US President Joe Biden, long showing signs of decline, is now officially done for in five months time, if not sooner. The current odds-on favorite to be the next president speaks often about turning away from Europe. Governments are collapsing, and countries are fracturing across the EU. And the eurozone economy is a mess.
One might be tempted to come to the conclusion that it is time for the EU to start figuring out an exit strategy from its war against Russia. Trouble is, if the bloc’s crop of leaders were able to grasp the situation and act, they likely would have gotten out a long time ago – or never been game at all. Instead they kept digging deeper, and here again we have the EU doubling down.
EU diplomats have spent the past few weeks throwing a fit over Hungarian Prime Minister Viktor Orbán’s shuttle diplomacy efforts. In its very first session the newly elected Parliament produced a belligerent joint text, making all sorts of hardline demands, such as the removal of any restrictions on the Ukrainian use of Western weapons systems to strike Russian territory.
They also chose to reappoint one of the war’s biggest backers, Ursula von der Leyen, as president of the European Commission – the most powerful position in the EU. Let’s take a look at von der Leyen’s pitch as she worked to cobble together enough votes for her second five-year term and what the plan is now that she’s back. Emboldened by her reappointment, she is pushing for a defense union.
Politico describes this task as “the number one challenge of her second term: making huge amounts of EU money available to reindustrialize and re-arm the EU.”
Left unexplained is who would foot the bill for the ambitious plans, but the Commission and the European Central Bank continue to consider the possibility of issuing Eurobonds to finance the purchase or manufacture of weaponry, an idea considered off-limits until recently. Some background on the potential “miracle” of Euro defense bonds from Euractiv:
This miracle happened during the eurozone crisis when the EU created a legal instrument, the European Financial Stability Facility, able to issue bonds and with a lending capacity of €440 billion. And with the COVID pandemic, the miracle was repeated as the EU adopted a recovery fund with a firepower of €750 billion, financed through common debt issuance.
The same line of thinking has inspired politicians to imagine defence bonds – to finance a major boost of the EU’s defence capabilities, after years of neglect when it was assumed that war was a thing of the past or that Uncle Sam would always come to the EU’s defence.
Estonia’s Prime Minister [now the High Representative of the European Union for Foreign Affairs and Security Policy] Kaja Kallas highlighted in December the need for EU defence bonds to fight Russia’s aggression in Ukraine…
Speaking at the European Defence Agency annual conference on 30 November, [European Council President Charles] Michel said EU member states should pool what could amount to €600 billion in defence investment over the next 10 years.
He also said European defence bonds would be an attractive asset class, including for retail investors. Incidentally, a top European Investment Bank cautioned in an interview with Euractiv in January that investors don’t currently have an appetite for defence-related financial assets.
A couple of weeks later, French President Emmanuel Macron returned to the topic, telling investors at the World Economic Forum in Davos that Europe should resort to joint debt to finance its priorities, including defence.
Who doesn’t love “miracles?” But there are some issues, including economic difficulties across the bloc, governments crumbling, and public frustration with everything from the immigration to the economy. There is also the reported military manpower shortages, which is a whole other problem that has been frequently covered.
Politico quotes an unnamed diplomat who says that “Everything that costs anything — for example, Ukraine defense,” will prove “problematic” during von der Leyen’s second term. While von der Leyen is throwing around figures like 500 billion over the next decade, another diplomat said, “We didn’t see spreadsheets, we didn’t see details, this is pie in the sky money.”
More details are likely coming soon as von der Leyen is planning to appoint a Commissioner for Defense who will present a white paper on the future of European militarization efforts within 100 days.
The real question is whether Germany will go along with any eurobond plan. The historically unpopular chancellor Olaf Scholz remains opposed to Euro defense bonds – for now. He argues that the EU already has various research and industrial funds to support defense cooperation among member states and defense companies.
For example, Poland, France, Germany and Italy just signed a letter of intent to jointly develop long-range cruise missiles. Poland and Germany were among those countries that got rid of their missiles in the 1990s following the 1987 Intermediate-Range Nuclear Forces Treaty. That agreement expired in 2019, however, after then-president Donald Trump withdrew from it. The US is ever-so-generously agreeing to cover Germany where US long-range missiles will be rotationally deployed in 2026 as a temporary solution.
While Scholz talks up agreements like the joint development of long-range cruise missiles, Atlanticists are insisting he do more, and he does not have a strong record of firmness when pressured by his NATO/EU colleagues.
