The scenario in which a returning President Donald Trump exits NATO or, more likely, undermines confidence in Article 5 is all too familiar across the alliance. So, too, are the policies Europe needs to keep itself secure and free: stronger militaries, European nuclear deterrence, more cooperation, and far higher readiness.
The problem is not policy but politics: what if what’s needed is impossible? Most of Europe has a defense implementation problem. Domestic politics doesn’t square with strategic needs. The case of Germany is instructive, but the same drama unfolds almost everywhere.
The trouble is money. Two things have happened in past decades.
First, Germany, like most European countries, has built distinct federal spending patterns since joining NATO. The big chunks of the budget are social spending and defense. In Europe, the ratio between the two is roughly between 3:1 and 4:1.
This reflects European choices after World War II that were supported by the US.
During the Cold War, Washington needed resilient European societies: wealthy, pacified, and not susceptible to Communist temptation. Building sturdy economies out of Europe’s war-torn societies was the order of the day.
Washington carried the defense load. This meant Europeans didn’t have to arm themselves again beyond manageable dimensions, and it made the US the hegemon in Western Europe.
This transatlantic bargain worked magnificently but at the price of hard-wiring allocations into European budgets. It created a culture of US-subsidized security and defense where welfare spending would forever be three to four times greater than defense spending.
This is now a problem. What was wise after 1945 is now a structural security risk as Europe faces war on its borders. But unlearning this political culture doesn’t come easily.
The second development came after the Cold War when Europeans “reaped the peace dividend.”
During the Cold War, Europe’s contribution to NATO grew. At its height, Germany spent 4.5% of GDP on defense – a figure unimaginable today. And that was while the US was carrying the bulk of the burden, including costly, extended nuclear deterrence.
After the Cold War, defense spending was slashed, and nowhere was this done more wholeheartedly than in Germany.
In Bonn and then Berlin, money was diverted to finance re-unification — rebuilding the east shattered by 45 years of Communism. That project cost more than $2 trillion.
This second development lasted for 25 years before being reversed around 2014 after Russia’s annexation of Crimea.
Today, as security worsens, Trump’s reelection means Europe’s protector is turning into a fierce critic, especially on the costs of security, and is anyway increasingly busying itself with Asia. Meanwhile, Europe haggles over spending models from a lost age. These aren’t merely budgetary issues. They represent fiercely held world views, political cultures, and entitlements.
Facing Russian aggression with a less committed US, Europeans must reverse spending patterns that have made Europe a mere “herbivore,” as President Macron described it.
But spending more on European defense means domestic political battles that will create tensions and big losers.
Take Germany, where fights over budgetary allocations triggered the collapse of Chancellor Olaf Scholz’s government in November.
While a Körber Foundation poll found 65% of Germans back raising defense spending to at least 3-3.5% of GDP, an equally important finding is that 56% oppose cutting social, environmental, and cultural budgets to do so.
The German armed forces are meanwhile in an abysmal state even though the Bundeswehr will have to be the backbone of European conventional land forces relying less on the US.
Defense spending went up in Germany after Crimea. It was boosted after Russia’s full invasion of Ukraine in 2022, when Scholz declared a Zeitenwende (new epoch), and the government created a €100bn fund for military procurement.
Facing war in Europe, speed was crucial, and so the tough fiscal debates were avoided through debt financing. The Bundeswehr got more money, but nobody else got less. Scholz postponed the hard part of the redistribution conflict.
This method of boosting defense spending isn’t sustainable. And this is where the German – and European – strategic tragedy sets in.
In early 2024, Scholz’s government made a timid attempt to cut subsidies for farmers.
The farmers would not have it. Violent protests were staged, with tractors blocking highways and city centers. The government swiftly relented and canceled most of the planned cuts.
If this is what to expect should re-distribution truly start, then Germany and Europe are in for a very rough ride.
With the German economy set to contract for a second year in 2024, new taxes hugely unpopular, spending cuts rejected, and massive defense spending increases unavoidable, something’s got to give.
So far, the answer is new debt. The 2022 special military fund was written into the constitution to exempt it from the country’s debt brake rules. The debt brake led to the collapse of Scholz’s coalition after two of the three parties, his Social Democrats and the Greens, sought to circumvent it to allow new spending without cuts to social spending. But the liberal Free Democrats, their popularity at rock-bottom, rejected more debt and tax increases. Ultimately, this circle could not be squared, leading to the demise of Scholz’s government after just three years.
The opposition Christian Democratic bloc, whose leader Friedrich Merz is likely to be the next chancellor after the February 23 elections, is wavering on the debt issue.
One way or another, the debt brake will ultimately have to be amended. Germany’s low debt-to-GDP ratio of 64% allows for borrowing without dangerous levels of indebtedness.
And yet, new borrowing isn’t the solution. Interest rates are high, and debt servicing is the fourth biggest item in the federal budget. Even Germany won’t be able to do the heavy strategic lifting based on this basis.
Where will the money come from?
Nobody knows. France’s debt ratios of around 100% of GDP mean it is “broke,” as one French official admits. The UK’s ratio is similar. Italy’s debt-to-GDP ratio is nearing 140%.
As the continent’s geopolitical situation worsens, the means to militarily harden Europe dry up. (And we haven’t even started discussing nuclear issues.) This is the tragedy of strategic impossibility in Europe.
If Europeans want to survive, the only answer is massive re-distribution within budgets, away from butter and into guns.
This will meet significant opposition. It will trigger social conflict, political upheaval, and violence. It will worsen Europe’s standard of living and be impossible to execute without public recognition of imminent threats to a free Europe.
This means the situation must get dramatically worse before painful reform becomes domestically acceptable. And by then, it may be too late.
The legacy of spending patterns since the 1950s and decades of strategic frivolity is now haunting Europe.
Europeans must start a brutal debate now to speedily adjust their budgets. They need to urgently use the remaining time — the window between Russia regaining conventional military strength and Trump’s America getting fully absorbed in Asia or simply telling Europe, “You’re on your own” — to prepare for horrendously difficult challenges ahead.
There isn’t much time left. Europe must act now.
Leon Mangasarian worked as a news agency reporter and editor in Germany from 1989 with Bloomberg News, Deutsche-Presse Agentur, and United Press International. He has a PhD in International Relations from the London School of Economics and is now a freelance writer in Brandenburg, eastern Germany.
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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