The latest Oeconomus Economic Club was held on 10 April, under the heading of “The end of war? The future of the European security architecture”. The issue is particularly topical in light of the marked changes in US foreign policy under the second Trump administration, which has prompted Europe to strengthen its military capabilities after decades of neglect. A number of the event’s participants were from various conservative organisations in Europe and the US.
In his opening remarks, Péter Törcsi, Chairman of the Board of Trustees at the Oeconomus Economic Research Foundation stressed that while it is important that Europe strengthen its own defence, without the support of the US it will be very difficult to create a new security architecture on the continent.
The keynote speech was given by a leading government official. He noted that after Prime Minister Viktor Orbán completed his peace mission last summer, he wrote a memorandum to European leaders in which he stated that Europe needed to engage Russia, since Donald Trump would likely win the upcoming American presidential elections and Europe would be left out of the peace negotiations to end the war in Ukraine. No one listened to Orbán, but what he wrote has come true. The new US administration is committed to achieving peace in Ukraine, and at present, there are two approaches in Europe in regards to ending the war: the US, Hungary and to some extent Slovakia say the sooner the conflict ends, the better, while the rest of Europe wants to keep supporting Ukraine as long as it takes. Our approach is different from this as the present level of support provided to Ukraine is not sufficient for them to win the war; in fact, Ukraine is slowly bleeding out. The longer it takes for negotiations to start, the stronger Russia becomes, therefore talks need to begin as soon as possible.
Regarding NATO, the official said that the new Trump administration is committed to the organisation, but there is a huge imbalance in terms of members’ contribution. As he pointed out, a quarter of NATO members still spend less than 2% of their GDP on defence, with some states’ spending being closer to 1%. There is a lot of talk about the imminent threat Russia poses to European security, but since many European states have provided military equipment and ammunition to Ukraine, stockpiles are depleted, and there is no production capacity in Europe to refill them. Hungary’s defence spending was around 1% ten years ago, but we have doubled our spending and reached 2% three years ago. Until a quarter of the alliance does not fulfil its promise in terms of defence expenditure, Europe will not appear credible to the Americans, the Transatlantic rift will widen, and the credibility of NATO’s article 5 will further diminish. Hungary’s primary aim is to strengthen NATO; that is why we fulfil our 2% target, and the share of procurement and modernisation within our defence budget is almost 50%, one of the best ratios in NATO.
Europe has realised that it has to change, hence the new program to strengthen its military capabilities. Hungary welcomes this development and is ready to start negotiations about its details. We do not want to delegate more authority to the European institutions, but we will support this initiative if it is implemented on an autonomous and voluntary basis. Europe needs more military capabilities, but at the same time these also need to contribute to NATO’s capabilities. Regarding the new European security architecture, the official said it was difficult to imagine how it would look like as confidence in Russia is low at present. However, there is no European peace without Russia, and therefore the new US administration recognises that Russia needs to be relegitimised. As he put it, whatever happens, the future of Europe’s security will be interlinked with Russia. Because of this, Hungary believes we need to reengage Russia. We hope that Europe will support American peace efforts and that Russia will show a positive attitude because otherwise there will not be peace.
Philip Thompson, Policy Analyst for Intellectual Property and Trade at the Tholos Foundation and author of the International Trade Barrier Index joined the event via video link. He said that during the election campaign, we heard a lot about tariffs from Donald Trump, and on 2 April we saw what he meant. Stock markets had one of their worst days in history. The White House has given different reasons for its tariffs: reducing trade imbalance, reducing other countries’ trade reserves, and bringing back manufacturing to the US.
Professor Giuseppe Morabito, retired Brigadier General and Senior Fellow at the Machiavelli Center for Political and Strategic Studies in Italy said that no one knows what will happen in the US the next day. Looking at the Russia-Ukraine war from a soldier’s perspective, he stressed that this uncertainty is of great importance for Ukraine. Professor Morabito asked if a deterrent force like in South Korea could be deployed to Ukraine? He does not think this is possible, given the sheer length of the Russian-Ukrainian border, the number of soldiers that would be required, and the fact they cannot be European or American, as per Russia’s demands. He emphasised that as a soldier, it is very difficult to answer what will happen in Europe in the near future.
Jerzy Kwaśniewski, President of the Board of Ordo Iuris – Institute for Legal Culture in Poland said that there are two points on which there is a consensus between the government and the opposition in Poland: that military expenditure should be at least 4% of GDP and that Russia poses the main threat to our region. However, their concepts relating to these points are different: the liberals want to strengthen the European project and centralise military spending and command, whereas the conservatives want to retain national autonomy in these matters. The European Parliament and the European Commission are in the process of amending the Lisbon Treaty, as a result of which military expenditure and command would be centralised under the Commission. Jerzy Kwaśniewski also highlighted a recent report by Mathias Corvinus Collegium in partnership with the Center for Fundamental Rights on the great reset of the European Union, which contains concrete proposals for the reform of the EU from a conservative standpoint.
Stanislav Jansky, Security Expert at Patrimonium Sancti Adalberti in the Czech Republic asked what would happen if the US decided to withdraw from Europe to focus on other parts of the world? What would happen if we no longer had NATO? There would probably be attempts to have a European army, most likely under French and British command. Would this be in our region’s interest? Not according to Stanislav Jansky. Would each country be on its own? That would be very difficult. Would there be ad hoc alliances? That would be very risky. Russia is a threat that will not go away, but there are other threats too, such as Islamisation and migration in Western Europe. Given these profound challenges, we have to think about what to do. Perhaps local, Central-Eastern European cooperation is the solution, suggested Stanislav Jansky.
Several participants also expressed the need for increased European military capabilities. One participant said that in addition to building up its own security, Europe should keep the US engaged on the continent even if the US decides to have less military presence here. He was also of the opinion that Europe should normalise its relations with Russia, but this should not be done on the basis of trust and sympathy, as this has been tried before in vain. Instead, it should be based on deterrence and trade. Another participant expressed his concern about the ambitious German military force development programme, noting that whenever Germany built up its army in the past, it usually did not end well for Europe.
Problems relating to improving Europe’s military capabilities were also mentioned. Several participants stressed that the European defence industry is fragmented, both in terms of procurement and production. This means small company sizes, small capacities and inefficient production. A further problem is underinvestment. The total defence spending of EU member states is roughly 350 billion euros, while the total revenue of the EU defence industry is 70 billion euros (which, by the way, equals the revenue of a single US defence company, Lockheed Martin), which means that 80% of military hardware procurement comes from outside the EU. Another problem is the lack of reliable critical raw material supplies in Europe; for example, 100% of rare earths used by the defence industry is sourced from China.
Ádám Csenger, an analyst at the Oeconomus Economic Research Foundation underlined the fact that while Europe was slow to realise that it needs to develop its defence capabilities, we are seeing some real changes. In 2014, only three NATO countries reached the 2% defence spending target; by 2024, 23 out of 32 member states did. Poland is the top performer, spending around 3.5% of its GDP on defence and building up its defence industry as well.
The issue of security was approached from other angles as well. One participant raised the issue of Europe’s aging population: by 2030, 300,000 people in Hungary will retire; the same figure for Central Europe is 2 million. Who will work in Europe? Central European countries try to solve this problem by “importing” workforce from Asian and sometimes Islamic countries. The issue is clearly also one of economic security.
