Europe defence requires more than a $75 bn boost

Si vis pacem.… Target reached. Europeans are about to meet a defence spending target first envisioned 18 years ago. This year, members of the North Atlantic Treaty Organization other than the United States will spend some $380 billion, or 2% of their combined GDP, on military expenses, the alliance’s Secretary General Jens Stoltenberg said on Wednesday. That will not make up for 30 years of shrinking defence budgets. The war in Ukraine, technological advances, and fears that the U.S. may be wavering in its commitment to European defence mean that the 2% defence spending target may just be a floor.

The countries closest to Russia didn’t wait for President Vladimir Putin’s invasion of Ukraine in 2022 to hike their military spending. Poland’s defence budget already surpasses 4% of the country’s GDP. The three Baltic states spend close to 3%.

Among the laggards, a group of rich countries – Germany, Italy, Spain, the Netherlands and Belgium – failed over the years to beef up their defence. They spent less than 1.5% of their collective GDP last year, NATO data show. For these five, meeting the 2% target would require spending 57 billion euros more this year than in 2023, according to Breakingviews calculations. That would be the bulk of an overall effort that would amount to more than 75 billion euros, if every EU member of NATO met the target.

This raises two questions for European governments: how to spend the money; and how much is enough.

Much of the cash may be needed to support Ukraine’s war effort. The United States has provided Kyiv with military aid worth about 25 billion euros a year since the beginning of the Ukrainian conflict, numbers from the Kiel Institute’s Ukraine support tracker show. Should Washington withdraw its aid, Europe would have to fill the void. This will start with an industrial challenge: even though Germany’s Rheinmetall has opened a new ammunition factory, Europeans are already struggling to meet their goal of delivering 1 million shells to Ukraine by this spring.

Europe will also need to upgrade its military capabilities. National armies must be better trained, and beefed up. Europe is rediscovering the need for territorial defence after decades of playing an auxiliary role in NATO foreign interventions from Kosovo to Afghanistan, notes Camille Grand from the European Council on Foreign Relations.

Spending a few dozen extra billion euros on defence will not, however, allow Europe to meet its current security challenge. The target was set before the rise of the Russian threat, and when Europeans thought they could count forever on American protection. EU governments need to invest more in advanced technologies that have proven crucial on the Ukrainian battlefield, such as drones, satellite communications and even artificial intelligence.

At the height of the Cold War, European nations used to devote 3.5% to 4% of their GDP to defence. To be battle-ready they may need to spend at least another 1% of GDP, or almost 200 billion euros, according to some military analysts.

The added cost may not lead to a brutal gun-or-butter choice. In an era of tight European budget constraints, it would still require drastic political and budgetary choices.