There was much backslapping and self-congratulation as NATO’s summit in The Hague on June 24-25 readied a rise in defense spending to 5% of GDP. It is a big change, it’s to be welcomed and represents a personal triumph for the alliance Secretary General Mark Rutte.
But the idea that this is anything close to enough, given the threats Europe now faces from the rapidly rearming and menacing Russian dictatorship, is close to laughable.
The last time Europe faced a threat this serious, even the fiscally restrained governments of the time pulled out all the stops. In the 1930s, the Czechoslovak government pushed its spending to the absolute maximum it could manage, using every imaginable tool, and even financial tricks, to finance arm productions.
It created special bonds, for example, and then pressured private banks to snap them up. By 1938, some 21% of government spending went to defense. Was it sustainable, or was it even enough? We cannot know, because the country’s Western allies sold it out at Munich.
Britain, which acted with such vigor to surrender the Czechoslovak democracy, did in fact understand the threat. Its defense spending rose to 6.9% of GDP in 1938 from 2.2% in 1933. It was enough, but only just. The UK barely avoided invasion.
The new NATO commitment is hedged with conditions. Around 1.5% of the pledge is to non-traditional defense items like infrastructure and cyber defenses. And the 3.5% core promise will only be reached in 2035. It would be nice to imagine that Putin and Europe’s other enemies will work to our schedule, but the threat is likely to arrive long before that date.
This is no time for hesitation. Europe has to prioritize a big rise in defense spending before it is too late.
The summit at The Hague will be mostly prenegotiated, so that it goes as smoothly as possible. It will also be as short as possible, mainly to avoid potential theatrical disagreements — the most recent experience with Donald Trump at the G-7 summit in Canada shows he is perfectly capable of making this shortest NATO summit in history even shorter. But that just adds to the argument that Europe’s defense priorities are indeed extremely urgent.
Because the security situation in Europe and especially on its Eastern flank is dramatically worsening. Putin has no intention to agree peace or a ceasefire, and his goal is clear — to return to the pre-1997 Europe before the first round of NATO enlargement.
Secondly, it’s clear that Donald Trump does not see Putin and Russia as a threat. During the G-7 summit, he repeatedly said that Russia should be accepted back into the grouping, to recreate the G-8, and frequently spends hours talking to Putin on the phone.
NATO is responsible for European defense, but without the EU, any major changes are impossible. Look at the web pages of EU institutions like the European Commission, and there are signs of some progress. Defense is becoming more important, but certainly is not the main priority. There are many other programs: a sustainable economy, industrial policy, a green deal, an industrial decarbonization accelerator act, a European climate act, and so on.
For me, the word priority is singular. It means one important consideration. If there are dozens of priorities, there is, in fact, no real priority at all.
Defense spending and investments have to become the priority on both a national and European level.
It is becoming clear that we have to use every tool in the arsenal. Governments will have to cut expenses and investments elsewhere, increase taxation, but also increase national debt. The same must be copied on an EU level.
The bloc must also transfer investment and spending priorities to defense, and increase collective borrowing. If it was possible to borrow money collectively for Covid pandemic, it must also be possible for defense. It is certainly a positive step that defense spending will be excluded for the criteria of the stability and growth pact (the Maastricht criteria) until 2029, but it is not enough.
For those fearing indebtedness, we should emphasize that it is better to be indebted than dead, and it is better to be indebted and to exist, than to be unindebted but conquered. Historically, debt issues are always somehow solved after a war. Through a debt conference, through higher taxation or whatever. I am not calling here for a war, but war prevention. After the crisis is over, there will come a time to solve the matter.
There will, unfortunately, be pressure to ignore this coming crisis. Politicians will have to explain new priorities and sacrifices (increased taxes, cutting somewhere else, borrowing more) and somehow sell them to voters. Spain has provided an example of this by winning an opt-out from the 5% commitment, in the apparent belief that Russia does not threaten the Iberian Peninsula.
The way to do it is to say that arms production will bring jobs and will include science, research, and development. Within national states.
There are problems with this, of course. Europe needs to cut duplicities and produce far fewer types of tanks, fighter jets, and other weapon systems to increase efficiency. Efficiency dictates more pan-European cooperation, while national political interests dictate more local production.
It can be overcome, but it needs smart leaders and smart policies. Take the example of the German Boxer armored vehicle family, which is jointly produced for the UK by BAE and Rheinmetall at a British factory. There are many similar systems that could benefit from joint ventures.
There is a subtle difference between professional and political talk. From the point of view of an economist and accountant, defense spending is spending. It is expenditure, not investment. But there will have to be some political explanation, which needs to explain that defense spending is an investment in our defense and security.
This is the same problem as that old political favorite, “investment in people”. According to accountants, people are always costs, so investment in people is pure nonsense, however beautiful it sounds. But that’s a peacetime mindset, and it doesn’t work now. The Irish playwright Oscar Wilde might have described an accountant in the same way he described a cynic — as someone who knows the price of everything and the value of nothing.
Another paradox is that if defense spending increases dramatically, countries should be motivated to buy the best and most efficient equipment and weapon systems. But these systems are often American. Buying more American means postponing the goal of European defense self-sufficiency and increasing dependency on a mercurial US. The issue may also become the subject of trade disputes — if Europe is to offer something about trade imbalances, it might try to offer to buy more American guns and weapons. It is not going to be easy to coordinate all of this.
But the key thing to remember is that defense is not only about production and its financing. It’s about public awareness and so-called national morale.
European governments will have to change the recruitment and motivation of people to serve or to be trained for active reserve forces. Limited professional armies are for peaceful times, not for an era of threats, crises, and emergencies, and — say it under your breath — war.
Jan Macháček is a visiting fellow of Globsec, president of Strategeo Institute, and a member of the board of foreign policy advisors to the Czech President Petr Pavel. He is a former dissident, musician and university lecturer. A heating stoker during communism, he cofounded the weekly publication Respekt after the 1989 revolution.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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