Recall in the Fall of 2022 when he resisted sending more heavy arms to Ukraine. After a few weeks of badgering, he pledged to support Ukraine “for as long as it takes.” He also caved on the Leopard tanks after making a show of resistance. On the other hand, the Taurus missiles still haven’t been sent to Ukraine. Yet the Eurobond issue is starting to be reminiscent of these previous pressure campaigns. It was only four months ago that idea was viewed as “radical;” now Germany is viewed as the main roadblock.
Berlin is facing its own budgetary constraints while also pushing arbitrary limits onto other EU nations, and the inadequate ramp up of military spending is “set[ting] the stage for further clashes with Germany’s international partners, especially Washington, in the coming months.” On the other hand, any eurobond plan would only strengthen political threats to the “center” in Germany, such as the Alternative for Germany and Sahra Wagenknecht who want to stop the digging and attempt to repair ties with Russia.
Could a Trump Election Further Von Der Leyen’s Goals?
It’s important to note that Trump didn’t actually undermine the NATO alliance in any significant way as president and appointed CIA officials and neocons to run his hawkish foreign policy, although there is hope that will change in a second go-round.
In reality, however, the plan for the US to take a backseat on the European front and focus on the Pacific is part of a strategy long pushed by neocons. It might be an unrealistic and dangerous one, but it is a strategy nonetheless. Here is a team from the influential Center for Strategic and International Studies (CSIS) writing earlier this year in Foreign Affairs about how Europe must lead in the fight against Russia so the US can focus on China:
That complicated reality requires U.S. allies, especially in Europe, to take on a larger share of directing the containment of Russia. Europe has shown its political and economic resilience in the face of Russian aggression. Yet militarily, the continent remains dependent on the United States. This dynamic must change, in part because the United States must commit more of its resources to Asia. The growth of European defense spending since Russia’s full-scale invasion of Ukraine is an encouraging step. In 2023, 11 NATO members hit their spending target, allocating at least two percent of GDP to national defense, up from just seven members in 2022. The rest need to follow suit.
Europe must also resolve the problem of coordination. Right now, the United States coordinates more than 25 militaries in Europe. While it must continue to do this in the short term, it must push individual European countries and the European Union to take over this role and to create a stronger European pillar in NATO.
This is precisely what is atop Queen Ursula’s to-do list for her second term, so a second Trump presidency might not be a disaster but an opportunity in the eyes of ambitious and deluded in Brussels who want to amass more power in the name of marshaling the bloc’s finances to ramp up militarization efforts against the Russian menace.
In many ways Europe’s bureaucracy has already changed in small but fundamental ways in order to redirect money towards war. From Equal Times:
“In 2023, there was a very significant increase in military spending worldwide, but especially in Europe. In Spain, for example, it grew by 24 per cent and in Finland by 36 per cent. If we compare it with 2013, the European countries in Nato are spending 30 per cent more,” says Pere Ortega, a researcher at the Barcelona-based Centre Delàs for Peace Studies, which is critical of measures adopted by the European Commission to promote military spending, such as the VAT exemption for the purchase of armaments or the change in the regulations of the European Investment Bank (EIB) to allow it to finance industrial projects in the military sphere.
And according to the European Council on Foreign Relations (ECFR), the number of countries meeting the two percent target has risen from 3 to 23 since 2014:
The problem now is that individual states are running into budgetary constraints.
More Guns, Less Butter
EU leaders are determined to reimpose austerity on bloc countries beginning in 2025. That’s a return to the annual limits of 3 percent of GDP for public deficits and 60 percent for public debt, which were suspended in response to the Covid-19 pandemic.
There are some new twists to the rules that were marketed as measures to soften the pain, but if they do, it will be minimal. For example, the new agreement stipulates that countries with a deficit above 3 percent of GDP are required to halve this to 1.5 percent but can do so during periods of growth. That growth might quickly evaporate with such a public spending pullback, but that’s the plan. Elsewhere, countries will still be required to reduce their debt on average by 1 percent per year if it is above 90 percent of GDP, and by 0.5 percent per year on average if the debt is between 60 percent and 90 percent of GDP. The new rules give countries seven years to get their spending in order, up from four previously.
These rules will make it close to impossible to spend more on defense without completely cutting social services to the bone. Even without factoring in increased defense expenditures the outlook is grim:
Too meet reformed EU fiscal rules, Italy and France would have to go for fiscal consolidations over 2025-2028 that are larger than during the Euro Crisis (2011-2014). Spain has to do about half.
