Europe’s Remilitarization Myth
Why building on the success of rearmament is a bad idea
Europe is re-militarizing as part of the ReArm Europe Plan (now renamed to Readiness 2030). The “ambitious defence package, providing financial levers to EU Member States to drive an investment surge in defence capabilities” enables the spending of over €800 billion, structured around increased public expenditure, capital markets and European Investment Bank lending. That is, financed entirely from debt (1). While one could argue whether Europe indeed faces a real security threat (more on that later), one thing is clear: re-militarizing Europe will be extremely expensive... And not only in monetary and social terms. Political views about perceived or real threats aside there is a strong case to be made that this initiative (if fully implemented) will pull the continent further deeper into the vortex of its accelerating economical and geopolitical decline.
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Background
Europe is in a deep and structural crisis driven by high energy prices, a lack of innovation, high labor costs and taxes, not to mention a fierce competition from China — and now an openly hostile US foreign policy. According to the report published by former European Central Bank chief Mario Draghi, the EU is now facing an existential risk without investment:
“The previous global paradigm is fading. The era of rapid world trade growth looks to have passed, with EU companies facing both greater competition from abroad and lower access to overseas markets. Europe has abruptly lost its most important supplier of energy, Russia. All the while, geopolitical stability is waning, and our dependencies have turned out to be vulnerabilities.”
While he was able to identify the root cause behind the continent’s predicament correctly (the abrupt loss of Europe’s most important supplier of energy (2)), he failed to provide an honest approach to the issue at hand. Instead, being a banker for all his life, he suggests to pour more money on a predicament with an outcome, confusing it with a problem in search of a solution. So, while the €800 billion ReArm Europe Plan might provide just that — lot’s of investment money — the grandiose spending package might still fail without adequate energy supplies. In its current form its like taking out a loan to buy a car while still being unable to afford the gas. And while some people argue, that this investment boom will somehow stimulate the entire economy (which in turn will become able to afford higher energy costs), reality suggests otherwise.
The primary issue with military production that it is not productive from an economic perspective. Newly built tanks will sit in a warehouse (best case), or will be used in a war which will eventually see Europe completely destroyed. In the medium-worse case scenario these weapons will be used in expensive and provocative military exercises, while burning tons of diesel fuel and firing shells costing thousands of euros each. In neither of these scenarios will weapons improve people’s lives, nor produce anything economically useful (such as food, consumer goods etc.). Military production is a drain on the economy, sucking in labor, investments, energy and resources, while doing nothing to make a return on investment. (Unless they are used in territorial expansion, securing new resources — but that’s not the goal here, right…? Um, right...?)
Then what about the stimulus military investment gives to the rest of the economy? Remilitarizing, as a means to recover from the great depression in the 1930's, has been a convenient myth to sell the idea to the public. In reality, it was infrastructure investment which has literary paved the way to “progress” not arms manufacturing. Building roads, pipelines, dams, the electric grid etc. has created a virtuous cycle, by inviting companies (not just military factories) to come in town and to set up shop there. It also created consumer demand for household appliances and cars, which in turn led to the building of more roads and more houses. As a result people wanted to have larger families, which meant even higher consumption, more cars, houses, washing machines, power lines roads and so on.
All this recovery from the Great Depression of the 1930’s (and the subsequent global war) was enabled by cheap resources, and a successful addition of oil to the world economic system. In a sense, WWII was fought over this new resource. Both Japan and Germany were racing to get rich oil fields in South East Asia and the Caspian to power their war efforts and their economies. The economic recovery and the massive expansion of highways has created a huge demand for oil products both in America and in Europe. Building freeways required a lot of stone gravel to be delivered on site by diesel trucks. Diesel excavators and bulldozers worked tirelessly on the foundations and laid a lot of concrete (with its own diesel and coal powered supply chain) on top. Access to cheap and abundant liquid fuels was thus the key to economic recovery.
Present realities
Trying to recreate this economic boom under today’s oil and resource stricken economic environment is doomed to fail. None of the benefits will come, only higher levels of indebtedness, inflation and political tensions. You see, debts taken on for building a tank factory (or converting car manufacturing plants for military purposes) will not going to repay themselves. Ever. Building guns is only profitable — beyond using them for territorial expansion — if you build them for someone other than yourself. ‘Let them destroy their country with those, then come back for more.’ This is how the military industrial complex in America grew big and this is why there was no armed conflict they did not like.
