, provides loans on favourable terms for collaborative projects involving at least three member states or two member states plus a third country with a defence agreement with the EU.

The package represents a significant shift from the European Defence Fund, which operated with a budget of roughly €8 billion over seven years. EDIP's scale reflects a recognition that fragmented national procurement, Europe currently operates roughly 178 distinct weapons systems compared to roughly 30 for the United States, imposes enormous inefficiency costs. The European Commission estimates that full interoperability and joint procurement could save €25 billion to €50 billion annually.

Kubilius warns of "angry divorce"

If Kallas struck a diplomatic tone, her fellow commissioner Andrius Kubilius was considerably starker. Speaking in Brussels on Wednesday, the Lithuanian defence commissioner warned that Europe must avoid an "angry divorce" with Washington, adding that it was "almost unavoidable that we shall need to stand on our own two feet in defence matters in Europe, because Americans will more and more withdraw." Kubilius, a former prime minister of Lithuania, has been among the most consistent voices arguing that European strategic autonomy is not a choice but a necessity imposed by US domestic politics.

The divergence between Kallas's "tough love" framing and Kubilius's divorce metaphor reflects a genuine strategic debate within the EU's foreign policy apparatus. Kallas, as high representative, must maintain the transatlantic relationship day to day; Kubilius, as defence commissioner, is tasked with building the industrial and military capacity that would make European autonomy credible. Both perspectives are grounded in the same premise: the United States is pivoting toward the Indo-Pacific, and European security can no longer rely on an unconditional American guarantee.

Europe's uneven burden-sharing

Hegseth's praise for Poland and the Baltic states underscores a persistent source of friction within Europe. According to NATO's 2024 estimates, only 11 of 31 allies that year met the 2% GDP benchmark: Poland (4.1%), Estonia (3.4%), the United States (3.4%), Latvia (3.1%), Greece (3.1%), Lithuania (2.9%), Finland (2.4%), Romania (2.3%), the United Kingdom (2.3%), Hungary (2.1%) and Slovakia (2.0%). Major economies including Germany (2.0% after a recent increase), France (2.1%), Italy (1.5%) and Spain (1.3%) have historically lagged, though several have announced multi-year plans to close the gap.

Kallas acknowledged the disparity directly. "Some of us have realised a long time ago that we need to invest in defence," she said, a pointed reference to the frontline states that have lived with the Russian threat as an immediate reality rather than a strategic abstraction. The Baltic states and Poland have consistently argued that their higher spending reflects geography, not virtue, and that Western European countries have benefited from their forward positioning without proportional contribution.

The peace project rearmed

Kallas framed the EU's defence turn as a reimagining of its founding purpose. "The European Union has shifted gear and reimagined our own paradigm as a peace project backed up with hard defence," she said. The formulation is deliberate. For decades, the EU defined itself as a civilian power, a peace project built on trade, law and soft power. The Russian invasion of Ukraine in February 2022 shattered that self-conception. The subsequent Strategic Compass, adopted in March 2022, committed the union to developing rapid deployment capacity, stronger defence industry and deeper cooperation with NATO.

The EDIP is the most tangible expression of that shift to date. It is complemented by the European Defence Fund (research and development), the Act in Support of Ammunition Production (ASAP) and a proposed European Defence Investment Programme that would create a permanent budget line for defence capability development. Together, these instruments aim to move Europe from a collection of national defence markets to a single defence industrial base, a goal that has eluded European policymakers since the 1990s.

Indo-Pacific linkage

Kallas used the Singapore setting to argue that European and Indo-Pacific security are inseparable. "It is a good thing we are doing more, but what I want to stress is that the security of Europe and the security of the Pacific is very much interlinked," she said, citing Chinese supplies of dual-use goods to Russia and the deployment of North Korean soldiers to fight alongside Russian forces in Ukraine. The argument serves a dual purpose: it justifies European engagement in Asia to Asian partners, and it frames European defence spending as a contribution to a global coalition rather than a regional insurance policy.

The linkage is not merely rhetorical. The EU's 2023 Indo-Pacific strategy explicitly connects European security to the maintenance of a rules-based order in Asia. Several member states, France, Germany, the Netherlands, Italy, have deployed naval assets to the region in recent years. The European Defence Agency has opened dialogue with Japanese and South Korean defence agencies on industrial cooperation. But the practical depth of this engagement remains limited compared to the transatlantic relationship.

What the numbers conceal

The €150 billion figure, while headline-grabbing, requires context. It is a lending facility, not a grant programme; member states must repay the loans. The actual fiscal impact depends on uptake, which in turn depends on whether national governments are willing to cede procurement sovereignty to joint projects. History suggests reluctance: the European Defence Fund's collaborative projects have often struggled to attract the minimum three-country participation threshold.

Moreover, the package covers only 2025-2027. The European Commission has estimated that closing Europe's capability gaps, in air defence, long-range strike, strategic enablers, cyber and space, would require additional annual investment of €100 billion to €150 billion for a decade. The EDIP is a down payment, not the mortgage.