Do we properly remember the effects and political debates of €zone austerity? pic.twitter.com/Rmuz8jfkTJ
— Philipp Heimberger (@heimbergecon) June 21, 2024
So how to reconcile the goal of a defense union and remilitarization with plans for austerity?
A few possibilities:
- There is talk of exemptions from the debt rules for military spending.
- Bloomberg reported back in March that EU officials and investors are using the fiscal rules to push for an EU-wide bond program that would bring the investors bigtime profits while allowing the bloc to ramp up military spending without individual nations incurring more debt.
Of course a third option is that the EU will abandon its war against Russia, stop supporting Nazis, quit fetishizing austerity, and rebuild its economies, but back to reality.
The big question remains if Germany will get onboard with the EU bond program. One reason it could is because it would help Berlin with its own budgetary constraints. While Germany wouldn’t face major budget crunches like France, Italy, and Spain under the return of debt and deficit rules, it is hamstrung by its self-imposed deficit brake. [1]
That rule, intended to force German governments to balance the federal budget, was introduced under former Chancellor Angela Merkel during the euro crisis and restricts deficit spending to a minimum, except under “extraordinary” circumstances, such as a natural disaster or war. The current government tried to override the brake in order to shovel more money into the Ukraine bottomless pit, but was rebuked last Fall by the constitutional court.
An EU-wide war bond program could help the bloc bypass all the self-imposed debt brakes while still cutting and privatizing social services, and both could be a boon for investors. What’s not to love? The Centre for European Policy Studies with more:
Against this backdrop, the EU’s true ‘Hamiltonian moment’ in defence would be a decision to issue joint debt to properly fund the ambitions set out in its Defence Industrial Strategy.
Based on Art. 122 TFEU and implemented in accordance with Articles 173-174 TFEU, such bonds—possible under the EU’s Financial Regulation—could provide the backbone for grants to Member States to bolster the Union’s defence production capacity if paired with existing incentives for joint capabilities research, development, production, and procurement. This would avoid the two-speed logic and weaker conditionalities surrounding proposals to use the European Stability Mechanism (excluding key countries such as Poland, Sweden and Denmark) to issue loans to EU Member States for defence spending.
Like how the Covid-induced Recovery and Resilience Facility stabilised European markets and sustained demand during and after the pandemic, Euro-defence bonds are a potential game-changer for the EU’s defence ambitions due to the potential speed and scale of resource mobilisation, and the potential impact on market de-fragmentation. And, fortunately, the German Constitutional Court should have nothing to object to this time around.
The View from Outside the Cult
Voices from Moscow, Budapest, and Belgrade are issuing warnings that the EU continuing down this road increases the threat of war, and they are concluding that is what Brussels wants.
Moscow is taking note of von der Leyen’s plans and preparing accordingly according to Kremlin spokesman Dmitry Peskov:
“[It] confirms the general attitude of European states to militarisation, escalation of tension, confrontation and reliance on confrontational methods in their foreign policy,” said Peskov “Everything is quite obvious here.”
The Kremlin spokesman added that while Russia did not pose a threat to the EU, actions by its member states regarding Ukraine “have excluded any possibility of dialogue and consideration of Russia’s concerns. These are the realities in which we have to live, and this forces us to configure our foreign policy approaches accordingly,” Peskov said.
Hungarian Prime Minister Viktor Orban, childishly reprimanded by the EU for talking peace with world leaders, keeps warning about the levels of delusion in Brussels. His latest in a Magyar Nemzet op-ed:
The Brussels bureaucrats want this war, they see it as their own, and they want to defeat Russia. They keep sending the money of the European people to Ukraine, they have shot European companies in the foot with sanctions, they have driven up inflation and they have made making a living difficult for millions of European citizens.
Serbian President Aleksandar Vucic echoed those thoughts in a recent interview with the Pink TV channel:
“The West would like to conduct warfare from a distance, through someone else, through investing money and so on, but at the moment they are not ready [for a direct conflict with Russia]. Will they be ready? They are not ready now, but I think they will be ready. They are already preparing for a conflict with the Russian Federation and they are preparing much faster than some people would like to see, in every sense. We know that from the military preparations, we know how they’re going. And I want to tell you, they are preparing for a military conflict.”
