Will Ukraine Drive Europe Toward Increased Defense Spending?

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Will Ukraine Drive Europe Toward Increased Defense Spending?
By: T.J. Cipoletti
@csis_isp

The ongoing crisis in Ukraine and the upcoming NATO Wales Summit has brought back to the forefront the issue of transatlantic burden sharing. Policymakers in Washington are looking across the Atlantic for signs of European seriousness in the form of increased defense spending at the same time that NATO members, particularly in Central and Eastern Europe, are seeking reassurance from the United States that it will be able to deliver on its Article V treaty commitments in the face of Russian revanchism. The largest pledge to date has been the Obama administration’s request for $1 billion for a European Reassurance Initiative.

CSIS has been tracking national defense spending trends across 37 European countries as part of its European Defense Trends series. Preliminary results from incorporating 2012 and 2013 figures—before the Ukraine crisis began—show that the downward trend in defense budgets has continued along a similar trajectory as in previous years, with total spending decreasing from €228 billion in 2011 to €220 billion in 2013. This decrease translates into a -1.9 percent compound annual growth rate (CAGR), which is a consistent rate of decrease in the time frame going back to 2001 and tracks closely with the “slow decline” scenario projection from the 2012 CSIS report. The rate of decline in total spending is now returning to the mean over the 2001–2011 period, as opposed to the accelerated rate of decline (-3.2 percent CAGR) from 2008 to 2011, during the height of the European financial crisis.

One particularly troubling indicator in the category breakdowns is the substantial decline in research and development (R&D) spending (-26.5 percent CAGR) in the 2011–2013 time period among the 23 countries for which CSIS has complete R&D data. Should this trend continue, Europe will be hard pressed to develop new technologies, which eventually could impact interoperability with the United States.

Assessing these trends in a vacuum would not inspire much hope, but there are some signs that recent events in Ukraine may be starting to have an impact on spending priorities. Policymakers in Poland, Latvia, Estonia, Norway, the Czech Republic, and elsewhere have committed to increase defense expenditures recently. Though many of these modest pledges are unlikely to have a major impact on the broader European capability picture, these commitments could prove to be a first step in the right direction toward convincing Washington that Europe still takes its security commitments seriously.

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