Europe’s Social Spending Likely Faces Cuts

With a possible U. S. pullback, nations weigh expanding defense industries

BY LAURENCE NORMAN

BRUSSELS— European countries are waking up to Russia’s danger, but the cost of building robust defenses able to withstand a potential U.S. pullback is so great that it threatens Europe’s post-Cold War social model.

With presumptive Republican presidential nominee Donald Trump questioning America’s future in the North Atlantic Treaty Organization and Russian forces on the offensive in Ukraine, European leaders are warning of an existential threat to the Continent’s security.

War nearby and disputes with the U.S. have exposed gaps in Europe’s military capabilities that would take years to plug even if governments make military spending a political priority, which they haven’t done for decades.

European Union leaders meeting on Thursday plan to address the bloc’s defense vulsian and its ambition to expand its defense industry. Painful decisions lie ahead.

Boosting Europe’s security would require increasing defense outlays just as many European countries are cutting budgets to cope with high debt levels and weak economic growth. Achieving the military spending that some politicians and experts say is needed would force European members of NATO to start reversing big post-Cold War social spending increases.

“You have to rearrange the social contract,” said Lithuanian Foreign Minister Gabrielius Landsbergis, who has warned that Russia eventually will attack NATO countries if it isn’t defeated in Ukraine.

Europe would need at least 20 years to build a European force capable of reversing a Russian invasion of Lithuania and parts of Poland without the U.S., according to a 2019 analysis by the International Institute for Strategic Studies, a think tank.

The cost, IISS said, would be $359 billion, more than $420 billion today. Europe’s NATO allies are projected to spend $380 billion on defense this year.

While vast amounts of Rusmean equipment have been destroyed in Ukraine, many Euro-pean officials say Moscow could rebuild its military within a few years of the war’s end. NATO has depleted its own stocks of weapons to arm Ukraine.

Because militaries need years to plan, equip and train forces, European governments face immediate and tough spending trade-offs.

“It comes down to the political will in combination with an ability to explain to the public what it is we really have to do,” said Anna Wieslander, director for Northern Europe at the Atlantic Council, a think tank in Washington. “The closer to Russia you get, the easier it seems to be.”

Europe in recent years has started reversing military cuts made after the Soviet Union collapsed in 1991. During the Cold War, many NATO members spent roughly 3% of gross domestic product on defense. Those outlays plunged in following years. After Russia seized the Crinerabilities Peninsula from Ukraine in 2014, NATO members agreed to lift their spending to 2% of GDP by this year. Many experts believe European defense expenditures must reach 3% of GDP if the U.S. starts to disengage.

The swing would be enormous for some countries.

For Belgium to buy enough ammunition to fight an invasion for a few weeks, it would cost more than $5 billion, said retired army Lt. Gen. Marc Thys. The kingdom is one of NATO’s lowest military spenders, at less than 1.2% of GDP in 2023.

When Thys joined the military in the 1970s, Belgium could deploy 50,000 men to Germany. After Russia’s invasion of Ukraine two years ago, Belgium agreed to send 300 troops to Romania. “We had to pull out all the stops,” he said.

Most European countries can hit 2% military spending by squeezing other government outlays by less than 1 percentage point, according to a recent study by Germany’s Ifo Institute for economic research. But to reach 3% would mean shifting several percentage points of government spending to defense, Ifo said.

Britain, has long spent 2% of GDP on defense but has a target of 2.5%, contingent on economic conditions. To reach 3% of GDP, Britain would need to boost military spending by more than $40 billion, said Ben Zaranko, senior research economist at the U.K.’s Institute for Fiscal Studies. That is twice what Brit-ain spends on its justice system.

“I think generally, if we want to spend much more on defense and we don’t want a bigger state, the government has to start removing state responsibilities,” Zaranko said.

Europe’s defense cuts since the Cold War generated a peace dividend of about $2 trillion, according to Ifo.

Ifo calculates that although European NATO countries’ military spending has returned to 1991 levels based on 2023 prices, social spending has more than doubled in that time, to consume half of government spending. That includes entitlement plans such as rising pension costs in an aging continent, which are politically hard to adjust. That fiscal pressure has left Europe dependent on Washington for vital military capabilities. —Daniel Michaels contributed to this article.