Notes
[1] The budgetary constraints on German military spending are somewhat overblown in the media. Yes, the cabinet’s approved budget only increased by 1.25 billion euros to 53.25 billion this year and Ukraine aid was trimmed from nearly eight billion euros to around four, but the Bundestag still must debate and approve the budget so there will be changes. Even the current draft budget leans heavily on sleights of hand, such as pushing the order for dozens of battle tanks they’ve ordered off the 2025 budget and leaving the liability to be funded in subsequent years. As WSWS points out:
…the government is actually spending far more on armaments and war. A government overview of the budget states that “taking into account the relevant shares of other individual plans,” the NATO target of military spending of at least 2 percent of gross domestic product will be achieved. With a GDP of €4.122 trillion, this means at least €82.4 billion in military spending.
The sum is probably even higher, as Scholz has already boasted of defence spending of €90 billion to NATO. In addition to the central defence budget, the government has already announced “defence-related expenditure” of €14 billion from other budget areas in the current year. Further projects totalling €20 billion will be paid from the Bundeswehr “special fund,” which totals €150 billion…In 2028, when it is expected the Bundeswehr special fund will be exhausted, the defence budget is set to rise by a huge increase of almost €30 billion to around €80 billion.
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Thank you! Wasn’t this always bound to happen once French influence in Africa collapsed? In 1955 Pierre Nord produced a book ‘L’Euroafrique, notre derniere chance’, in which he noted that Europe risked being crushed between the USA and USSR, but that “Only Eurafrica is a complete economic, political and military solution. It is *the* solution for Europe. Economically, Europe may very rapidly become a power equal to the USSR and US, between which it will ensure the equilibrium. Economically and militarily, Eurafrica will be a nuclear power. In its immense territories, which no enemy can occupy, destroy or obliterate, it will produce atomic bombs. Which is to say that nobody will attack it. Yet, what we want is peace. Nothing but peace.”
Yet European influence in Africa has now largely disintegrated, and Nord’s nightmare – that Europe would be caught between the American Scylla and the Russian Charybdis – has come to pass. Europe simply cannot offer Africa a better deal than the Sino-Russian bloc. It lacks sufficient surplus capital to export in order to satisfy Africa’s development objectives, and its power had long rested upon the predatory CFA and the ‘suasion’ of successive secretaries-general of African and Malagasy affairs: Foccart, Journiac, the younger Mitterrand. Europe lacks a decent endowment of mineral resources (beyond iron ore, coal, bauxite, etc.), and its ability to extract or extort mineral resources from Africa has been key to its prosperity over the last five centuries. That is now at an end, but had been subject to diminishing returns since the late 1980s.
‘Robbed’ of Africa, the EU has slowly realised that it must double down on integration in order to offset the loss of African discounts (though meaningful returns to integration have probably already long been spent). The need to do this has been put into starker and more urgent relief by the large premium it has paid to the US for LNG imports since 2022 in combination with the effects of the IRA (the US trying to offset its inability to resolve its deficits with China by eliminating its deficits with the EU). There can be no movement on true debt sharing with the German economy in secular decline (German taxpayers not wanting to underwrite the alleged profligacy of France). Therefore, the Ukrainian war and the transformation or Russia into an external ‘other’ against which the EU can unite has been used by EU chiefs as a ramp to force deeper integration (and, in time, meaningful debt sharing) via the back door. Thus, per Monnet, integration is driven by crisis.
These same officials presumably believe that the contribution of the US to the defence of Ukraine must continue for as long as possible in order to smooth the transition (and lower the immediate cost) of the EU from a peace project to a war project. Brussels is presumably under no illusion that the US, whether under Trump or Harris, will stiff the EU with the reconstruction costs (EU taxpayers providing implicit subsidies to US private equity firms), but even this can be sold as an opportunity to deepen integration and to bulldoze Germany into assenting to debt sharing.
Europe’s path is surely down (the UK also).
Thanks for this. Here’s a Eurostat link that puts some numbers on the EU’s plan to recolonize Africa by force.
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Africa-EU_-_international_trade_in_goods_statistics&oldid=457940
Now that the gas station masquerading as a nation has passed Japan to become the 4th largest economy in the world, that makes Japan a sushi restaurant pretending to be a nation and Germany a beer and pretzel stand with a few used cars thrown in.
Europe and Japan are resource scare with a giant neighbor abundantly endowed with what they need and willing to peacefully trade with them or just about any rational actor. And at one time at very good prices to boot.
