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Euractiv
5 hours ago
- Euractiv
Europeans divided over where to spend their new military budget bonanza
As Europe prepares for a decade-long arms shopping spree to rebuild neglected militaries and narrow the gap with US firepower, its spending choices will shape the continent's industrial base for years to come. In June, NATO countries agreed to spend 3.5% of their Gross Domestic Product (GDP) on defence in order to meet the military capability requirements outlined in the alliance's defence plans. For the 23 EU members of NATO, this means a whopping annual increase of nearly €270 billion, according to calculations from the Bruegel think tank. These funds are expected largely to flow into the defence industry and military recruitment. A central question is now whether European countries will invest in developing their domestic defence industry or continue to rely heavily on US-made equipment. The NATO spending commitments are simple targets, leaving each ally relatively free to decide what exact weapons to buy and from whom. European allies are splitting along a spectrum, from those leaning heavily on US weapons to those insisting on buying European, with each path offering both short-term fixes and longer-term strategic bets. On the spectrum US-made systems have a clear attraction. High-end options such as the F-35 fighter jet or Patriot air-defence batteries carry eye-watering price tags but can help governments hit NATO's spending target quickly. For underfunded militaries, big-ticket purchases have long been the fastest way to show progress after years of neglect. The Patriot is a case in point. One battery costs around $1 billion, and each interceptor missile comes with a roughly $4 million price tag. In August, a small group of European countries agreed to purchase more Patriots, further increasing their defence budgets and reliance on US-made gear. A European alternative to the Patriot, the Franco-Italian SAMP/T battery and Aster 30 missiles, is around a third cheaper. France and Spain in particular have argued that building a robust European defence industry is an essential security priority. To that end, France has long avoided buying US-made weaponry whenever possible. The two countries joined with Germany on the ambitious and expensive Future Combat Air System (FCAS) next-generation fighter jet project, a European alternative to foreign options, particularly those produced in the US. At the other end of the spectrum, Poland has seen its national security priorities centred on quickly acquiring military hardware in large quantities, regardless of the source. Europe's clear defence spending champion, Warsaw has more than doubled its military budget in just five years, hired tens of thousands of additional soldiers and modernised its fleet of F-16 fighters while also buying new fifth-generation F-35 jets. The Polish armed forces also stocked up on rocket launchers, more than 100 new helicopters, scores of heavy tanks and much more. The country has prioritised speed in deals for military equipment, a key motivation behind Warsaw's burgeoning relationship with South Korean arms makers. Poland has been more wary of big-ticket European defence projects while maintaining deep ties to a number of US defence contractors. Is reliance on the US healthy? Most European NATO forces have extensively purchased American gear for years, assuming it would guarantee them a better relationship with Washington, the military alliance's dominant power. But Donald Trump's return to the White House earlier this year, and his administration's reluctance to promise Europeans unambiguous support in case of war, has forced governments to question whether buying American really buys influence or favourable treatment. Critics warn that purchasing further US-made equipment does little to resolve Europe's dependence on American technology or foster the growth of the European defence industry. NATO's spending target also contains no incentives to purchase European-made products to build up local industrial capacity. Instead, the GDP-based target can reward splurging on the priciest gear or enormous quantities of useless gear to show money is being spent, or favour exporters that can deliver fastest – often from the US or South Korea – while many European production lines face backlogs, especially in missile and ammunition production. That spending race has already pushed up prices in the global arms market, where costs have soared since Russia's full-scale invasion of Ukraine in 2022. The price of NATO-standard 155mm artillery shells has quadrupled, from around €2,000 before the war to about €8,000 recently. However, focusing on budget figures alone risks prioritising optics over efficiency and real war-fighting capacity. That was a criticism voiced by Spanish Prime Minister Pedro Sánchez when he rejected NATO's new GDP-based targets, arguing that Spain could deliver the required military capabilities while spending significantly less. But NATO countries signed up to the task at The Hague summit in June, and will spend the next years trying to meet expectations. The alliance grades progress in yearly updates, adding pressure to deliver on their promises. (mm, bts, cp)
Euractiv
17 hours ago
- Euractiv
Poland plans 3% tax on tech giants
Poland is planning to levy a 3% tax on large tech companies which it wants to support its own technology and media sectors. As negotiations to adapt the global tax system to modern digital realities continue at the OECD level, many European countries are working on their own taxes targeting large, predominantly US tech companies. These efforts have caught the attention and ire of US President Donald Trump. But despite noisy pushback from his administration – including threats of retaliation via trade tariffs – a number of countries are pressing on. In Poland, Donald Tusk's government signalled its intent to tax Big Tech back in March. Further details of the plan are now starting to emerge. Work on Poland's draft bill will 'continue through the end of the year', the digital ministry told Euractiv. Once ready, it said the bill will undergo public consultation. Depending on the legislative process, the tax could take effect as soon as 2027. The ministry said the tax will apply to companies whose global revenue exceeds €750 million. It will be aimed