Assisting Ukraine today is not just an investment in the future security of the West but also promises an economic boom that could stimulate half of the global economy during the eventual reconstruction.
“Europe’s stance towards Russia in security dialogues will become more constructive as the Russian army approaches the eastern EU states bordering Ukraine,” predicted Konstantin Gavrilov, a leading Russian diplomat in the permanent arms control negotiations in Vienna. Furthermore, he believes that the fervor will diminish when Russian troops are stationed at the borders of Poland, Romania, Hungary, and Slovakia; the tone will then be entirely different.
Recently, similar statements have been made by various officials, most frequently by Dmitry Medvedev, former president and prime minister. Today, we no longer dismiss such “madmen” out of hand, even though the war in Ukraine proves that the neo-Soviet imperial ambitions are ill-fitting for the regime. Although the myth of the invincibility of the Russian army has disintegrated before our eyes, the world increasingly takes the grandiose statements of these talking heads seriously. (Most recently, Medvedev gave a lecture in front of a map where Ukraine ceased to exist, save for a narrow strip, with its territories transferred to Poland, Romania, and Hungary.) According to Tamás Csiki Varga, senior research fellow at the Institute for Strategic Defense Studies at the National University of Public Service, Russia’s intent is clear. There appears to be no point at which either side would realize they cannot achieve their goals and therefore see no point in continuing the war. Moreover, détente seems unlikely in the future: Putin broke all five international agreements guaranteeing Ukraine’s security two years ago – why would anyone believe he would adhere to a peace agreement now?
Therefore, the European Union and its partners, as well as NATO member countries, need to brace themselves for a prolonged threat even without an active war.
Awaiting Defense Industry Investments
However, the EU has grown complacent – apart from the Balkan conflict, it has not faced an actual wartime situation in nearly eight decades. Despite the very real threat of Russian aggression – and the prospect of the EU facing it alone – the community’s defense industry is finding it difficult to reorient itself. National armies have been downsized (Germany’s stocks, for instance, are sufficient for just three days), and the democratic world has been unable to produce the promised one million artillery shells for Ukraine for months. While the Czech government managed to “find” 800,000 artillery shells funded by Canada and others (likely purchased from various countries), Germany only recently announced the construction of a new munitions factory by Rheinmetall. This plant, expected to start production in a year, will produce 200,000 artillery shells annually, alongside explosives, warheads, and other components, with construction costs covered by the company at around 300 million euros. However, this investment is still insufficient.
The European defense industry has been in decline for 20-30 years, with efforts to rebuild it only triggered by Russian aggression. There is much to make up for, as only 2.4 billion euros from the 2023 common budget were allocated to defense industry development. The European Commission is set to present the EU’s defense industry strategy this month, which includes plans for over a 20% increase in defense production – as promised by Ursula von der Leyen, the Commission’s president, at the Munich Security Conference in mid-February. “We need to spend more on defense, and we are already doing so. Last year, defense production increased by 20%, and it will grow even more in the future,” said the Commission’s president. Her re-election campaign includes the integration of funding for armament programs into the common EU budget, prioritizing joint procurements and ordering from EU manufacturers whenever possible. However, this proposal faces significant debate – while some countries have no objections to common budgetary tools, defense funding is currently managed by individual EU governments. The Commission and the European Investment Fund unveiled a plan in January to boost the defense industry, offering 175 million euros for EU defense industry innovation. This is supplemented by 1.5 billion euros from the STEP program for innovation and development purposes as part of the common budget review. The expansion of the European Peace Facility (EPF) by an additional 5 billion euros and the creation of a similar fund for Ukraine are currently hampered by a German-French dispute.
Challenges of Unified Action
The lack of a common defense industry and budget, as well as joint military developments, is a more significant problem than the absence of these intentions. The EU, in its current state, is incapable of genuine collective action, establishing a joint military force with coordinated defense and operational planning, led by a unified “Ministry of Defense,” as highlighted by Csiki Varga. It is worth recalling that during the last major European conflict before Ukraine, the Balkan wars, the UN peacekeeping mission descended into chaos: participating British, French, and Dutch military units followed their own governments’ orders, showing little willingness for meaningful cooperation despite the theoretical existence of a joint command. The stalemate was eventually broken by the Clinton administration and the US Air Force, which forced Belgrade to the negotiating table by bombing Bosnian Serb positions in September 1995.