The action of self destruction of these Western nations is beyond belief.
https://www.imf.org/en/Publications/WEO/weo-database/2024/April/weo-report?c=223,924,132,134,532,534,536,158,546,922,112,111,&s=PPPGDP,PPPSH,&sy=2000&ey=2023&ssm=0&scsm=1&scc=0&ssd=1&ssc=0&sic=0&sort=country&ds=.&br=1
April 15, 2024
Gross Domestic Product based on purchasing-power-parity (PPP), 2000-2023
2023
Brazil ( 4,085)
China ( 33,552)
France ( 3,865)
Germany ( 5,544)
India ( 13,342)
Indonesia ( 4,391)
Japan ( 6,507)
Russia ( 5,180)
United Kingdom ( 3,917)
United States ( 27,358)
World Bank: The Russian economy has become the fourth largest economy in the world
https://nan.media/en/world-bank-the-russian-economy-has-become-the-fourth-largest-economy-in-the-world/
I believe the World Bank has finally come clean in admitting it used bad methodology (propaganda?) in analyzing Russian economy.
Further, The World Bank and/or others note the part of the Russian economy not captured by it’s analysis (underground) suggests it is MUCH larger than in other parts of the world and might place Russia ahead of India, making Russia…
THE THIRD LARGEST ECONOMY IN THE WORLD
The World Bank about the same time has reclassified Russia as a high income nation:
https://www.worldbank.org/en/about/leadership/directors/eds23/brief/russia-was-classified-as-high-income-country
Thank you:
https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD
GDP, PPP (current international $)
https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.CD
July 15, 2024
Gross Domestic Product based on purchasing-power-parity (PPP)
2023
Brazil ( 4,455)
China ( 35,263)
France ( 4,169)
Germany ( 5,858)
India ( 14,537)
Indonesia ( 4,333)
Japan ( 6,251)
Russia ( 6,452)
United Kingdom ( 4,026)
United States ( 27,361)
That’s it. If recall correctly, the World Bank said it has been mis judging size of Russian economy for a long time.
I guess I have become tired of seeing nations compared on GDP without reference to the sizes of their populations. China, a nation with over four times the population of the United States, has an overall GDP which is just twenty percent higher, instead of four times as large.
India has the third largest GDP only because it has so many people. Doesn’t it matter for arguments about “economic power” how much GDP a country has per capita? I admit this is probably a complicated question, and may depend upon the problem being discussed (e.g., national defense-war spending vs. domestic welfare spending), but surely it is silly to just discuss these things as though only overall GDP matters.
https://fred.stlouisfed.org/graph/?g=1pPhr
August 4, 2014
Real per capita Gross Domestic Product for China and United States, 1977-2023
(Indexed to 1977)
https://fred.stlouisfed.org/graph/?g=1pMR0
August 4, 2014
Real per capita Gross Domestic Product for China, United States, India, Japan and Germany, 1977-2023
(Indexed to 1977)
[ China, a nation with over four times the population of the United States, has an overall GDP which is just twenty percent higher, instead of four times as large. ]
An interesting question is raised.
According to the World Bank, the GDP of China is about 28.9% larger than that of the US. Presuming that basic needs of the people of China are being met, which they assuredly are, the relative GDP level should give a sense of the extent of resources that are available for research, development and further Chinese growth.
Robert Solow showed that investment as a share of GDP is critical for growth and China devotes a markedly high share of GDP to investment. Chinese investment should assure relatively high growth from here.
Though the thinking of Solow on growth seems little considered by Western economists at present, I hold Solow was correct and entirely support the Chinese investment emphasis.
Excellent comment, frog hole. How widely shared were Nord’s views? Certainly plausible.
Many thanks! They were very widely shared, and I fear that the importance of Africa to the early stages of European integration is too often overlooked (and only discussed in passing, for example, in the recently published 2 vol. Cambridge History of the European Union) This volume (from which I took the Nord quote) was a necessary corrective: https://www.bloomsbury.com/uk/eurafrica-9781780930008/. Also here, which also emphasises the importance of the Maghreb: https://www.cambridge.org/core/books/project-europe/5931FB3A173CD4770E31D2581BA7F8E7.
They could do whatever they liked a lot easier without American distractions/pressure / acts of war like destroying Nordstream.
The collapse of the dollar and Americas retreat from harassing the entire planet cannot happen quick enough, for me anyway.
