Chartbook 389: Europe's zombie armies. Or how to spend $3.1 trillion and have precious little to show for it.

“$3.1 trillion on European defense over a decade ... really? Can you send us the data please.”

The reaction of my editors at the FT to an early draft of my recent op ed on European defense policy was more than understandable. Can it really be true?

European militaries are reputedly out of their depths in facing the new world created by Russia attack on Ukraine. For years, they are said to have been starved of funding by short-sighted politicians. The answer to the current crisis is to increase their budgets to 3.5 percent of GDP, or even 5 percent, depending on how you count.

So it does come as a something of a shock to learn how much money has, actually, been spent by Europe on its defenses in recent years, without, it seems getting much bang for its trillions of bucks.

For the doubters, here are the SIPRI numbers.

$ 3.1 trillion over a decade.

If you go back to the early 1990s, the numbers get truly bamboozling. If we take 1991 to 2021 as an epoch - from the dissolution of the Soviet Union to Russia’s invasion of Ukraine - total non-US NATO defense spending comes to $8.9 trillion in 2023 prices. That is an earth-shattering, world-changing amount of money frittered away on the declining institutions of the European military, which are now seemingly unable to mount an effective defense against Putin.

Of course, part of the answer is that these kind of sums are unfair.

Like GDP, military spending is a “flow”. Security has to be provided and paid for every minute of every day. Adding up annual spending, arriving at a huge total and then demanding to know what we have to show for it, misses the point. It is a bit like adding up a decade of grocery bills and asking, where is all the food? We ate it. We wouldn’t be here to ask the question if we hadn’t. Europe was defended every minute of every day. Defense spending did its job.

But this counter argument only works up to a point.

Yes. There is a service element to defense that is “consumed” as we go along. That is best captured in the salaries paid to soldiers and defense staff. And Europe has plenty of soldiers. Even more staggering than the defense spending, arguably, is the fact that so many Europeans are in uniform.

In the early 1990s, as the Cold War ended, non-US NATO strength stood around 2 million. By 2000 after years of drawn downs, the figure for EU militaries had stabilized at 1.3-1.4 million and there it has remained. Those men and women are not organized into a single force but split across 29 separate forces.

Here, from sensible sources, is a ChatGPT compilation, for the strength of EU militaries in 2023.

Don’t be distracted by the outsized fleet of 1800 Greek tanks. It would be worth a post in its own right. It consists in large part of outdated vehicles donated or bought on the cheap or with subsidized loans.

The point is that there are far too many, undersized and independent fighting forces, consuming resources, and offering very little military effectiveness. There was the misguided attack on Libya. France could deploy forces to the Sahel. But they were the exceptions that proved the rule. Germany is more typical in having a military rated at almost 200,000, but struggling to deploy even a few combat brigades.

It would seem that Europe’s problem is that it spends too much on defense as a service - i.e. salaries, wages, pensions - and too little on defense as an investment i.e. on weapons and other hardware and infrastructure. This is strongly suggested if we compare expenditure on defense procurement with the personnel strength of the US, UK, France, Germany and Italy. Germany’s figure in this table are flattered by the surge in spending following 2022 in previous years its spending would have been very similar to that of France.

Now, you might think that the US figure is inflated by the notorious bloat within the American military-industrial complex. I would be the last person who would wish to minimize that. But the evidence suggests that the bias may be the other way around. American defense dollars likely go further than European euros.

Look for instance at the price of modern, third-generation battle tanks and the cost of self-propelled howitzers, which have been key to the fighting in Ukraine. German prices are far higher than their American counterparts.

Source: Bruegel

And, as work by Juan Mejino-López and Guntram B. Wolff at the Bruegel policy think tank has shown, these higher costs have to do with smaller procurement runs and smaller procurement runs are, in turn, tied to the fragmentation of Europe’s militaries and their strong preference for national procurement.

Right-now there is often lamentation about the tendency of European militaries to import key weapons systems from the US. And there is, of course, plenty of geopolitical and political maneuvering involved, for instance, in Berlin’s initiative to build an air defense system heavily reliant American and Israeli missiles. As the data show, Germany does have a strong preference for imports from the US rather than its European neighbors.

Figure 2: Arms imports by origin for selected EU countries, the UK and US

But, on average, across the entire defense budget, the besetting sin of European militaries is not that they rely too heavily on foreign weapons, but that they import not enough. They are too self-sufficient. The problem is not that Germany buys too many weapons from the US, but that it buys too many in Germany.

Figure 1: Imports as share of defence equipment expenditure, selected countries

National fragmentation creates the balkanized defense market, the inefficient proliferation of major weapons systems and in terms of global industrial competition, the small size of European defense contractors.

Back in 2016 a famous compilation showed that Europe maintained six times as many major weapons systems as the United States, on half, or less, of the military budget.

Unsurprisingly, the result is a sprinkling of fancy weapons systems across two dozen militaries with little actual combat effectiveness.

Rheinmetall, Europe’s most talked about “defense champion”, about which so much has been said since the Russian invasion of Ukraine, was in 2022, ranked 28th in the global armaments league.

Waste at this level is not merely a matter of absent mindedness or “inefficiency”. When you “misallocate” trillions of dollars, it has a logic. In this case, to put it politely, the logic was conservative. A less polite version would be to say that they were zombie armies. Europe’s military establishments were shriveled and dysfunctional but they abided. Europe’s military producers were inefficient in terms of delivering weapons. They did not play in the big leagues with their massively consolidated American rivals, but they continued to make profits. Not rationalizing and not consolidating avoids painful conflicts. States and politicians could maintain the pretense of sovereignty without actually facing the facts of disempowerment and incapacity.

Russia’s invasion of Ukraine and the course that war has taken has shaken this trillion-euro impasse. The national security establishment will happily rise to the occasion. There is a “blob” in London and Paris too.

A progressive politics should demand more.

Rather than allowing huge volumes of resources to be shifted into familiar channels under the sign of emergency, we should be asking what a rational security strategy for Europe looks like. And one thing we should be able to agree on, is that there should be no “way back”. At a time of austerity, in which the prospects of a generation of young Europeans were blighted in the name of fiscal consolidation, the grotesquely wasteful, pre-Ukraine status quo was a scandal hiding in plain sight.

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