Today, decisions are made by national governments, and these decisions are then harmonized with each other, which is clearly asymmetrical and inefficient – as seen in the defense industry. The establishment of the European Defense Fund in 2017 and the annual defense review are only initial steps. As long as governments are unwilling to cede further aspects of national sovereignty to the common cause, dreams of joint defense industry developments (such as tanks and aircraft) and coordinated, large-scale, economical stock replenishment are unrealistic. Standardization similar to NATO’s would also be necessary, as confirmed by Csiki Varga. Currently, the development of the next-generation combat aircraft (Future Combat Air System) is a distant prospect, with the German-French-Spanish Airbus-Dassault-Indra product potentially entering service only in the 2040s. (If at all, as more countries are ordering American F-35s.)
Ukraine: Costs and Opportunities
Meanwhile, there is a real danger that the United States – regardless of the outcome of the November elections – will turn away from Europe, as its finite resources are increasingly tied up with China, which it views as its primary concern, and it wants to avoid the challenge of simultaneous aggression with Russia. Within the EU, there is clearly no consensus on what needs to be done. Ten to twelve countries are willing to take on shared risks and show sufficient determination for a joint military force, but this group does not align exactly with the strongly pro-Ukraine faction. For instance, the Poles and Romanians are staunch Atlanticists, strongly committed to the United States. The situation of nuclear deterrence is also complex. Post-Brexit, France remains the sole nuclear power in the EU – would it be willing to place this in a joint force, and would the others contribute financially to its maintenance?
The potential return of Donald Trump to the White House poses an even greater threat. During his previous presidency, he floated the idea of withdrawing the United States from NATO, a notion he has recently reiterated. He even “offered” Putin the green light to attack NATO member states that do not spend the expected 2% of GDP on their military; these countries, he claimed, would not be defended by America. This is problematic because the potential next targets of Russian aggression (the Baltics, Poland, Finland) all meet or exceed this spending threshold. European Union defense expenditures increased by 6% in 2022 compared to 2021, reaching a historic high of 240 billion euros. Estimates suggest that in 2023, this growth was 4.5%, bringing such expenditures to an average of 1.6% of GDP. However, most member states still did not meet NATO’s target of 2% of GDP. Seven countries, including Hungary, saw a decrease (nominally 1.8%).
In real terms, global military spending reached a new high of $2.24 trillion in 2022, a 3.7% increase, according to the Stockholm International Peace Research Institute (SIPRI). The three largest spenders, the United States, China, and Russia, accounted for 56% of global expenditure. Combined defense spending by Central and Western European countries – both EU members and non-members – surpassed the 1989 level in real terms for the first time, reaching $345 billion. Increases were significant in Finland (36%), Lithuania (27%), Sweden (12%), and Poland (11%). NATO’s total military spending amounted to $1.232 trillion, up 0.9% from 2021.
Based on these figures, the democratic world is clearly capable of generously financing Ukraine’s heroic defensive war – even though some NATO countries fall short of the 2% GDP target. The three largest military supporters of Ukraine (excluding the EU itself) are the United States (€44 billion), Germany (€17 billion), and the United Kingdom (€6.6 billion) – while the United States spent $860 billion on military expenditures in 2023, Germany $68 billion, and the United Kingdom $65 billion. Including refugee-related expenditures, the burden on Germany is 0.8% of GDP, while for the United States and the United Kingdom, it is less than 0.5%. Furthermore, the reconstruction of Ukraine could be the economic development project of the century. According to estimates by the Ukrainian government, the World Bank, the European Commission, and the United Nations, the recovery and reconstruction needs over the next ten years will amount to $486 billion, nearly three times Ukraine’s estimated nominal GDP for 2023.
It is therefore evident that the support provided to Ukraine today is not only an investment in the West’s future security but also promises a reconstruction boom that could invigorate half of the global economy. Of course, this benefit will accrue to those who manage to participate in it.
In Tamás Csiki Varga’s optimistic scenario, societies and political leaders will come to understand the necessity of a unified EU approach within five to eight years. However, the pessimistic forecasts suggest a continued struggle, where the next crises will overrun us, national attempts at solutions will fail, and the costs will be borne by all Europeans.