Yep. It really doesn’t matter what Ursula and the war faction in the EU / UK want in terms of military prodcution. The industrial base will dictate how much the Europeans can make. The is now worsened by the the US led destruction of Nordstream 2.
They can print Euros or Pounds, but not print imported cheap energy. It’s not that there is no energy, it i that it s much more expensive an that it will make European industry, food production, and living standards far less competitive.
Essentially Europe has been destroyed from within thanks to people like Ursula and the German Green Party, which is now the war party. Europe is going to come out of this a much poorer place, and one that will have to beg Russia for forgiveness.
https://en.wikipedia.org/wiki/Eurafrica
Eurafrica refers to the originally German idea of strategic partnership between Africa and Europe. In the decades before World War II, German supporters of European integration advocated a merger of African colonies as a first step towards a federal Europe.
Great article and marvellous comments!
Why would leaders do this? Because they face their own destruction if they do not obey.
What a mess. As I’ve argued in various articles, money is not the problem. Even allowing for the fact that “Europe” has no money except for contributions from nations, and that the Commission is not supposed to interfere in defence affairs, where it has no mandate and no expertise, even massive amounts of money can’t create capabilities out of thin air. As I’ve argued, unless you can buy the goods, recruit the personnel, build the factories, build the training areas and ranges and generally recreate the infrastructure of forty years ago (which you can’t anyway) money by itself is of no value: it will simply produce inflation as too much demand chases too few goods. But I suppose money is all that the Commission, trained in the best Business Schools of Europe, can understand.
Meanwhile, Foreign Affairs is useless as you would expect. The US now has very little military power in Europe: its operational ground forces there are smaller than Belgium’s. There is thus no sense in which Europe is “dependent” on the United States. Likewise, the US doesn’t “coordinate” European militaries and never has. To the extent that anyone did during the Cold War, it was the civilian and military staffs of NATO, but they never had much success. Whereas intra-European equipment sales like the Leopard series of tanks did have some success, collaborative European projects from the AlphaJet to the Typhoon were a procurement nightmare, which took forever and ended up costing at least as much as national procurement would have. The European Defence Agency was set up twenty years ago (outside the EU structures) in an attempt to remedy this, but hasn’t had much success either.
This has nothing to do with Africa, by the way. Various colonial powers entertained dreams of some kind of confederation up until the 1960s, but the cost was frighteningly prohibitive. There was a brief flurry of interest in western military operations there after the end of the Cold War, but this soon petered out: witness the pitiful European contributions to operations in Mali. This is why, for most of the last twenty years, Europe has been encouraging African regional organisations to build their own capabilities, under initiatives like the African Standby Force, although that, again, hasn’t been a roaring success. European interest in Africa has anyway been declining for decades: my impression is that this is true even in the development area after so many disappointments.
[ Even allowing for the fact that “Europe” has no money except for contributions from nations, and that the Commission is not supposed to interfere in defence affairs, where it has no mandate and no expertise, even massive amounts of money can’t create capabilities out of thin air… ]
A fine comment, but there is a missing suggestion which is that the point is not Europe developing Ethiopia but Ethiopia adopting a suitable development model and attracting Europe to the new Ethiopian economy. The model, which Ethiopia has adopted, is that of China:
https://fred.stlouisfed.org/graph/?g=1qyj6
August 4, 2014
Real per capita Gross Domestic Product for Kenya, Ethiopia and China, 1992-2023
(Indexed to 1992)
It is the brazenness that gets me. Here in Britain, the newly elected neocon Starmer government pretending to be Labour, announced they would send £35 bn to Ukraine each year for as long as necessary, along with promising to hike the defence budget. No question of where the money would come from.
One festering sore related to child poverty is the 2 child cap. Namely child support only extends to 2 children, no additional payments for further children in a family. This has had a big impact on child poverty and according to various bodies, ending the cap, introduced by the previous tory government, would cost £35 bn a year, which cannot be funded! A parliamentary vote was held yesterday on the cap and Starmer demanded all Labour MPs vote to retain it. A handful voted against and a furious Starmer has cut them adrift.
No mainstream media, to my knowledge, has asked where the money for Ukraine is to come from. They really do take the public for idiots.
PS this post is not about MMT or how governments fund things, it is about the 2-faced lying they engage in as to what is important for them.
“It is the brazenness that gets me. Here in Britain…”
Especially important comment, showing that Labour under Starmer has become thoroughly, brazenly, fiercely, Conservative.
