The proposal from the European Commission comes at the demand of EU leaders who have focused on security and defence to provide a new sense of purpose after the Brexit vote last year shook Europe.

The incentive grew stronger after the election of US President Donald Trump, who berated his European partners on military spending at a raucous NATO summit in Brussels last month.

This led German Chancellor Angela Merkel to urge Europeans "to take our destiny in our hands" and warn that the United States was no longer a reliable partner.

Adding to the sense of chaos, is a more assertive Russia and a series of deadly attacks claimed by Islamic State group in France, Belgium and Britain.

The new fund will be unveiled later on Wednesday by EU foreign policy chief Federica Mogherini as part of a broader effort by Commission President Jean-Claude Juncker to work on an ambitious EU defence strategy.

"This is an exceptional moment, taboos are being broken," a top EU diplomat told AFP on condition of anonymity.

The commission will argue that the EU's soon to be 27 member states (minus Britain) can no longer afford to individually pay the high cost of maintaining a military of a global reach.