I found this report from Bojan Pancevski at the Wall Street Journal encouraging:
BERLIN—Germany will boost military spending above 2% of GDP and create a strategic natural-gas reserve, Chancellor Olaf Scholz said Sunday, marking a significant shift in the country’s defense and energy policies in reaction to Russia’s war in Ukraine.
The measures, all of which had long been resisted by successive governments and will now be reflected in this year’s budget, underline how profoundly Russia’s attack on Ukraine is upending European politics after almost eight decades of nearly uninterrupted peace on the continent.
“We have to ask ourselves: What capacities does Putin’s Russia have? And which capacities do we need to counter his threats?†Mr. Scholz told parliament, gathered for an extraordinary session on Sunday. “It’s clear, we will need to invest a lot more in the security of our country to defend our freedom and our democracy.â€
“Putin wants to establish a Russian empire…the question is…whether we can summon the strength to set boundaries to warmongers like Putin,†Mr. Scholz said.
and
Mr. Scholz said that he would immediately invest 100 billion euros, equivalent to $113 billion, in weaponry. Starting now, he added, Germany’s military spending would exceed the North Atlantic Treaty Organization’s spending target of 2% of GDP, a goal that none of his predecessors managed since the end of the Cold War and that Germany had pledged to reach by 2024 as part of its commitments to NATO.
He said the government would create strategic gas reserves and finance the building of two liquefied natural gas import terminals on the country’s northern coast.
Mr. Scholz also announced concrete arms-systems procurements including the decision to buy state-of-the-art drones from Israel and F-35 warplanes from the U.S., which he said would be used to amplify NATO’s nuclear deterrent against Russia.
It’s one thing to announce something and another actually to do it. For years the Germans have been long on rhetoric and short on fulfillment. If true, it would be a dramatic shift in German policy and in my opinion steps in the right direction.
This is what i said during the Mearsheimer discussion.
“NATO as a defense entity against Russia was essentially defunct until Russia invaded. No one had much of a military other than us. There were no security issues for Russia. (There were and are economic issues with Russia having taken such large hits recently.) Maybe now western Europe beefs up their militaries?”
While I agree that it is possible that Scholz is just acting like a typical politician ands saying what people want to hear in the moment I also would bet that he sees economic opportunity here if Germany can become the arms sales center for NATO. The part I expect they will follow up on is creating an energy reserve. They have to be feeling pretty vulnerable.
Steve
Just to put it in perspective.
Like in the other post; if the 1989 peace dividend is gone; and countries revert to their military spending in 1980’s.
Germany 3%. Now 1.5%. Increase of 100%.
UK. 4.5%. Now 2.2%. Increase of 100%.
France 3%. Now 2.1%. Increase of 43%.
And don’t forget the Eastern Europeans — with their lower absolute GDP; they have to spend even higher as a percentage of GDP to build quality militaries.
2% isn’t the target anymore. 3%, 4%?
None of those countries is presently running a budget surplus. The U. S. alone has a deficit of nearly $3 trillion. How much can actually be extracted from their economies in the form of taxes. The overwhelming likelihood is that all of that additional debt will be monetized.
This comes in the context that US and all its allies credit card will have their spending limits cut drastically.
What’s done is done, but the freezing of Russian central bank reserves held in US, Europe yesterday and given the difficult relationship between China and US; it is inevitable (and likely quite soon) the Chinese will dump all its treasury, Euro government debt, Japanese goverment debt holdings (2 trillion plus). They (China/Russia) are likely to insist on payment for trade goods in a neutral medium of exchange, like gold, or in their own currency.
The shock of a sudden stop to trade deficits is the equivalent of going cold turkey for a strong alcoholic. Long term it will be good but in the short term/medium term it could be very ugly.