One of the main things most people miss about the Europe of this era is that there is a dramatic movement away from social democracy (as in Labour) that is inevitable. Why? Because immigrants from areas with totally different values (from Europe) makes the sense of cohesion of any of those societies with large immigrant population almost void. People do not trust each other nor do they have values in common so how are they going to want to support families with women (who wear burkas) who have multiple children? The UK is becoming the US but without the virtues and values of diversity baked in the cake in the US–we deal with diversity very well. We don’t trust each other but we do it in a way that is not disruptive of business or life in general. We see where the balance is, try to keep our institutions from getting too far out of hand through a culture that is automatically inclusive because we have had no choice but to develop that culture.
The ruling elites in Europe have no solution to the problems presented by mass immigration–the only way to keep the people with a sense of unity is to develop a love of war and aggression against evil “threats.” This is what the US has done–we keep people together by valorizing military virtues (thank you for your service) despite the obvious fact the the US military is incompetent. Europe wants the same–they dream of being a bulwark against whatever fantasy the propaganda organs are feeding average people. All this provides a sense of communality that is always missing from Western civilization now that we live in a post-modern world where meaning seems to be absent.
For any ruling class war is always the best way to impose an authoritarian regime on the common folk even if it threatens destruction of everything.
The silver lining in all this is that Europeans do have a history of social protests and with the reality that will become more and more obvious that in fact Russia is not after getting Europe, and the coming tightening of the belt, we will get many perfect storms across the big, multipronged peninsula jutting out onthe west of Eurasia.
The answer here is straightforward: militarization is both effect and cause, the result (the “solution,” from the standpoint of those who rule) is repression. This is an old story with many historical precedents, and one we are increasingly experiencing in other faux democracies, like the US. Less for the 99%, when they squawk, shut them up, shut them in, and if needs be, shut them down. After all, what are armed forces for?
All those defence budgets will require for every project the formation of multi-country conglomerates of companies which compete amongst them and at the same time need coordination, and who knows exactly where the money will be spent. One can expect that most of the money will run through the interstices of these complex arrangements and intermediaries, coordinators etc without delivering anything that will change the current dismal situation in Europe, not to mention Ukraine. The Neoliberal framework doesn’t allow for the development of an “EU army” which is built under the premises of some common strategy which doesn’t exist in any kind or form. This is a recipe for failure. These people only talk about % of GDP spending and financial tools as if these would magically turn fast in a well equipped, abundant, coherent body of armies with some not yet established objective. They live in fantasy land.
These people only talk about % of GDP spending and financial tools as if these would magically turn fast in a well equipped, abundant, coherent body of armies with some not yet established objective.
Exactly.
The statistics on the increase of %GDP devoted to defense are to be contrasted with the fact that we are never told about the concrete realization of those budgetary increases.
More money is spent — and where are the additional troops with their equipment? Instead, we are constantly reminded of rising shortages (not enough rifles for German soldiers, not enough ships for the Royal Navy, not enough tanks for the French army, not enough ammunition everywhere).
I am also reminded that many European countries (NATO and non-NATO) spent large sums of money to get the F-35, are still awaiting deliveries, and have been informed they will have to wait even longer. Easy to increase defense spending to that mythical 2%, but the increase of tangible military capabilities (even measured as raw numbers of widgets) remains elusive.
F-35 needs a new engine, or to shut down most of its on board electronics.
While the end of stealth invisibility is closer than money for reliable engines for the lead sled that carries 16000 pounds of mil spec jet fuel.
Spend more get less.
How will they wed austerity to militarism?
Stoltenberg explained it in Canada a month ago.
” Stoltenberg explained it is tough to prioritize defense over social services, but said a precondition of success in any western country is preserving peace and investing in security.”
“But, at the end of the day, if those countries aren’t able to prevent war, their efforts on health, education and climate change”will fail”.”
Apparently we have been preserving peace by arming Ukraine.
Got the causality backwards: efforts on health, education and climate change never having been seriously attempted, those countries will tear themselves apart failing at the war they’re determined to fight despite having utterly failed to prepare.
While the EU may be barking, it’s the USA that has promoted itself as and acted as the “BIg War Dog” over the past few decades.
They are counting on the USA being committed to backing up its bluster and, like crabs in a barrel, don’t care if more war brings down the USA.
Just another possibility…
Which gets back to me characterizing countries of Western Europe as adversaries, if not actual enemies, of United States and their agents in US government as traitors..
