How Europe will pay for its defense

The Wake Up Call

US Secretary of Defense Pete Hegseth's speech to European NATO members was a wake-up call for politicians in the EU. According to Hegseth, the USA remains committed to NATO, but will no longer be primarily focussed on Europe's security in the future. Accordingly, the Europeans would have to take responsibility for their own conventional security in future. This means that in a few years' time, the armed forces of the European NATO members must be strong enough to credibly deter a possible conventional attack by Russia on the Baltic countries, for example. As most NATO countries do not currently have this capability, massive investment in defense is necessary. In this context, the US government has called for 5% of GDP to be invested in defense in the future. In the end, this could amount to 4% – twice as much as most countries currently spend.

In order to close the gap, Germany, for example, would have to cut its civilian spending by a quarter. This would hardly be politically feasible, even if there is considerable scope for savings with regard to social spending or the often inefficient climate policy. In the end, most European NATO members are likely to significantly increase their budget deficits in order to make themselves capable of defense. In the following, we outline how this could be realised.

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