Europe, on the other hand, will build these factories for itself. What these upgraded car factories will produce could only be sold to their own governments, who then will have to go further into debt to pay for these weapons. This payment will then go through the entire weapons industry supply chain, profits will be skimmed off at every step, then what little remains will be deducted as taxes, which will be used to pay back a tiny portion of the debt created for military investment. Sure, a few people will get richer still, but the average worker (who used to make cars previously) will not see his/her situation improved.
Not that it would be possible to produce the steel, gunpowder and high explosives needed without a massive subsidy from cheap fossil fuels. The Germans before WWII at least had a huge pile of high quality coal which they could use to produce iron and cement. They also learned how to turn coal into hydrocarbons, fertilizer and eventually liquid fuels for their cars, trucks, tanks and airplanes. (Hence the time pressure to start a war before the civilian economy grew too big to be supported by coal alone.)
Germany no longer has that geological advantage, though. The average cost of mining one tonne of hard coal in Germany was 180 euros in 2023, as most of the easy-to-get, high quality, close to surface stuff has been burned already. What little remained is literally under mountains of stone, threatening miners with rock and gas outbursts, large deformation, squeezing and creeping rocks and high temperature. Conditions which are extremely costly (and energy intensive) to overcome. The story of coal made Germany a perfect case study for critical resource depletion, and its effect on the economy.
Depletion of its own cheap mineral resources and the complete lack of hydrocarbons was the sole reason why Germany had to import 50% of its coal, 55% of its natural gas and 31% of its crude oil from Russia, at least up until 2022. All of these former imports fall under some sort of sanctions today, affecting 33% of Germany’s total energy consumption. (Is it any wonder that energy became so expensive in Germany as well as in other parts of Europe?) Those who think that a massively energy intensive remilitarization program can be powered by expensive LNG from America and Qatar, or coal shipped literally from the other side of the planet (Australia and South Africa), are deluding themselves. Since neither nuclear, nor renewables could be used for this purpose (sorry), the whole idea is doomed to fail.
The ReArm Europe plan, on the other hand, has every potential to evolve into a massive Ponzi scheme, eventually sucking in every investment and pension fund — first voluntarily, then up to a certain percentage mandated by law. This supposed remilitarization of Europe could very well be the swansong of the EU: one last round of cacophony before the curtain falls. Sure, it will generate a lot of apparent economic activity in the meantime, resulting in temporarily rising GDP figures, but since all of this will be financed by taking on debt (and not organic, productive growth of the economy), it could not and thus will not last forever. As soon as material and energy reality hits, the bubble will burst violently with would be pensioners and everyday folks left holding the bag.
Western Europe is about to realize that they were but a chess piece, now past its usefulness, in a grand game of big players. Their high living standards were artificially created to act as a bulwark against the soviets, showing those evil communists how capitalism could serve people better than any other political system. The trick worked, it drove immigration from Eastern Europe, supplying cheap labor to Europe for decades, and incentivized former Warsaw pact states to break their chains. The fact, that the resulting high standard of living was supported entirely by cheap fossil fuels and a dominance over world affairs has just started to transpire though. Now, with both gone a painful sobering up is in due order.
The Russian threat
Despite it’s ever more obvious victory in Ukraine, it would be foolish to think that Russia has the means and resources to overrun the entire European continent. Their progress beyond Avdiivka during 2024 — the most active part of the front back then — is a good example. After a year of heavy fighting they progressed a mere 50 km (31 miles), not more. At this speed it would take them another 20 years from now to reach the Polish border, 35 to be in Berlin, half a century to arrive to Paris and 75 years to reach Lisbon, Portugal. In other words: Russia would need the entire rest of the century to complete the conquering of Europe. After all, they were fighting the entire NATO military organization already, who were providing all the weapons, training, tanks, artillery, satellite surveillance, air defense systems, targeting — literally everything but the flash and bone of human soldiers. So should the fighting continue, say in Poland, it would result in the mass mobilization of European troops and the same bloody slog would go on for years and years.
Given all that, why would the Russians want to conquer Europe? What would they gain after sacrificing millions of their own soldiers and fighting a war for the rest of the century? 450 million disgruntled old people who hate them to their guts? Europe has no resources left and it has lost its geopolitical significance a long time ago. In fact, the world could go on just fine without them, as there is nothing of significance coming from the old continent. And there is the fact that even the Russians would be running out of oil before they could complete their mission, not to mention young men, thanks to their falling fertility rates.
