NATO’s spending target has been in place for almost 20 years, since 2006, but most member states are still underachieving the 2% of GDP target. Although global defence spending has been rising steadily, the expenditure of European Union member states has been more moderate, allowing Eastern countries to climb up the international rankings. If the European member states were to take into account and reach the target set by NATO, the EU would overtake Chinese military spending. A European army, which has been mentioned several times in recent years, could have more benefits than drawbacks, but there are many questions surrounding this issue, such as the question of the governing body. In this short article we discuss the value of European defence spending and a European army.
NATO (North Atlantic Treaty Organisation) is a military alliance founded in 1949 to maintain security in the Atlantic area. Its aim is to provide collective defence for its members against any external attack. The proposal that NATO member states spend 2% of their GDP on defence was adopted in 2006 as a guideline. This is intended to further strengthen the alliance’s military preparedness and response capability. Recently, the war between Russia and Ukraine has underlined the importance of developing the defence industry and stressed the need for collective defence.
The figure can be referenced here: https://public.flourish.studio/visualisation/17497424/
However, according to NATO data from July, only 11 countries met or exceeded this target last year, including the United States, the United Kingdom, several Eastern European countries such as Poland, Greece and Hungary, as well as the newly acceded Finland. This indicates that Eastern European countries are particularly vigilant in responding to the security challenges facing Europe.
The figure can be referenced here: https://public.flourish.studio/visualisation/17497472/
Both the previous and current US administrations – under both Donald Trump and Barack Obama – have stressed that NATO members must increase their defence spending to meet or exceed the 2% target, thereby strengthening the alliance’s overall defence capabilities. These statements are aimed primarily at Western European countries, which are setting a slower pace at enhancing not only NATO, but also European defence capabilities.
The EU in global comparison
The issue of a European military has been raised repeatedly in recent years, and it is therefore worth looking at the region’s spending in a broad comparison. In 2022, global military spending reached $2.2 trillion, double the amount spent in 2000, but the ranking remains the same. The United States tops the list with $877 billion, or nearly 40% of the total. China comes in second with 13% ($292 billion), followed by Russia with 4% ($86.4 billion) and India with 3.7% ($81.4 billion). The first EU member state is Germany, which came in seventh in 2022 with $55.8 billion spent, followed closely by France. The two European heavyweights accounted for just 5% of global spending.
The figure can be referenced here: https://public.flourish.studio/visualisation/17497508/
The European Union, the third most populous member of the G20, lags behind its global competitors in defence spending. The EU’s population of around 448 million makes up around 9.5% of the world’s population. The region’s defence budget is increasing steadily and reached a record $240 billion, a 6% increase on the previous year, according to the 2022 report of the European Defence Agency (EDA). This brought EU defence spending to nearly 10% of total global defence spending in 2022. Although this is a significant amount, military and defence investment is concentrated mainly among the major powers. For this reason, greater investment is needed to compete or catch up. Based on data from 2022, the EU ranked third in defence spending behind China with $292 billion and the US with $877 billion. If EU member states spent 2% of their GDP on defence, the total expenditure would rise to nearly $370 billion, with Germany accounting for the largest share of nearly $90 billion.
The European Defence Fund, which was set up to support the European Union’s common security and defence policy, has a budget of €13 billion over seven years, but although it performs important tasks (such as defence research and development, funding joint projects and strengthening the European defence industry), it seems quite small compared to the defence spending of the major powers. This amount provides limited opportunities to support innovation and technological development, which could put the EU at a disadvantage in international defence competition, especially in areas such as technological independence and the development of interoperability. Against this background, the European Defence Fund budget, while essential for defence tasks, does not seem sufficient to respond adequately to the growing global security challenges.
To get a clearer picture of the defence spending mentioned earlier, it is important to look at it from a different perspective too.
Purchasing power parity
Purchasing power parity shows how many units of the domestic currency an imaginary basket of goods and services that costs a unit of currency in the country (or region, such as the EU) that is the basis of comparison costs in the country that is being compared. On this basis, a million dollars in China can finance more troops, equipment or even deployment than, for example, in the US, as a result of the cost of living and the different value of the currency.
According to a study by the Spanish party VOX, this translates into a multiplier of around 1.6 in China compared to the Americas, compared to around 3.4 in India, 3.2 in Russia and 1.5 in the EU. This creates a whole new ranking, making the contest between China and the unified EU closer.
The figure can be referenced here: https://public.flourish.studio/visualisation/17497600/
The graph shows that the US is still far ahead of the global ranking, but the EU could overtake China if each member state spent 2% of GDP on defence. Moreover, it can be seen that India also becomes a dominant player if purchasing power parity is taken into account. The regions presented, with the exception of the EU, have their own militaries, based on common investments and structure.
The advantages and disadvantages of a European army
The biggest challenge for the European Union’s defence strategy, however, is not necessarily the scale of expenditure, but rather the integration of structures. The EU has a multitude of different weapons systems, including 30 different types of tanks, 20 different types of aircraft and 10 different types of tanker aircraft, which is a major obstacle to effective joint warfare. According to an older Statista survey from 2016, 178 different weapons systems were used in the European Union, compared to only 30 in the United States. However, according to a McKinsey study, efficiency could also be reflected in costs, as the use of common weapons systems could result in cost savings of up to 30% per year, or nearly $15 billion.
A unified European army has many advantages, but there are also important issues that need to be clarified. The benefits of such a transition would include faster deployment, the creation of a major global army, increased strike capability, and the establishment of a common infrastructure and data sharing system. However, there would also be drawbacks, such as the need for centralised control, potentially reducing the sovereignty of individual member states.
