As the US withdraws, European countries are trying to increase their defense spending and increase their investment in the continent’s own defense industry.
The European Commission President Ursula von der Leyen has approved relaxation of fiscal rules to allow European Union countries to spend more on defense.
“Let’s not be questioned. When it comes to European security, Europe needs to do more and Europe needs to bring more to the table. Leyen at the Munich Security Conference on Friday He said in his speech.
However, they are skeptical investors who have encountered bureaucratic and institutional obstacles and have fewer benefits and risks in other industries.
Von Der Leyen said that European Union countries spend an average of around 2% of GDP, but need to increase to above 3%.
That’s well below the 5% that President Donald Trump urged to spend on NATO countries.
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She said Europe is in conflict with “illegal” Russia over Ukraine and requires a “bold approach.”
“This is why we can announce that we would like to propose activating escape clauses for defence investments,” she said. “This will allow member states to significantly increase their defensive spending.”
The change will allow the EU government to increase defence spending without violating strict Bloc budget rules of 27 people who do not allow excessive borrowing.
Von Der Leyen’s presentation is based on a paper prepared by Poland and serves as the rotating EU president. This paper presents an interpretation of defense investments as current interpretations of defense investments are too narrow only for military equipment such as tanks and planes.
Von Der Leyen has told Ukraine’s European supporters that U.S. Defense Secretary Pete Hegses was “unrealistic” for Kyiv to become a member of NATO or return to the pre-2014 border. The announcement was made in a day.
On Friday, von der Leyen said: “Many European security circles have been confused, and some have been worried about comments by senior US officials earlier this week.”
“But we need to be honest here. Avoid anger and protest because if you listen to what you say, you will not only understand where they came from, but also have some statements that you can agree with. “Because we know there is. The US and the European Union want to end the bloodshed,” she said.
“We also need to develop a fully integrated European defence, industry and technology foundation, which goes far beyond a simple discussion about spending numbers,” Macron said. Ta.
“If all we do is become even bigger clients in the US, we will not be able to solve the issue of European sovereignty in 20 years.”
He also urged European countries to purchase Franco-Italian Samp-T air defense systems.
Has the EU Army Plan been revived?
Tim Ripley, a defense analyst and author of “Little Green Men: The Inner Story of Russia’s New Military Power,” said the idea of the European Union Merkel revived in light of Trump’s Ukrainian proposal during the Epoch era. He said it could be.
“If Ukrainian peacekeeping forces don’t become NATO, then the obvious vehicle will be the unit ordered by the European Union, so it could have returned,” he said.
He said Trump and Hegses effectively told Europe. “If you want to protect Ukraine, that’s your problem.”
“If European taxpayers want to take more money for defense, obviously they feel they’re profitable and safe in security, but that’s what the money is like for workers in Florida and Texas, rather Europeans. It’s a natural trend to keep workers at work,” Ripley said.
On January 31, a letter signed by France, Germany and 17 other EU countries called on the European Investment Bank (EIB) to ease rules regarding lending to the defense industry.
The EIB is jointly owned by 27 EU member state governments and is currently prohibited from funding the production of ammunition, weapons or military equipment.
Banks can use both civilian and military applications such as satellites and drones to lend to companies that manufacture dual products.
Increased capacity and stockpiling
Ripley said there is a debate to increase the speed of production of existing planes, drones and missiles, rather than spending money on researching and developing new types of weapons and equipment.
“We’re going to increase the number of production, increase the number of shells we’re buying, increase the number of missiles,” he said.
“So we’re going to increase capacity and increase our stockpile, which means we actually have more than we spend everything on exotic research and development and invest in planes that aren’t delivered for 15 years. I will,” Ripley said. .
He said Europe has a history of low return on investment in investors and defense industries.
“First of all, you had a finite production because they didn’t build a lot of hardware. To make more profits, make more and sell for export. You weren’t capable of making a runaway profit,” he said.
Ripley said the example was the Eurofighter typhoon fighter. It is built by Airbus, Beissy System, and Leonardo of the UK, Germany, Spain and Italy.
“Only one company in each country has contracts and contracts to build them, and they are allowed to earn a 5% profit. Their profits are kept at the upper limit. It’s an exclusive situation,” he said.
“Undeniable reputation risk” for investors
NATO Executive Director Mark Latte said at a meeting at the World Economic Forum held in Davos on January 22, environmental, social and governance guidelines are undermining Western investment capabilities. He spoke.
Many pension funds, businesses, and other large investors choose where to invest based on these ESG guidelines.
This will exclude the defense industry in the cold. This is attempting to overcome by encouraging people to support defense spending and speak proactively.
“Defense is not in the same category as illegal drugs and porn. Investing in defense is our investment in security. It’s a must!”
The drone carry vehicle manufactured in Poland for the Polish army was depicted on December 23, 2024 at Starova Walla in Poland. Wojciech Król/Poland Ministry of Defense
He said the defense industry has posed “an undeniable reputational risk” for investors.
“The problems that “indirectly” fund the defense industry by purchasing government bonds (for example) do not seem to pose any problems, but some investors are not entitled to matters regarding their image or beliefs. We hope to avoid the sector completely just to keep it safe and simple. ” wrote Laforcade.
