At first reading, the ReArm Europe proposal by Commission President Ursula von der Leyen, announced today, seems to promise a whopping billions of euros, up to 800 (!), for the rearmament of European Union countries.
Unfortunately, this is not the case. The proposal, or the “package” as it is called, includes 2 parts: The first and only essential one is to have a loan of up to 150 billion for large joint equipment programs of the member states, with indicative reference to air defense, artillery, drones and anti-drones, ammunition. The loan will come, as it appears, from some European bond issuance mechanism, or something similar, and will finance such equipment over time.
However, von der Leyen foresees that the same loans can also finance Ukraine’s equipment needs, or through EU programs, weapons can be produced for Ukraine, and even directly. Therefore, the loan balance that will remain for equipment within member states will be less than 150 billion. And of course, the “big countries” of the EU, which indirectly take on the guarantee of these loans through their own economic strength, should agree on the loans first and foremost. Even here, since we are talking about loans, we should see – if they are implemented – under what conditions, and whether they are tolerated by the weaker member states.
The second part of the package is the famous and long-discussed escape clause for defense spending, that is, this specific expenditure should not be counted in the restrictions and clauses of the EU Stability Pact, which imposes a limited deficit each year and relatively low public debt. Here, von der Leyen gives only an indicative example and says that, if the EU member states increase their defense spending by another 1.5% of their GDP, this will “produce/mobilize” investments of 650 billion! If, not how “will”.
In practice? Yes, the independence of state defense spending from the limitation is very useful, but in no case can we predict the budgetary spending margins that each country has and how much they will be. For example, Poland and the Baltic countries have already reached a “ceiling” of defense spending, and it will be very difficult for them to increase further. The small countries of the EU, e.g. Belgium, Luxembourg, Denmark and others, and increase their defense spending by 20% and 30%, still do not produce a large “volume” of investments. After all, the EU states already They have increased their annual defense spending by 30% between 2021-2024, from 214 billion euros in 2021 to 326 in 2024 (1.9% of total GDP) and are expected to increase another 100 billion by 2027 (data from the Council of the EU).
In fact, of the above amounts, approximately 30% for 2024, i.e. 102 billion euros, were in investments, i.e. actual purchases of new weapons (while general defense spending includes the enormous cost of personnel). So the European continent, at least as the European Union, has already made a rapid increase in defense spending, both in general and in equipment and is already planning another one. But von der Leyen’s assumption of “mobilizing” some 650 billion cannot be verified, but even if it happens – this happens – it will concern a period of about a decade.
To be fair, von der Leyen and the Commission obviously know this and no one expects mechanisms and investments of an extra 800 billion euros “tomorrow”. But a clarification must be made, in order to entertain an impression that can only be described as imaginary.
Here, many more issues come into play, which we formulate as questions:
1. What is the real further possibility of increasing and, above all, maintaining high defense spending by most EU states? And in an environment that is “flirting” with economic recession and underdevelopment?
2. From which other expenditures of state budgets will funds be cut in order to move hundreds of billions to defense? And will there be social consensus as the major expenditures in all EU countries are healthcare, insurance, education, and targeted social spending?
3. Even if Europe were to find “hot money” for defense, is there currently specialized personnel to man defense factories, highly specialized and highly productive? And if there is not, how long will it take to be trained accordingly? And where will this be found while there is already a serious shortage of trained technical personnel?
4. The big issue of increasing the personnel of the Armed Forces, how will it be solved? In a Europe that is demographically crippled and there is a general climate of withdrawal from military professional activity, as the salaries are uncompetitive and the working conditions are difficult? Will the salaries and benefits of professionals be increased so that they become competitive? And who will replace them in the general labor market, which also suffers from a search for workers?
5. How will the huge issue of the variety of armaments that continues to plague Europe be solved? Which country will accept to join “another” weapons markets, sacrificing its own production? Just to give an example, at the moment in Europe orders are being placed for armored combat vehicles and German Puma and Lynx, and Finnish Patria and Swedish-British CV90 and French VBCI and Spanish ASCOD. So the necessary agreement on “cost reduction” and “common armaments” remains a theory and will be very difficult to resolve for joint production.
6. A new issue that arises and has not been analyzed: If the US undermines NATO, as there is a strong fear, what extra cost will have to be paid – and we are talking about hundreds of billions – to gradually make European countries independent of a bunch of critical structures of the alliance that are currently controlled by the US? For example, in telecommunications, headquarters, bases, replacement of weapons that may be under American restrictions?
So the von der Leyen proposal cannot answer the above, with the 150 billion euros in loans that it cites. As even with this package, which will clearly be useful, the core of the European defense problem is not touched: Which requires first of all common planning (there is none), a stable defense policy for many years (and therefore political stability that is by no means foreseen, on the contrary, the introverted far right does not consent to European armaments) and of course plenty of money that can come not from occasional loans, or cutting social spending, but from generous financing, let’s say it openly, “cutting money within the EU”. Just as the US currently finances its outrageous military spending, of some 900 billion dollars a year, but writing over $1.8 trillion a year in its budget deficit with corresponding borrowing.
