15 hours ago
Will The EU Replace NATO As Europe's Defence Shield?
The USS New Jersey, an Iowa-class battleship serving the United States Navy, firing 16-inch shells ... More into the Demilitarized Zone (DMZ) from the waters off the coast of South Vietnam, 30th September 1968. These were the first shells fired by the USS New Jersey in the Vietnam War. (Photo by)
It looks like I will have to burn all the Biggles books I collected as a child and jettison any antique copies of 'Eagle' comic books, because there are reports that Britain and Germany are about to sign a defence co-operation agreement, ending a long stretch of history where they have been on opposing sides. Indeed, the entire literature of what George Orwell described in his essay 'Boys' Weeklies' could now be caught offside.
For instance, the work of John Buchan, once Governor General of Canada, and well known as the author of the 'Thirty Nine Steps', may be especially dislodged by an agreement that casts Germany and Britain as best geopolitical friends, as many of his books, like those of Captain W.E. John, depend on the role of the indispensable British hero seeing off his German nemesis. An innovation on the part of Buchan, was the glamorous female mastermind, Hilda von Einem, who vies with the handsome Irish intriguer Dominic Medina (please do read 'Greenmantle' and the 'Three Hostages') as the foil to Richard Hannay.
One of the significant moments of history when Britain and Germany (Prussia then) found themselves on the same side was the Battle of Waterloo, one of the great contests, where during a pounding from French guns Wellington's officers asked for orders he replied, 'there are no orders, except to stand firm to the last man'.
One of the survivors was Henry Percy, aide de camp to Wellington, who after the Battle had to row halfway across the Channel with the news of the Duke's victory, as an absence of wind had halted his sloop. On arriving in England he found that many (in the City) already knew of the victory owing, allegedly, to a network of agents assembled by Nathaniel Rothschild who is said to have made a fortune on the event and thereby spawned the phrase 'buy on the sound of cannons'. It is a useful illustration of the roles of communications (social media today) and finance in war.
Indeed, part of the reason that Germany and Britain are moving closer together on defence (France is even closer to each one militarily) is finance. Gone are the days when London and Berlin could afford to spend 9% of GDP building great battleships in the lead-up to the First World War (Margaret MacMillan's 'The War That Ended Peace' is worth a read), and now they must do with more meagre ambitions and newfound collaborations.
In this context, the recent NATO Summit was a watershed as it signalled a headline commitment to 5% defence spending across NATO countries (as a % of GDP), something that would have been unthinkable four years ago.
In Europe, there is a sense that some of the defence spending pledges amount to a 'fudge', and it is very clear that defence spending as a % of GDP does not translate into defence readiness. Of the European members of NATO, the UK, Greece, France, Poland, the Nordics and Baltics are the most defence ready, and some of them are already spending ambitiously. For example, Poland is set to reach a level of defence spending of 4% of GDP and has already struck a strategic military procurement partnership with South Korea.
On the other hand, countries like Italy and especially Spain have been castigated for their reluctance to spend. Italy has talked of including investment in a bridge from the mainland to Sicily as defence infrastructure and in the case of Spain, it has apparently tried to 'kitchen sink' other tangential forms of spending into the defence segment.
Still, the broad 5% target is a gamechanger, and is comprised of two parts – close to 3.5% on defence spending and then 1.5% on areas like cyber security and AI driven defence capabilities. Momentum will be boosted by the EU's Eur 150 bn lending facility for defence procurement, up to Eur 3bn in loans from the EIB (European Investment Bank), and the German government's significant augmentation of its defence budget. Still, this fiscal support leaves an enormous shortfall that will likely require capital from the private sector.
In this respect, we are at the cross-over of geopolitical forces. NATO as an operating construct has been thrown into doubt by Donald Trump and the actions of his defence policymakers (the latest act being to deprive Ukraine of defensive missiles). As such, Article 5 no longer seems as watertight as it did in the early 2000's (it has only been invoked once, in September 2011, by Nick Burns, then US Ambassador to NATO). The impression many in Brussels have is that Europe will be left to defend itself from Russian aggression – there is now a parlour game amongst the various European intelligence agencies to estimate when a Russian incursion might occur.
As a result, the EU will become a much bigger player in defence procurement (see the recent White Paper here), Europe's defence centric innovation economy will grow rapidly, and 'war bonds' will become a new asset for investors. Europe's main threat is most obviously Russia, in addition to cyberwar from further afield. The danger in the long-term is that it finds itself as the last bastion of democracy, amidst a range of large, autocratic countries.
To return to Germany and Britain, anyone who reads the MacMillan books can't escape the recognition that the arms race between Germany and Britain over one hundred years ago, is now being repeated by the US and China. Ultimately Europe may count itself lucky to stay out of this contest.
