‘Old Europe’ scrambles to get ahead of Trump with bigger military outlays

(Originally published Dec. 23 in “What in the World“) The punditocracy is waking up to Europe’s gathering crisis.

After it dawned on The New York Times Dec. 19 that the confluence of events transpiring between dots in London, Brussels, Paris, and Berlin might deserve connecting, its opinion editors saw fit to publish a guest essay Sunday they headlined “Things Are Terrible in Europe, and They’re Only Going to Get Worse.”

Editors at The Guardian have their economics editor Larry Elliott wondering: “Germany and France are in crisis—is the next global financial crash brewing?” Politico’s editors have given their chief economics correspondent, Matthew Karnitschnig more certainty with “Europe’s economic apocalypse is now.”

Editors, not columnists, write headlines. So don’t blame the pundit if the headlines get the emphasis wrong. Elliott aptly puts Europe’s problems in a nutshell:

The problem for the eurozone’s big two is that they have near-stagnant economies alongside generous social welfare systems that date back to the postwar decades, when growth was still strong. Low levels of unemployment ensured there were the tax revenues needed to pay for pensions and other benefits. The arrival of the baby-boomer generation meant there were plenty of workers for each retiree. The US picked up most of the tab for Europe’s defence during the cold war, allowing European governments to prioritise welfare spending. But those favourable conditions no longer apply. Birthrates have fallen, and the baby boomers are getting older. Europe is being forced to dig deeper to pay for its own defence in the face of the threat posed by Russia. Most important of all, growth rates have slumped.

Karnitschnig sees incoming U.S. President Donald Trump as the straw that could break Europe’s back: “With Donald Trump poised to retake the White House in a few weeks and the continent’s economy in a deepening funk, the bedrock on which the region’s prosperity rests isn’t just developing fissures, it’s in danger of crumbling.”

In a post Friday on Truth Social, Trump said he had “told the European Union that they must make up their tremendous deficit with the United States by the large scale purchase of our oil and gas. Otherwise, it is TARIFFS all the way!!!”

Europe has faced the prospect of a Trump trade war before, obviously, and so the European Commission reportedly has a plan ready. The difference this time is that Europe’s individual members are more divided, with the two largest economies distracted by political crisis. That makes it easier for Trump (and China) to sidestep Brussels, divide the EU and conquer.

Europe also fears a real war—with Russia—and having to fight it without help from Trump. So, despite its political troubles, Germany is buying four new submarines in a joint purchase with Norway for a total of six U-boats for 5.5 billion Euros. German Defense Minister Boris Pistorius, who will lose his job with the rest of Germany’s government after last week’s no-confidence vote, told reporters last week Germany needs to spend more on defense and should even lift its cap on government debt to do so. “If Putin attacks,” Pistorius told Funke Mediengruppe, “we must be fit to wage war.”

Trump has already put the European members of the North Atlantic Treaty Organization on notice that he’ll abandon them to the Russian peril if they don’t boost their own defense spending to at least the NATO minimum of 2% of GDP. That has sparked a flurry of efforts to increase military outlays. Last year, European Union members of NATO boosted military spending by 10% to a record €279 billion ($293 billion) and are discussing raising the target next year to 3% of GDP.

But new reports say Trump wants them to raise their defense spending to 5% of GDP. Greek Prime Minister Kyriakos Mitsotakis told reporters Sunday after an EU defense meeting in Finland that the new target would become clear after Trump’s inauguration. “We know we will need to spend more than 2%,” Mitsotakis said.