Europe's forced rearmament

Igitur qui desiderat pacem, praeparet bellum.

(If you want peace, prepare for war)

Publius Flavius Vegetius Renatus, Roman writer, 4th century AD

Since World War II Europe has relied on the security guarantees of the US, its largest ally within NATO. Nevertheless, during the Cold War Western European countries spent approximately 3 percent of their GDP on defense — even more in the 1950s and 1960s, when the threat from the Soviet Union was most feared. After the Berlin Wall fell in 1989 and the Cold War seemed definitively over, European countries drastically scaled back their military spending. In recent decades, most European member states have not even reached the NATO standard of spending 2 percent of their GDP on defense. A broad consensus emerged that no more major wars would be fought on European soil. This conviction was so firm that numerous European countries transformed their defenses into peacekeeping armies, designed to keep warring factions in other parts of the world at bay. Generally, with little success by the way.

Now, some 35 years after the Iron Curtain fell, Europe feels the need to return to Cold War spending levels. Due to the changing world order, Russia and the NATO countries are once again facing off. Even though the context is fundamentally different from the Cold War, the European NATO-allies recently agreed to increase their military capabilities, with the consequence that defense budgets must grow to 5 percent of each European allies GDP within 10 years. If all member states honor this agreement, it would mean an increase in defense spending from the current € 326 billion to € 858 billion in 2035. An annual increase of € 532 billion.

Europe does not want rearmament, but is forced into it. The Russian invasion of Ukraine on February 24, 2022, caused serious concern in European capitals – far more so than the annexation of Crimea in 2014. And while the war is certainly not progressing favorably for Russia, Russia's large-scale militarization is a major concern for European leaders. The Kremlin has transitioned to a war economy and is investing heavily in expanding its military and ramping up arms production. Russian industry currently produces more weapons in three months than all NATO countries combined produce in an entire year, partly thanks to help from China and Iran. Many analysts see this as preparation for a conflict with one or more European countries after the conflict with Ukraine ends. A scenario that becomes all the more likely as US President Trump casts doubt on his participation in an armed conflict with Russia.

The Eastern European countries that suffered most under the Russian occupation have no doubt that Putin wants to subjugate them again and that they must defend themselves against this by rearmament. Poland, for example, is spending almost 5 percent of its GDP on defense this year, the most of all NATO allies. Finland and Estonia, both victims of Russian aggression, also spend a lot on defense; more than €1,400 per capita per year. It’s unlikely though that the agreed-upon 5% target will be met by all countries. Not every country feels the Russian threat equally strongly. Spain had already indicated before the NATO summit in The Hague that it would not be able to release the necessary funds. And other European governments will also have difficulty explaining to their citizens that cuts to health care or education are necessary to deter Russia. Politicians in European democracies will also point out the risks of rearmament and thus potentially mobilize significant opposition to the plans. They will argue that more armaments, rather than deterring them, actually increases the risk of escalation. This argument is valid. The Russians are primed for an arms race with the more economically powerful NATO countries, even if those are only the European NATO countries. An arms race with the US led to the collapse of the Soviet Union in the late 1980s, and even though circumstances have changed, the West has more economic potential to sustain an arms race. This fact could prompt Russia to premature escalation or even the use of nuclear weapons.

Opponents of rearmament will also call defense spending a waste of capital and claim that it leads to economic decline. This last argument, however, is not very convincing. The defense sector often produces so-called ‘breakthrough innovations’, technologies that also have significant economic value. The return on research and development by defense companies appears to be five times higher than the return on research and development by companies outside the defense industry.

And then there's the group, quite diverse, who believe Russia is not seeking war and dismiss the war in Ukraine as a justified seizure of territory within Russia's sphere of influence. This view contradicts the principles of international law and is generally based on the mistaken assumption that the US and Germany guaranteed Russia that NATO would not extend eastward in exchange for the German reunification. If this commitment was made, it was verbal; there is not a single official document that confirms this claim. Moreover, sovereign countries are free to join any alliance they like, they do not have to consult their former ruler. Anyone who believes that Russia under Putin is not seeking an armed conflict with European countries should spend an evening watching Russian state television. The belligerent language used there is deeply disturbing. It is symbolic of the militarization of Russian society that has been ongoing for decades. The nationalistic and militaristic rhetoric, including threats of using nuclear weapons, is not an isolated incident. Meanwhile, the Kremlin is spending 40% of its state budget on the military-industrial complex, propaganda and subversive activities, expanding conscription and recruiting foreign fighters. Repression is reaching unprecedented levels, including the killing of opponents and critics of Putin’s ‘special military operation’.

Europe rearms. Forced, reluctantly, but inevitably. It took a Russian offensive on the European mainland and a series of threats from a right-wing populist American president to painfully expose Europe's geopolitical naivety and incompetence. Aside from a few unruly right-wing populists, representatives of single-issue party factions who struggle to develop a coherent vision on any issue other than migration, a growing number of European politicians are realizing that on the geopolitical battlefield ideology and morality are factually irrelevant, and that hard power matters. The realization that deterrence is necessary to keep out authoritarian leaders with excessive territorial ambitions and that military force is sometimes needed to safeguard your interests is growing. Europe simply cannot afford to give in to the whims of an autocratic regime, the corrupt criminal leaders of a country with a quarter of the EU's population and an economy the size of Spain. Now that Realpolitik is obviously gaining ground, it may even dawn on them that only a strong, united and independent Europe can play a meaningful role on the rapidly changing and increasingly multipolar world stage.

Although Europe still has to buy American weapons for quite some time to come, the European defense industry will quickly gain in importance. Manufacturers such as Rheinmetall, Airbus, Dassault, Naval Group, Leonardo, Saab, and Damen are already showing higher sales, profits, and share prices, and will continue to benefit from increased defense spending by EU member states. Nevertheless, the sector also faces significant challenges. Companies are hampered by different views among the EU member states, slow and bureaucratic decision-making, complex licensing systems, staff shortages, high labor costs, and scarcity of raw materials and high-quality chips. A major problem is the fragmentation of the defense industry in Europe. However, Readiness 2030 can ensure greater compatibility. With ReArm Europe, as the plan for European rearmament was called initially, the European Union aims to spend a maximum of € 800 billion extra on defense by 2030. A large portion of this, € 650 billion, must be financed by the member states themselves. A smaller portion, €150 billion, can be financed by member states through the European Commission by issuing EU bonds. The countries that borrow through the EU must jointly undertake their defense procurement, which benefits mutual cooperation. 

It's difficult to predict where Europe's forced rearmament will lead to. In the worst-case scenario, it leads to an escalation between Russia and one or more European countries, apart from Ukraine. But more positive scenarios are also possible, and perhaps even more likely. The chance that Russia can sustain the current intensity of the conflict in Ukraine is slim, especially if the EU increases its production and supply of high-tech weapons to Ukraine. Eventually Russia's worsening economy will force the Kremlin to negociate. A militarily stronger Europe may also result in a more self-confident Europe, an economic power that will finally assert itself geopolitically.