Economist March 22nd 2025 Europe 45
CHARLEMAGNE
Theres no such thing as a free tank
Europe needs to spend more on defence, notjust pretend it is
defence efforts. But why stop there? With a bit more creativity,
even larger slices of government outlay could be re-imagined as
part of this expanded security budget. Since a citizen in ill-health
can hardly be expected to serve in the armed forces, surely public
hospitals should be included as defence spending too? Soldiers
need to be able to read, and travel to military bases; including the
education and transport budgets as a subset of the military makes
perfect sense. The list is just about endless.
-t I ~ 3 For the 23 NATO members who are also in the European Union,
the incentive for creative defence accounting has recently grown
stronger still. As taxes in most EU member countries are already
high and social spending seemingly sacrosanct, the easiest way
for national governments to quickly pay for more defence is to
borrow the money first For some, notably in the south, adding to
the national debt pile would mean they fall foul of the Eu's fiscal
rules, which normally limit annual budget deficits to 3% of GDP.
Plans are afoot to loosen these strictures by allowing countries to
run up additional deficits of 1.5 more percentage points without
facing sanctions from Eurocrats, so long as the money is spent on
defence. Anything that can be shoehorned into that category
probably will be, to Mr Sanchez's delight.
Spain and Italy are not the only ones tempted by creative think-
s THE BRITISH government drew up its annual budget in 2015, ing. There are plenty in Europe, including in Paris and Berlin, who
A the sums came out wrong in a troubling way. Cuts across de-
tments meant that spending on defence would come out just
think setting up state-owned banks which defence contractors
could borrow from will help ramp up production of drones and
of 2% of GDP for the first time since the 1930s. That wouldn't shells. This is appealing to politicians: a little seed money to start
only a year earlier Britain had hosted NATOleadersas they for- a bank can be "leveraged" into big amounts that look nice in press
lly agreed on the 2% figure, in response to Russia's first crack at releases. But credit facilities merely help private arms-makers sort
ading Ukraine. A clever way was soon found to spare politi- out the financial mechanics they need to operate. Ultimately gov-
ns' blushes. A few billion pounds of spending that had not in ernments will still have to find real cash to buy the lethal stuff
vious years been included in the defence budget was discreetly once it is made. There's no such thing as a free tank.
uffled into it, in what was politely dubbed a "revised accounting
ategy" (also known as "shifting the goalposts"). With the stroke Does sunscreen count as defence spending?
a pliable accountant's pen, Britain's defence budget now in- European diplomats are privately spluttering at the Spanish and
ded pension payments to war widows and defence-ministry Italian approach. They are right. Obfuscation on military funding
ff, as well as some intelligence spending and contributions to represents a spectacular failure to rise to the occasion. For one, it
-flung UN peacekeeping missions. The tactic helped nudge the is likely to prove self-defeating. "If you lump too much into de-
-important figure back above the desired threshold. fence spending that isn't really related to defence, you will just
Given further Russian aggression and American isolationism, end up with a far higher target to hit," says Fenelia McGerty of the
2% figure is no longer enough. At a summit of NATO leaders in International Institute for Strategic Studies in London. In other
e its 32 members will have to agree to spend well over 3% of words, forget 3.7%; the NATOtarget might come out closer to 6%.
P on defence (the latest betting is on 3.7%). No amount of ac- What is worse, Mr Sanchez's idea is premised on a fallacious
unting fudges will bridge such a gap. But this bas not stopped notion: that NATO countries abutting Russia need to invest in
me politicians from attempting a turbo-charged variant of the tanks and infantry to be shot at, while those further away do their
tish trick. On March 13th Pedro Sanchez, prime minister of bit by running IT helpdesks. That is offensive to the very idea of an
ain, proposed a novel way to boost his country's defence spend- alliance. "A government can't say 'I'm doing this but l'm not going
, NATO's lowest at a feeble L28% of GDP. The wheeze is not ac- to do that': NATO cannot work that way," says Edward Hunter
lly to spend more on the armed forces, but to adopt a "360-de- Christie, a former NATOofficial now at the Finnish Institute of In-
e" vision of security instead. For one thing, the real peril to ternational Affairs. Burden-sharing means everyone must have
ain comes not from Russian tanks trundling over the Pyre- skin in the game, including a fair share of the dangerous bits.
es-why worry about that? The threats posed by a changing cli- Yes, convincing voters to trim public services or pay more tax is
te in the Mediterranean basin mean that efforts to curb carbon hard. That is what political leadership is for. Germany is showing
issions should be counted as akin to military expenditure, the way by shelving its sacrosanct "debt brake" to fund its armed
ngside cyber-securiry and combating terrorism. Several per- forces. The Baltics have raised all sorts of taxes, including on to-
ntage points of GDP can thus be re-imagined as defence spend- bacco ("Smoke a Marlboro, stop the Russians!"). Denmark even
, and whatever target NATOsets easily met. jDicho y hecho! nixed a public holiday. A lot more will be needed. For their part,
Italy has its own defence-washing plans in mind, arguing that southern Europeans should remember how much they have bene-
asures relating to economic competitiveness-itself a nebu- fited from being part of both NATO and the EU. And that for alli-
