The EU has seen a 12% decrease in military defense spending over the last decade.
The plan also comes as a reaction to USA President-Elect Donald Trump's vow to reduce USA's commitments to NATO if some member states are not paying their fair share.
Brexit is also a factor in the EU's plan, as the UK has consistently rejected France's and Germany's call for improved security.
The EU plans to increase research spending from €25m set for 2017 to €90m by 2020. It would also use €5 billion per year of member states' money to buy drones and helicopters.
"To guarantee our collective security, we must invest in the common development of technologies and equipment of strategic importance - from land, air, sea and space capabilities to cyber security," European Commission President Jean-Claude Juncker said. "If Europe does not take care of its own security, nobody else will do it for us."
The European Council will discuss the plan later this month.
proposed - suggested
funding - supplying with money
fair share - equal contribution
strategic - here, critical