May 2, 2025

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Europe Seeks to Rapidly Increase Defense Investment Amidst Strategic Realignment

AP Photo/Bernat Armangue

Over half the countries in the European Union plan to trigger an emergency clause to allow an increase in defense spending and investment without breaching the EU’s spending limits. Belgium, Bulgaria, Czechia, Denmark, Germany, Estonia, Greece, Croatia, Latvia, Lithuania, Hungary, Poland, Portugal, Slovenia, Slovakia, and Finland, all reportedly want to increase their ability to boost defense capabilities. Twelve of the countries, including Germany this earlier this week, have already filed a formal request with the European Commission.

The exemption would allow countries the ability to increase their defense spending up to 1.5 percent of their gross domestic product (GDP) each year for four years without breaching EU fiscal rules, triggering disciplinary steps from Brussels for excessive borrowing. Such disciplinary steps are normally taken when a government’s deficit is above 3 percent of GDP. The rules were established to underpin the euro currency by limiting government borrowing and deficits.

These recent developments are part of a broader move by European countries to boost defense spending and capabilities in the face of apparent U.S. retrenchment and the war in Ukraine. In addition to the fiscal escape clause, the European Commission has also proposed a plan to mobilize up to €800 billion for defense spending over four years. This includes €150 billion in loans for joint armament projects.

Overall, Europe led to a record international rise in defense spending last year, according to the Stockholm International Peace Research Institute (SIPRI). European spending increased by 17 percent to $693 million, leading a global rise of 9.4 percent to $2.7 trillion worldwide, according to SIPRI. This marks the highest level of defense spending since the fall of communism in Europe, most notable among NATO countries responding to Russia’s invasion of Ukraine.

As this massive boost in spending demonstrates, the war in Ukraine and the uncertainty of U.S. partnership has upended some of the most entrenched taboos around greater European autonomy and defense investment, particularly in the past few months. This has extended beyond the EU to the national level. French President Emmanuel Macron recently reiterated his willingness to extend France's nuclear deterrence to other European nations. The new German Chancellor Friedrich Merz has stated his interest to discuss such a proposal with France and the United Kingdom. Germany also approved a €1 trillion defense package – a significant shift away from the country’s post-war pacifism and resistance to militarization. Poland, one of EU’s leaders in defense spending, has expressed its aim of gaining access to nuclear arms and to a larger military. Belgium, who has often lagged behind its European counterparts in defense, has sought to boost spending and investment in critical military equipment.

Support for the rapid re-armament of Europe, including heavy investments in the defense industrial base, comes with challenges. This includes stunted joint procurement efforts, lack of interoperability, differing strategic cultures, and the fragmentation of the defense industry. The U.S. has also opposed European defense industrial base integration at the expense of U.S. weapon procurement.

As European leaders move to rapidly increase their defense capabilities in the longer term, many are seeking to expand defense partnerships in the present, giving considerable leverage to countries such as Türkiye over European leaders. Türkiye’s membership in NATO - with the second largest military in the alliance after the U.S. – and its robust arms industry renders the country a relatively ideal alternative. The country was also included in a list of non-EU countries who could potentially benefit from the European Commission’s new €150 billion rearmament fund.

The urgency of rearmament has seemingly led to muted reactions from European leaders to a recent crackdown on Turkish President Erdogan’s political opposition. Europe’s relative silence on the country’s slide into authoritarianism demonstrates how the prioritization of defense may supersede Europe’s foreign policy ideals or principles. A rush for U.S. defense alternatives may require continually turning a blind eye to human rights concerns and democratic principles, potentially paying the consequences with the European electorate. Moreover, U.S. alternatives are far from an exact one for one exchange; new partners, such as Türkiye, do not provide the same high-tech defense and intelligence capabilities as the U.S., not to mention the shared history, including joint missions, democratic values, and allyship in the post-World War II era.

Moreover, some analysts have begun to note a coming backlash linked to increased defense spending due to the potential “guns-vs-butter” decisions. The number of people currently over 65 has surpassed those under age 15 in Europe, intensifying pressure on the welfare state, particularly in areas like pensions and healthcare. This comes at a time when Europe may eventually have to cut costs to bolster its defense funding, particularly against concern about high debt-to-GDP ratios across the continent.

As the inevitable tradeoffs between defense spending potentially cuts into social welfare programs, the European political landscape may be impacted. Populist politicians and figures across the ideological spectrum have increasingly pointed out the alleged disconnect between Brussels’ priorities and those of the European electorate, mobilizing tens of thousands in Europe for protests over the cost-of-living and energy prices. European centrists currently experiencing a slight bump in support today due to moral clarity on Ukraine may potentially experience the backlash from those tradeoffs in future elections, with Euroskeptic populists on the rise capitalizing on the fallout. Whether the European leaders are able to effectively weather these impacts, and convince the public of the necessary investment tradeoffs, remains to be seen.