In a rational world the very idea of the world’s largest state by territory and mineral reserves needing more territory should be considered too absurd to contemplate. Not in Europe, though. Despite the constant fearmongering it was in fact the Europeans who could not let the notion of a permanent war on Russia go, not even after multiple failed attempts to subdue it from Napoleon to WWI and WWII. (Note how none of these major wars in Europe were started by Russians, and how all of them somehow ended up trying to conquer it instead.) It’s no different this time either. This was a proxy war from the get go, aimed at overextending and unbalancing Russia by pushing NATO onto its boarders and by arming a hostile regime to the teeth on their doorstep. No lesser person than Secretary of State Marco Rubio admitted as much earlier this month:
“And frankly, it’s a proxy war between nuclear powers, the United States helping Ukraine, and Russia.”
Providing lethal aid to Ukraine was always deemed high risk, due to Russia’s openly communicated sensitivity in the matter and due to their close proximity, lending them significant advantages. Now, with the sanctions failing, more than a million people dead and military aid proving to be less and less effective in stopping the Russian advance, the US has realized it’s time to call it quits. Since this war was never about territorial expansion, but securing its own boarders, once the NATO threat is removed there will be no need to continue or resume fighting. Russians are already preparing for a post-war world. For them Ukraine is just one area where they need a lasting settlement (3). In their view sanctions are now a permanent fact of life, and thus they remain focused on turning their country into an autarky — the diametric opposite of an expansionist state.
Russians will not fool around should push come to shove, though. They would rather nuke a few European cities first, than let themselves dragged into yet another European war potentially lasting for decades, draining their resource base (4). Russia is a nuclear superpower with world class missile forces, air defenses and hypersonic delivery systems. (Does anyone still remember this?) There is no technical, military or strategic way for Europe to compete with any of that. (Sorry, a few rented nukes on outdated missiles and onboard ageing aircraft or submarines will not cut it.) Militarily speaking EU member states are third-rate players, lacking both the mineral and the industrial resources — not to mention a young and willing population — to fight another world war. The sooner this reality sets in, the sooner lasting peace can be achieved on realistic terms.
Then what’s the point in building more tanks, artillery, drones, or what have you? Well, who knows how long the EU and NATO will be here to smooth internal conflicts…? The North-Atlantic alliance’s unity is in shambles. The US is now openly threatening another member state (Denmark) with taking over their territory (Greenland), while Europeans can’t agree how to call themselves, let alone whether to send troops to Ukraine or not. Instead of a continued conflict with Russia, we can thus expect a return to the historical norm, with petty European nation states quarreling over scarce resources. A few years from now it might easily turn out that this whole remilitarization was actually not against the big bad boogeyman to the East, but to deal with neighboring states, wanting to dominate this soon to be forgotten westernmost peninsula of Eurasia.
Until next time,
B
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Notes:
(1) The proposal was opposed by the Dutch parliament. It has raised concerns regarding collective indebtedness and national accountability (i.e.: weaker EU economies free-riding on stronger ones), ultimately leading to higher inflation and a weaker Euro. Notably, Dutch lawmakers consider a debt hike to offset energy costs, instead.
(2) Actual fighting in Ukraine had little effect on the price of natural gas in Europe, though. Various sanctions, lawsuits, asset confiscations and seizures, abrupt withdrawal of permits, “mysterious” pipeline explosions and denial of payments from the European side, on the other hand, had a significant role to play in the price rally following the Russian escalation of the conflict in 2022.
(3) The urgency behind the need to struck a deal with Russia might also be interpreted as a way to free up resources needed to start another unwinnable conflict… This time with Iran, involving nukes. However this would be viewed as the continuation of the same proxy fight driven by US foreign policy establishment since decades now. Iran is in a strategic location for Russia, situated on its north-south transport corridor to India, defending both the Caucasus and Central Asian regions from western interference. (Hence the strategic partnership deal they stuck earlier this year.)
(4) ‘Hey, won’t the US retaliate should mushroom clouds cover the Sun over Europe?’ I don’t think so. The US will not risk global annihilation over this rapidly declining peninsula of Eurasia. Rather, judging by the actions of the current president and the oligarchs supporting him, they would be looking forward to loot what remains rather than risk their own survival...
