the challenges of an alliance that needs to strengthen the defense of Europe

the challenges of an alliance that needs to strengthen the defense of Europe

The North Atlantic Treaty Organization (NATO) today celebrates its 75th birthday, three quarters of a century in which the alliance has been growing and incorporating new members to build a collective defense network. NATO was founded on April 4, 1949 to organize a common defense against the threat of the Soviet Union, and three quarters of a century later it is once again gaining importance to protect Europe from its eastern neighbor. The alliance’s anniversary comes at a time when consideration is being given to how to strengthen Europe’s protection, with the shadow of donald trump and their demands that members’ defense investment commitments be met, under threat of ceasing to protect them. Billion-euro increase in defense spending needed to meet pact to invest 2% in this effort, and Europe is proposing different formulas. One of them, making use of the rescue fund (ESM), the mechanism whose existence was key 12 years ago to avoid the sovereign debt crisis in the euro zone.

On its 75th birthday, NATO finds itself at an important moment in its history. The Organization needs to shield Europe from the Russian threat, after more than two years of open war in Ukraine, and the United States, the leader of the alliance, pressures the member countries of the Old Continent to comply with the investment commitment in defense that they have been avoiding for years: spend a minimum of 2% of their GDP on defense. The possible arrival of Donald Trump to the White House, if he wins the elections next November, promises to create tensions in the Organization, since has threatened to stop defending those countries that do not comply with this agreement.

“The prospect of a second Trump administration in the United States has already catalyzed conversations among other NATO members about radical reforms to increase defense spending, with the prospect of the United States returning to pre-1941 isolationism,” explains Samy Chaar , chief economist at Lombard Odier. And this, a withdrawal of the United States from the defense of Europe, is something that the Old Continent cannot allow at this moment. There are analysts, such as the philosopher Gabriel Albiac, who have been warning for years that the United States is losing interest in the Old Continent and that it is rotating its efforts towards other areas, such as Southeast Asia.

The reality is that there are not a few European countries that do not fulfill their commitments with NATO: more than half of Europe does not reach the defense investment to which it has committed. Spain is one of those countries, with defense spending in 2023 of 1.26% of its GDP, something that would force our country to increase spending by nearly 10 billion euros to be able to meet US demands. Only Luxembourg and Belgium dedicate a smaller portion of their GDP than Spain to this effortwhile France, Italy, Germany, the Czech Republic, Romania, Bulgaria, Croatia, Turkey, the Netherlands and Norway will also have to increase their defense spending to reach 2% of GDP.

A billion-dollar increase in defense investment

Europe’s commitment to increasing its investment in defense seems assumed. In recent weeks, the rhetoric of several leaders of the Union, such as Ursula von der Leyen, president of the European Commission, or Emmanuel Macron, president of France, as well as Margarita Robles, Minister of Defense of Spain, have had overtones warmongers, ensuring that the threat from Russia is real and that Europe must be prepared to defend itself from its eastern neighbor.

This requires tens of billions of euros in investment, and we must not forget that for NATO it is also now important to finance the defense of Ukraine, the country that is already fighting Russia on its territory, another effort that the countries alliance members will have to finance. In fact, it seems that a firm proposal is already being formed, which will be voted on at the Organization’s meeting next July in Washington, since Jens Stoltenberg, the secretary general of NATO, has proposed the creation of a fund of 100 billion dollars among the members of the alliance to finance the defense of Ukraine for the next five years.

“We must change the dynamics of our support,” Stoltenberg said this week. “We have to ensure predictable security assistance that Ukraine can rely on in the long term, so that we rely less on voluntary contributions, and more on NATO commitments, less on short-term offers, and more on multi-party commitments. years,” he considers.

Sources of Bloomberg They also highlight that Stoltenberg’s proposal includes NATO taking over the leadership of the group now led only by the United States that is responsible for coordinating arms deliveries to Ukraine, the Defense Contact Group for Ukraine. If the direction of this tool falls on NATO as a whole, and not just on the United States, this would protect the system against the possibility that Donald Trump wins the elections in November and decides to distance the United States from Europe.

Apart from investment in the defense of Ukraine, an option that is currently being considered so that the members of the Union can achieve their defense investment objective has to do with the rescue fund that the EU set up in the years of the debt crisis to protect the Union in times of serious difficulties. The European Stability Mechanism (ESM) was created to finance members of the Union that needed it in times of extreme urgency, and to date it has not had to be used. Its appearance alone was enough in 2012 to calm the risk premiums of some European countries, such as Spain, Italy, Portugal or Greece, at the worst moment of the crisis that year. Also It was even considered using it during the Covid pandemic.

Now, While the different ways to increase military spending in the Old Continent are being discussed, the Mede has emerged as a possible means of financing this effort.. As of today, the fund’s capacity exceeds 400 billion euros, a sufficient amount to be able to cover the investment needs of members for some time.

The use of the Mede on this occasion seems to be a replica of the creation of the Next Generation funds that Europe launched to combat the economic crisis derived from the coronavirus pandemic, and which has also been used to finance the energy transition on the continent, with the objective of increasing the generation of green energy in the block. With Next Generation, 750,000 million euros were put on the table, and there is no doubt that defense investment needs are now a great priority in Europe, so making use of the 400,000 million from the Mede does not seem like a crazy option.


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