Terror in Europe

Who’s Left Behind In New Global Arms Race? Old Europe

France has long been the only country in continental Europe to invest in its military. Though others are now reacting to new threats, it may be too little too late.

Russian Spetsnaz special forces soldiers in Red Square in May
Isabelle Lasserre

-Analysis-

PARIS — In terms of defense, Europe has long lived in la-la land, a world made of cotton and kindness. Protected under the U.S. umbrella since 1945, it fed on the dividends of peace. Certain that social wellbeing was superior to matters of defense and security, Europe reduced its defense budgets for years. Now, Russia's imperialist ambitions and Islamist terrorism have woken up the continent.

On the advice of his military chiefs, French President François Hollande has stopped the constant tightening of France's defense budget, which was threatening its long-term military model. Eastern European countries, starting with the Baltic nations, splashed out on defense thanks to Russian President Vladimir Putin. And Germany is starting to break away from its post-World War II disarmament process "thanks' to ISIS. Still, only a few European NATO members actually respect their commitment to spend 2% of their GDP on defense, though they vow to do so at every summit meeting.

This awakening is too little too late considering how serious the threats are on the Old Continent and in France. According to the French chief of defense staff, Pierre de Villiers, there are two threats: the return of powerful nation-states and radical Islamist terrorism. He warns that neither of these threats will diminish in the coming years even if ISIS is eventually defeated by the international coalition in the Levant.

A former colonial empire with nuclear weapons, and a permanent member of the UN Security Council engaged in many fights abroad, France is the only country aware of the need to fend off both threats simultaneously. Eastern Europe worries mostly about the rise of a powerful Russia. The southern part of the continent is anxious about the threat of terrorism. This gap between southern and eastern Europe leads to different judgments, which affects the entire bloc's defense.

While Europe ponders the necessity to bolster its defenses and judges the hierarchy of threat, the rest of the world is in a fast-paced arms race. To the east, Russia has been increasing its defense budget considerably these past few years. It's modernizing its nuclear-deterrence capability, developing its navy and reinforcing its conventional forces.

In a world that's growing more unstable and dangerous, all the biggest powers are investing substantially in military force. In Asia, these include China, India, Pakistan and Japan. North Korea leader Kim Jong-un announced on Dec. 31 that his country is now a nuclear power. Armament is also clearly underway in the Middle East, where Saudi Arabia, Egypt, and the Gulf monarchies, in addition to Iran and all countries around the Levant, are reacting to the region's instability and chaos.

"We are at war," De Villiers declared recently. "And you can't win a war without an effort at war. It's the price to pay for peace."

Europeans have long forgotten that history can be tragic. The biggest shock this year might come from the other side of the Atlantic. "The continental drift that's pushing America toward Asia will accelerate under Trump," predicts general Vincent Desportes, a former director of the Paris-based École de Guerre. "It's thus possible that Europe will feel the need to regain its strategic independence. It will then have to organize the continent's defense."

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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