Written by Mujtaba Rahman and Jan Techau for GLOBESEC Forum 2024.
Regardless of the outcome of the US presidential elections, the EU has known for a long time that it can no longer rely as heavily on Washington for its security as it has in the past. Europe must do more for its defense, there is no two ways about it. There is no formal EU plan to address the diminishing nature of the US’ security umbrella. But an emerging consensus has taken hold over the last few years—more national and EU defence spending; consolidation of the EU’s fragmented defence industry and strengthening the European pillar within NATO. In her pitch for a second mandate, European Commission President Ursula von der Leyen made clear her intention to launch a “European Defence Union,” with a European Commissioner working alongside Kaja Kallas, the EU’s incoming High Representative.
While noting that EU member states will retain responsibility for their national security and their armies, and that NATO will remain the pillar of the EU’s collective defence, von der Leyen made clear her ambition to “create a single market for defence” and put EU defence spending needs at €500bn over the next decade. Average defence spending in the EU as a share of GDP has increased from 1.3% of GDP in 2021 to 1.6% in 2023 and is expected to rise well above 2% this year. 17 EU countries, including France and Germany, will reach the 2% NATO target this year. But the external pressure to increase defence spending coincides with the EU’s renewed internal focus on shoring up its public finances. The EU’s new fiscal rules, which will be implemented for the first time next year, risk further constraining member states’ already tight room for defence spending.
Domestic factors are also weighing on member states’ ability to spend more on defence. Take Germany’s constitutional court verdict last November, that ruled that the coalition’s strategy for financing its political agenda was unconstitutional. This has forced the three parties in government to cut €20 billion from this year’s budget and find a further €30 billion in savings next year. France’s fiscal challenges have also become much more pervasive in light of persistent overspending and crumbling economic forecasts which are now predicting a budget deficit of 5.5% of GDP this year.
Whatever government now emerges in Paris will have to implement spending cuts to bring France’s public finances into line with its legal obligations to the EU. Meanwhile, Italy, Spain will remain the bloc’s defence spending laggards. Italy is also under pressure to reduce its deficit. While Spain has more room for manoeuvre, infighting within the ruling coalition mean the government may fail to pass a budget for the second year in a row, and makes more military spending a non-starter.
While Poland, the Baltics and Nordics are all well beyond the 2% NATO goal, the general constraints on national fiscal capacity were encouraging a view in Brussels and some EU capitals that the EU will need to do more, via euro bonds or another Next Generation EU initiative for defence. French President Emmanuel Macron even called for adoubling of the financing capacity of the EU budget, and then the actual budget itself.
Those plans are now up in smoke. The outcome of Macron’s snap elections looks like a deadlocked national assembly, with no group or bloc of parties able to form a majority. A weak minority government, or a technocratic or caretaker government instead looks likely, but won’t have the political legitimacy to advance these ambitions. Mobilising big money in Europe requires national parliamentary approval—the one thing France can no longer guarantee. The EU’s weakness is not solely the result of what is happening in France. Germany is equally to blame. Berlin had timidly increased defence spending after Russia’s 2014 annexation of Crimea, and Chancellor Olaf Scholz announced a Zeitenwende in Germany’s security and defence policy after Russia’s invasion of Ukraine. But despite a debt-financed €100 billion special fund for the armed forces, Germany’s overall reaction to the fundamentally changed geopolitical realities of Europe remains half-hearted. Most importantly, the mental Zeitenwende, the eagerly expected change in political culture concerning military power and its political utility, has, for the most part, not taken root in Germany’s political leadership, or its broader political class.
Germany seems only vaguely aware of its continued existential reliance on US security and the fundamental problems that could emerge should a possible second Trump administration decide to abandon America’s security commitments in Europe. Given the EU’s limited ability to move on big money, and absent strategic leadership from Paris or Berlin, the EU has been focusing on consolidating its defence industry. However, the EU’s new defence industrial plan is still in its infancy with unclear prospects whether it can outgrow its meager initial funding of €1.5 billion. Similarly, the objective of strengthening the EU pillar within NATO must also be considered a long-term program.
Europe’s defence ambitions now look increasingly brittle when set against the geopolitical challenges the world is presenting. Absent leadership from France or Germany, it will fall to Poland, the Baltic and Nordic states, whose politics are being driven by the urgency of a war on Europe’s eastern border, to ensure this agenda moves forward. Otherwise, von der Leyen’s second mandate will be at risk before it has even begun.