Russian threat abruptly ends West’s ‘peace dividend’

“The prospect of a Soviet invasion of Europe is no longer a realistic threat,” George H.W. end of the cold war.

The then president’s comments signaled the optimistic era of “peace dividends”. Western governments were eager to fund priorities other than security, such as health and education or lower taxes, in an era of expanding free markets, liberal democracy and economic globalization.

Three decades later, Russia’s assault on Ukraine has once again thrust defense spending onto the agenda. The United States provides billions of dollars in military assistance to Kyiv. Long complacent on defence, European countries, including Germany, have pledged to spend more.

“Now, whoomph, we are suddenly in a new era that is the opposite of globalization, where concerns of state and security trump free markets and economics,” said Nigel Gould. -Davies, Senior Fellow at the International Institute for Strategic Studies, a London thinker. -Tank.

But it is a redefinition of priorities that could harm Western living standards. As Kaja Kallas, Prime Minister of Estonia, a country bordering Russia, said: “I would like to invest all this money that we invest in defence, in education, but. . . we don’t really have an option.

Western military spending had already increased slightly in the mid-2010s, when Russia’s annexation of Crimea and support for separatist movements in eastern Ukraine in 2014, as well as fears over the rise of China, prompted the US, UK and EU to repair cut security budgets after the 2008 Financial Crisis.

Military spending has continued to rise slightly during the coronavirus pandemic, said Diego Lopes da Silva, senior researcher at the Stockholm International Peace Research Institute. But a complete reversal of the post-Cold War peace dividend would require an expenditure of an entirely different magnitude. It would also compete with other pressing needs, such as the transition to a green economy.

At the end of the 1980s, the United States spent 6% of its gross domestic product on defence. Last year it spent 3.5%, a difference of more than $520 billion. EU countries have further cut spending, in part because they have relied on the US security umbrella and because rules limit their budget deficits and ability to run up debt.

Last year, of NATO’s 30 member states, only the US, UK, France, Baltic states, Norway, Poland and Romania met the alliance’s target 2% of GDP devoted to defense spending. Germany, Europe’s largest economy, spent just 1.3%.

The invasion of Ukraine changed the calculus. Although the West is now much stronger militarily than Russia, unlike in the Cold War, Moscow’s unpredictability has prompted politicians to act.

Topping the list, according to analysts and defense officials, are more combat-ready NATO forces positioned in Russia’s border states, particularly the Baltics, as well as increased military readiness. forces and ammunition capacity.

A Ukrainian soldier carries a Javelin missile system
A Ukrainian soldier carries a Javelin missile system. The United States has sent about a third of its stockpile to Ukraine this year © Gleb Garanich/Reuters

The German army recently revealed that it lacks combat-ready equipment. Even the United States, which spends the most on defense, was taken aback: it sent a estimates that a third of its Javelin anti-tank missiles are destined for Ukraineand replenishing this stock will take years.

“Just-in-time logistics are great – until you’re in the middle of a battle,” said Andrew Graham, former head of the UK’s Defense Academy. “Peacetime accounting does not allow you to have reserves, but military doctrine requires it.”

European pledges to increase defense spending are now on the rise, though funding them is another matter: governments must help voters cope with soaring food and energy prices that have been exacerbated by the conflict in Ukraine.

Line graph of defense spending as a multiple of health spending showing that the

“Putin’s central thought is that the West will not get out of this and will eventually tire of supporting Ukraine,” a senior European intelligence official said.

Even in energy-rich Norway, which is benefiting from rising oil prices, there are fears that NATO’s 2% spending target could become out of reach in a booming economy.

In the UK, which has NATO’s second largest army, leading politicians are calling for defense budgets to reach 3% of GDP. “I have always said that as the threat changes, the funding should change,” said British Defense Secretary Ben Wallace. “It’s up to me to present a case on these threats.”

Germany is committed to meeting and even exceeding the NATO target. But the 100 billion euro defense fund it is setting up is enough to fund its spending shortfall for just two years, analysts say.

Relative volume circles showing military spending in 2021 (in billions of dollars).  The United States spends as much on its military as the following 10 countries combined G0934_22X

French President Emmanuel Macron has outlined plans to boost military spending, but the country’s top audit body has warned that to do so, Paris will have to skimp on other spending to meet budget deficit targets.

In Italy, Prime Minister Mario Draghi’s desire to increase defense spending has met with public resistance, with teachers threatening protests and public transport workers announcing strikes.

And in Spain, Prime Minister Pedro Sánchez’s aim to reach the 2% target by 2030 is facing strong opposition from his government’s coalition partner. Yolanda Díaz, the communist deputy prime minister, said the priority should be “research, education and health”.

The Netherlands is a rare example where the government seems to have seized the nettle. Last week he agreed to a series of spending increases hitting the 2% target by 2024, paid for by tax hikes, spending cuts elsewhere and government borrowing.

“2022 is the year the importance of defense spending was recognised,” said John Llewellyn, former head of international forecasting at the OECD and partner at Llewellyn Consulting. “But it’s not necessarily the year when the tax burden also had to increase to fund it.”

Additional reporting by Andy Bounds in Brussels, Guy Chazan in Berlin, Amy Kazmin in Rome, Richard Milne in Oslo, Sarah White in Paris and Peter Wise in Lisbon

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