Back To The EUSSR
The more serious threat to Europe comes from within, not from without.
With its 450 million citizens (one-third more than America) and the world’s second-largest economy, the European Union should be a formidable counterweight to the US. This is how the EU has publicly positioned itself in President Trump’s second term. When the US announced arbitrary tariffs, the EU announced it would champion free trade. When the US gave unequivocal support to Israel, EU governments gave unconditional recognition to the Palestinian state. As the US urges a peace deal between Ukraine and Russia, the EU urges Ukraine to fight on.
The disagreement on Russia-Ukraine is especially strident. The EU argues that the recently proposed deal unjustly rewards Russia, and opposes it on both ethical and strategic grounds. Ethical, because Russia should be punished for invading a sovereign state. Strategic, because the EU has now branded Russia as an existential threat, an enemy that might soon invade the EU itself.
Lawyers, guns and money
I share the EU’s ethical view, but I find the strategic argument overblown. Russia’s already limited pool of young people has been decimated by a long war, to the point that it needs to import drone-fodder from North Korea. Weakened by its failed offensive against Ukraine, it is unlikely to set its sights on Poland. Putin laments the demise of the USSR, but lacks the means and strength to recreate it. It would be much better for Europe to try and find a long term modus vivendi with Russia.
However, if the EU is determined to defeat Russia, then it needs to do “whatever it takes”, to dust off Draghi’s fighting words at the height of the euro debt crisis. “Send lawyers, guns and money,” as Warren Zevon sang — except with soldiers instead of lawyers.
This is what the EU promised — kind of. Germany shelved its constitutional debt brake to rebuild its military might. EU countries pledged to boost defense spending and to create a credible and cohesive European defense force.
There are a number of obstacles. Europe has too many arms manufacturers, because every country has its own pet projects. This implies small-size orders, lack of economies of scale, higher costs, incompatible systems. European countries have few soldiers, and fewer still who are properly trained to fight. And it might be hard to set up effective chains of command in a Union that could not even agree on a single seat of parliament.
Pay to play
The biggest problem, however, is money. Except for Germany, no European country has the funds to bolster defense. But wait a second, how can the world’s second-largest economy not have money?
Well, EU governments are already spending a lot of it. Government expenditures average close to half of GDP in the EU, with a peak of over 57% of GDP in France. In the US, the general government spends 38% of GDP.
This matches vasty different levels of taxation: US general government revenues are almost 20% of GDP lower than in most large EU countries. Moreover, since US federal spending and revenues come to only 23% and 17% of GDP respectively, there are US states where the government footprint is much lighter — think Florida vs California.
Much of European government spending goes to finance the social welfare state that Europe is so proud of: Spain, Italy and Germany devote over one-quarter of GDP to social welfare; France nearly one-third; the US less than one-fifth. My European friends insist it’s money well spent. And so it might be. But there are trade-offs.
In principle, European states could divert resources from social spending to defense. Reforming welfare, however, appears politically impossible: ask France, where the government has agreed to roll back a previous modest increase in the retirement age.
The truth is, though, even shifting money from social spending to defense would not be enough. Europe’s crucial underlying problem is lack of economic growth. Over the past ten years, the US economy expanded at an annual pace of 2.5%. The EU’s three largest economies managed only around 1%; Spain alone came close to keeping up with America.
Productivity growth averaged 1.9% per year in the US over the same period, according to the Bureau of Labor Statistics. It averaged a measly 0.7% in Germany, 0.5% in Spain, and stagnated in France and Italy.
Growth is might
You cannot become a credible military power without strong economic growth. Geopolitical dominance is built on economic strength. China understands this well. If the EU wants to play a leading role on the global stage, it needs to revamp its economic growth model. The challenge is much more fundamental than paring back social welfare. The EU needs to shrink the role of the state and make room for a stronger, more dynamic private sector. This requires nothing less than a mindset change because it seems to run counter to Europe’s DNA. Indeed, the EU’s very institutions have become a formidable obstacle to this transformation, focused as they are on regulations and on growing their own influence and power — like every bureaucracy around the world but even less restrained by democratic accountability.
If the EU insists down the road of more regulation, more government spending and higher taxes, it will forego any ambitions of greater geopolitical relevance. Ironically, the more serious threat to Europe comes from within, not from without. It’s not the risk that Russia will try to rebuild the USSR of old, gobbling up chunks of the EU. It’s the risk that Europe will turn into a EUSSR1, with an overreaching multilayered bureaucracy that stifles economic growth and undermines future prosperity and geopolitical relevance. Until eventually it will break apart, like the USSR and for the same reasons: lack of economic growth and lack of democratic accountability.
For the record, I do not like The Beatles.
Sharp anlysis on Europe's self-imposed constraints. The productivity data is damning: when you're growing at 0.5-0.7% annually while spending 50% of GDP through goverment, you're essentially locked into a low-growth equilibrium where every new challenge just triggers more regulation and spending. Your EUSSR framing captures the paradox well,the bureaucracy expands to solve problems it creates, and no one can reform because each layer of spending has its own constituency.
Agree with you.
But it will take more than economic reforms to undo, if still possible, Europe’s “Civilizational erasure” pointedly stated in the US National Security Document.