Geopolitical uncertainty, mainly due to the Russian invasion of Ukraine but also the chaotic situation in the wider Middle East, combined with the possibility of Donald Trump’s election to the White House in November, have brought the term “war economy” back to the fore.
Both at EU level, as with the first-ever European Defense Industrial Strategy (EDIS), presented by the European Commission last month and which European Commissioner Thierry Breton described as a package of measures to strengthen the EU arms industry in order to turn in “war economy mode”.
As well as at the level of individual member states, as in France last Thursday where President Emmanuel Macron declared, inaugurating the construction of a projectile production factory, that “due to geopolitical and geostrategic changes” the French defense industry must move to a “war economy” in order to continue supporting Ukraine.
The Russian threat
The prolongation of the war, which brings closer the possibility of Kiev’s defeat, makes many Europeans consider Russia its Vladimir Putin existential threat that, if not stopped on the fronts of Ukraine, will attack other European states in the near future.
“Russia is threatening Europe,” said the EU’s foreign policy chief. Joseph Borellast Tuesday, calling on the EU to prepare for a “high-intensity conventional war” that is “no longer a fantasy” – the first time a European foreign affairs chief has been so blunt.
Europe underestimated the Russian invasion of Crimea in 2014 and until the “para five” of the war in Ukraine in February 2022, it continued to underestimate the Russian threat. But more slowly at the beginning and more intensively in recent years, European states have increased their defense budgets – following the global trend to increase armaments.
Europe’s defense spending almost doubled (+94%) in the five-year period 2019-2023 compared to the previous one, according to the Stockholm International Peace Research Institute (Sipri), considered the world’s leading think tank on armaments data.
Geopolitical uncertainty
It is true that after the fall of the Berlin Wall the world went through a prolonged period of optimism where a generalized war seemed distant, even obsolete after the dissolution of the USSR and the economic ties between states strengthened by globalization.
Today the situation is completely different: geopolitical stability has disappeared and has been replaced by risk and aggravation. The Minister of Defense of Denmark, Trolls Lund Poulsenrecently described the new order very vividly: “The Berlin Wall has been replaced by a ring of fire around us.”
Geopolitical uncertainty is also reflected in defense budgets worldwide, which will reach a record total in 2023 (estimated at $2.2 trillion) with more and more countries arming themselves more and more for different reasons – the rise of China which is, for for example, the world’s first naval power, the flare-up in the Middle East, the India-Pakistan rivalry and, of course, Russian aggression plus nukes.
The military preparedness of the EU
Putin’s threat, combined with Trump’s threat to remove the US from its role as Europe’s security guarantor, highlighted how militarily unprepared the EU was and how much most member states were underinvesting in defence.
The prevailing analysis in European capitals today is that even if the war in Ukraine ends without Kiev being defeated, the EU must continue to arm and prepare for war to follow the massive arms race being witnessed around the world – in other words, to prepare well for war in order to be able to preserve the increasingly fragile peace.
“If we want peace, we must prepare for war,” the president of the European Council, Charles Michel, said recently in a letter to European leaders, also speaking of the need to adopt a “war economy.”
References to the “war economy” – a term first used in World War I – have proliferated in recent years. It remains unclear, however, what exactly “to produce more equipment and in a shorter time” means, as officials clarify that a “war economy” means, and how it will be financed (e.g. with European defense bonds or using frozen Russian funds?) .
“The famous ‘war economy’, an expression introduced by President Macron in June 2022, has not yet seen the light of day,” Monde columnist Sylvie Kofman wrote this week.
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