The NATO requirement is that defense spending be 2% of GDP, and that 20% of that defense spending be procurement.
It seems to me that a country could set up a national arsenal, like what Springfield used to be, and decide to procure nothing but domestically developed and produced systems, since spending on failed R&D is counted against the 2/20 requirement.
It seems to me that if a country decided to design and produce its own rifle, ammunition, aircraft, tank, defense related semiconductors, and everything down to the screws, they could spend the money which benefits its citizens, as opposed to sending the money off to Lockheed-Martin, Boeing, Nexter, or BAE Systems, they could meet this requirement while ensuring that the defense money stays in their country, promoting their national welfare.
Even if they never successfully create a new weapons system, it all still counts.
It’s Keynes paying people money to dig holes.
Ah yes, but such a country would have to have sat out the last 40 years and still maintain the infrastructure, skilled trades, process engineers, line expertise, organization and supply chains to do all these things.
Traded all that away on the alter of Markets so a few sociopaths could become oligarchs.
So here we are, and you can’t get there from here.
No, it wouldn’t. The requirement applies to all attempted procurement, successful or not.
So, it could do things that are (relatively) easy like small arms without too much difficulty, in the process creating things like steel mills, fastener manufacturing and machine tools, which both employ people and create the skills for heavy industry, and they can do things like produce a tank (Arjun in India, does not work, and 20 years from start to service entry), or an aircraft (Indian Tejas, 30 years from start to service entry).
Even if the country fails, they win, because the defense spending is setting money on fire, but if the spending is only on domestic defense production, they can metaphorically roast money on the blaze.
You do know that in much of Europe arms production is state-owned ? Like Fabrique Nationale in Belgium or DCNS in France or subsidised like BAe in U.K. or MBDA in Germany
The fact is there is no real customer because there is no military simply parade ground weapons to sell in display quantities not consume in actual combat. It is like Colonial Wars pre-1914 using a few Maxim guns but no heavy artillery and Vickers in U.K. having to licence fuses from Krupp
It is not 1940 when 40% GDP flowed into war
A sovereign country could do many things. None of the NATO/EU countries is sovereign.
During 1914-18 War Britain issued Perpetuals in the form of War Loan @5% which as Chacellor, Neville Chamberlain reduced to 3% in 1932 I believe
These were only redeemed when 3% became costly during NIRP era
There are no redemption schedules for EU Bonds and Germany doesn’t budget for the liability. What kind of Bondholder wants such a product in a portfolio ?
EU is a dustbin of liabilities with TARGET2 at BUBA and these Off-Sheet vehicles at nation state and EU level plus huge bank liabilities and strange things like KfW and Euro Investment Bank
The last thing Europe can do is industrialise as Germany de-industrialises since Euro currency value is propped up by shrinking German trade surplus
On Chamberlain’s conversion: https://www.routledge.com/The-Management-of-the-National-Debt-of-the-United-Kingdom-1900-1932/Wormell/p/book/9781138995550 (at chapter 19), and https://www.google.com/search?q=conversion+of+british+national+debt+1932&rlz=1CAXCFT_enGB1091&oq=conversion+of+british+national+debt+1932&gs_lcrp=EgZjaHJvbWUyBggAEEUYOTIHCAEQIRigATIHCAIQIRigAdIBCTgzOTVqMGoxNagCCLACAQ&sourceid=chrome&ie=UTF-8
Of course, this was all of a piece with the UK’s 1934 moratorium on the redemption of debts owed to the US (where, by 1916, the UK had effectively been forced to cede to MacAdoo the level of interest which should be paid): https://yalebooks.co.uk/book/9780300247183/the-long-shadow-of-default/#:~:text=Description&text=The%20Long%20Shadow%20of%20Default%20focuses%20on%20an%20important%20but,after%20the%20First%20World%20War. US officials repeatedly warned the UK about that de facto default, and it was one of the reasons why Congress applied such harsh terms to its assistance during and after WW2.
I agree completely with the points you make, including above: the present position is not analogous to the 1940s, and policymakers are staking far too much on the success of a revived ‘military Keynesianism’, which might instead be a further twist in the vortex of relative decline.
Perhaps a tiny bit of Trump’s brand of realism might get through to the not-very-bright European leaders in the next 4 years or so.
I hope he does abandon Europe, and let it flounder for a while until it wakes up to the nasty fact that it has been used, abused and discarded by its erstwhile friend and ally puppetmasters in Washington!