at platforms including marketplaces, social media and ride-sharing apps, as well as companies carrying personalised advertisements or selling user data. Services that only provide users with access to content (such as games) or interfaces (such as payment or comms platforms) are set to be exempt, as are financial services and direct web sales – such as via a retail company's own website. Companies would have to report revenues generated in Poland or in relation to Poland, based on whether they can 'reasonably assume' users are residents of the country – for example through their IP addresses, per the ministry. It added that a 'modest' 3% tax on tech giants' revenues could generate up to €470 million in the first year. The ministry expects the tax take to continue to grow after that. The proposal appears quite similar to the Commission's draft for an EU-wide digital tax from 2018 – which would have paid into national treasuries – but got abandoned after member states were unable to reach agreement. The Commission also publicly mulled introducing an EU digital tax to pay back the Union's Covid recovery debts. However, instead, it recently proposed an EU-wide tax on large companies in general. (nl)
Euractiv
19 hours ago
- Euractiv
Europeans brace for fraught White House talks on Ukraine
Security guarantees, not concessions, top Ukraine allies' agenda Euractiv is part of the Trust Project Alexandra Brzozowski Euractiv Aug 18, 2025 16:35 4 min. read Analysis Based on factual reporting, although it Incorporates the expertise of the author/producer and may offer interpretations and conclusions. European leaders head into a Trump-Zelenskyy Oval Office stand-off on Monday fearing pressure on Kyiv, and scrambling to shield Kyiv from a Trump-Putin deal. The burst of White House diplomacy comes just days after the US-hosted Alaska talks with Russia on ending the war in Ukraine, where Vladimir Putin was welcomed with a red-carpet ceremony, but no signs of an imminent ceasefire emerged. As Trump and Zelenskyy will meet at 7 pm European time for a heavily choreographed encounter, EU diplomats have expressed concerns that Trump might try to pressure Zelenskyy into concessions favourable to Russia. The Ukrainian leader is widely expected to reject the Alaska talking points and provide a European-backed counteroffer to Trump. He will huddle first with a group of European leaders invited by Kyiv as a supporting cast. This includes British Prime Minister Keir Starmer, French President Emmanuel Macron, German Chancellor Friedrich Merz, Italian Prime Minister Giorgia Meloni, Finnish President Alexander Stubb, NATO Secretary General Mark Rutte, and European Commission President Ursula von der Leyen. Those leaders will later join Trump and Zelenskyy to convince the US president that Moscow's maximalist demands are schemes to continue the war. After the huddle, they will join Zelenskyy and Trump in a trilateral session. Confrontation concerns European officials can't shake memories of Zelenskyy's last Oval Office exchange, when Trump and his administration officials berated their Ukrainian guest for his lack of gratitude and, bizarrely, his choice of attire. And this time, officials are determined to avoid a repeat. Their primary objective, they say, is to shield Zelenskyy from pressure to make concessions to Russia, though what European leaders can actually deliver remains uncertain. With meetings capped at around an hour apiece, there's only so much damage control they can do. The bigger unknown is Washington itself. What, exactly, is Trump prepared to offer Kyiv and what terms, if any, would Moscow be willing to stomach? Like before, Putin, standing alongside Trump in Alaska, reprised his talking points about the so-called 'root causes' of the war to justify the violation of international law while pressing for maximalist demands. The summit only left European officials fretting that Trump might seek a deal with Putin, potentially involving territorial concessions. Those worries intensified over the weekend when Steve Witkoff, Trump's special envoy and chief go-between with the Kremlin, hinted that Russia was ready to enshrine its pledge not to invade other countries or breach their sovereignty. But as often before, what a pledge from Putin is worth is anyone's guess. Europe's leaders are expected to focus on one thing: what security guarantees they, alongside America, can extend to Kyiv to make any agreement with Moscow stick. A 'Coalition of the Willing' met on Sunday after Trump reportedly told European leaders a day earlier that America could support such guarantees, so long as NATO stays out of it – a long-standing Russian demand. 'Europe might not be able to offer Ukraine airtight security guarantees without the US,' Lithuania's former Foreign Minister, Gabrielius Landsbergis, noted before the talks. 'But we can take frozen assets, close the skies and bring Ukraine into the EU, if we want. That's what 'standing with Ukraine' means – and I think Putin would start thinking twice.' Before the White House talks, leaders of the Nordic-Baltic Eight - Denmark, Estonia, Finland, Iceland, Latvia, Lithuania, Norway, and Sweden - said in a joint statement that 'achieving a just and lasting peace requires a ceasefire and credible security guarantees for Ukraine." Still, the European delegation arriving in Washington on Monday is thin on eastern representation. Solely Finland's Stubb will speak for the Nordic-Baltic-Eastern camp, amid the gaping absence of Poland's Prime Minister Donald Tusk. While Warsaw has been part of the coalition, it seemed to have been largely sidelined from the Washington talks, yet it remains one of the largest political and financial supporters of Ukraine. Polish officials across the country's political spectrum have been adamant that their country would not be willing to send troops to Ukraine, despite its active political involvement in the coalition. Germany, too, has indicated it might likely be too stretched to provide troops to secure a potential future ceasefire. Foreign Minister Johann Wadephul on the podcast rejected the idea, pointing towards a country's brigade stationed in Lithuania as Berlin's key contribution. 'Doing that [maintaining the brigade] and additionally stationing troops in Ukraine would probably overwhelm us,' he said. Charles Szumski and Nick Alipour contributed reporting. (mm)
