Welcome back — it was a watershed moment for Germany and Europe this week.
Incoming German Chancellor Friedrich Merz took everyone aback when he said on the night of his election victory on February 23 that his priority was “independence” from the US. On Tuesday, the Christian Democrat leader again surprised them — including the financial markets — by hatching a speedy deal with the Social Democrats to rewrite fiscal policy and allow Berlin to borrow hundreds of billions of euros for defence and infrastructure investment.
On Thursday night, EU leaders endorsed a European Commission plan to free up national borrowing for defence, a €150bn loan programme for building capabilities and other measures to support rearmament. But the EU’s more indebted members may struggle to use the fiscal space theoretically afforded to them. Emmanuel Macron, the French president, said more would be needed, including large-scale common borrowing.
This makes Berlin’s astonishing volte-face on fiscal policy all the more crucial. As one senior EU official put it, “without Germany spending, there is no European defence”. I’m at ben.hall@ft.com
America’s betrayal
European leaders are having to adjust at incredible speed to a crumbling transatlantic security order that underpinned their defence for generations. In just six weeks, US President Donald Trump has turned from unreliable partner to antagonist to potential adversary.
French-speakers might enjoy this we-told-you-so philippic by Bruno Le Maire, France’s former finance minister for Le Grand Continent. The US has “spun out of control”, he writes, and is threatening “the schism of the west”.
The Trump administration seems hell bent on a peace deal for Ukraine that practically all European leaders bar Hungary’s pro-Kremlin Prime Minister Viktor Orbán fear will seriously compromise their own security. The US betrayal of Ukraine was laid bare this week when Washington suspended deliveries of military aid and then cut off intelligence-sharing with Kyiv. This will hamper the operation of air defences and long-range precision strikes. It shows the lengths that Trump will go to get his way and will have sent shudders through European capitals that depend on US military technology.
Despite the martial statements from European leaders, many beyond Nato’s eastern and northern flanks have yet to translate their concern into spending commitments. France, Italy and the UK in particular face some difficult choices in the weeks ahead. Italy was the most vociferous critic of EU fiscal constraints on its ability to raise defence spending. Now it has no excuse — as long as bond markets are accommodating.
Spend, Spend, Spend
Increasing defence spending may be the easy part. Given Germany’s economic heft and its armed forces’ focus on territorial defence, it should become the bedrock of European security. But as the FT’s editorial pointed out this week, Berlin still needs to acquire a strategic culture, a willingness to deploy military force and take risks.
Ronja Kempin of the German Institute for International and Security Affairs (SWP) writes (in German) that the Europeans will also have to overcome fragmentation to turn greater spending into greater military power.
“Each country operates largely independently, with its own procurement systems and armed forces that are hardly interoperable. Europeans still spend more than 80 per cent of their defence spending at the national level. This means they lack economies of scale. They get fewer capabilities for their money. National sovereignty reservations stand in the way of interoperability of the armed forces.”
Nato has long tried to forge the interoperability of its members’ armed forces. Now the EU has a panoply of measures to promote joint procurement and innovation in defence technology. Luigi Scazzieri of the Centre for European Reform provides an excellent overview of the EU’s ambitions in this field, as does this piece from Clingendael, the Netherlands Institute for International Relations.
The good news is that Europe knows what it needs to do: implement the defence plans and fill the capability gaps drawn up by Nato. Commission president Ursula von der Leyen stresses that the EU’s industrial efforts on defence must be aligned with these Nato requirements.
The FT laid out the challenges in this Big Read last year. Torben Schütz and Christian Mölling of the Bertelsmann Foundation provide a concise and lucid analysis of what Europe should do now in this piece for the European Policy Centre on a “European way of war.”
“Nato currently possesses approximately two-thirds of the capabilities required to implement the new regional defence plans. Without the US, this share drops to about one half.”
Europe has to fill that gap as swiftly as possible, they write.
That means investing in among other things: air defence; long-range strike systems; drones and anti-drone technology; and so-called ISTAR — intelligence, surveillance, target acquisition and reconnaissance.
Europe’s vulnerabilities on ISTAR were underscored by the withdrawal of US of intelligence-sharing with Ukraine this week, but Schütz and Mölling note the Europeans do have some capabilities in this domain.
Without the US, Europe would need to be able to field up to 120,000 men to stop Russia early in any evasion. Europeans would also have to replace American military leadership within Nato while retaining the tried-and-tested military governance structures of the alliance, they add.
A new umbrella for Europe
The biggest challenge is how to substitute the US nuclear deterrent. Merz put it back on the agenda last month, saying he wanted to discuss how the UK and France could help Europe. The British deterrent is already there to protect Europe under Nato command, but is reliant on US missile technology and maintenance.
Macron said this week he was ready to engage on the issue (which delighted Team Merz) and he has set up a six-month review of the strategic and technical implications. But France’s “vital interests”, which the force de frappe protects, have had a “European dimension” since Charles de Gaulle’s era. It is hard to see how Paris could make that more precise without detracting from the “strategic ambiguity” that underpins the country’s deterrent.
The French and British nuclear forces are too small to replace America’s. But the fact that Donald Tusk, prime minister of Poland — one of the countries most attached to the US security guarantee — said on Thursday that the French proposal should be taken seriously shows just how the Europeans are now thinking the unthinkable.
Can Europe’s defence groups step up if Donald Trump pulls back? by Sylvia Pfeifer and Clara Murray examines how the continent’s weapons manufacturers could benefit from a rearmament drive.
Read of the week
Hakan Fidan gives a rare interview to the FT — The ex-spymaster shaping Turkey’s rise by Andrew England and John Paul Rathbone
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