The Government lends Airbus at zero interest to increase military spending

The Government has chosen to grant loans at zero interest, non-revisable and without the requirement of guarantees to Airbus with the aim of giving a boost to Defense spending, a commitment sealed by Pedro Sánchez before his NATO partners and the subject of powerful discussion in the within the coalition.

Thomas Osborne
Thomas Osborne
06 December 2022 Tuesday 21:36
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The Government lends Airbus at zero interest to increase military spending

The Government has chosen to grant loans at zero interest, non-revisable and without the requirement of guarantees to Airbus with the aim of giving a boost to Defense spending, a commitment sealed by Pedro Sánchez before his NATO partners and the subject of powerful discussion in the within the coalition. It is a complex financing system that José María Aznar already executed with controversy during his tenure.

The Council of Ministers activated on Monday, through two royal decrees, two credits for Airbus at 0% which, according to business sources, will be the first of more special items. There is expectation in the military industry. Specifically, the Government will lend the arms company 2,137 million, divided between 1,429 million for the Euromale RPAS drone and 707 million for the Tiger MK III helicopters. The accounting mechanism chosen by the Government to increase military spending comes from the Ministry of Industry, which acts as a financier of the arms programs, although under the framework of being the area in charge of "scientific and technical research."

The Official State Gazette (BOE) published yesterday indicates that they are loans with repayment "insured" by the "legal business" that Airbus and Defense will sign for their repayment. That is to say, the credits are guaranteed, explains the Government, by the contracts that the department that Margarita Robles now directs guarantees to sign with the company in the coming years. Specifically, Defense has the commitment to buy 18 Tiger helicopters and four Euromale RPAS drones. With them, Airbus will have enough workload in its national factories to also maintain jobs.

The firm with headquarters in Blagnac will have to return the 2,137 million to the Public Treasury, but in affordable terms. This is stipulated in the BOE itself. The amortization schedule covers between 2031 and 2037.

The Government channels through this mechanism the increase in military spending for the coming years, which is completed with the Special Weapons Plans (PAE). These are commitments that will go beyond the current legislature and that will have to assume not only the next executive that comes out of the polls, but also the following ones.

It is not the first time that the Government resorts to this type of accounting decisions to increase military spending. It happened during the first administration of the PP, when Industry advanced large amounts to military companies at zero interest, money later returned through Defense purchases. This decision caused the military companies to hoard a significant debt, of up to 35,000 million, with the State, which has been amortized over the last few years. It still remains. In a parliamentary response in 2020, the current government recognized that said debt was still 12,710 million, an amount that must be returned by different companies by 2034