The year 2020 had a tumultuous beginning; to the already existing humanitarian emergencies, environmental disasters, and political crisis, in February, the international community also had to deal with a coronavirus viral pandemic that was rapidly spreading from the city of Wuhan, China. Initially, the COVID 19’s threat was underestimated; if China immediately closed the Hubei province to contain the proliferation of the virus, the other countries waited until the beginning of March to take countermeasures. In this regard, as the WHO declared the COVID 19 a pandemic (WHO, 2020), by the end of March, over 100 countries instituted lockdowns to curb the growing number of people tested positive to the virus (BBC, 2020).
The coronavirus’ impact on GDP
The COVID 19 emergency displayed systemic problems in every country, most of which related to the healthcare sector. However, prolonged lockdown strongly affected the economic sector, as many commercial businesses could not perform their activities; consequently, most of the countries witnessed the growth of the unemployment rate. This situation had a massive impact on the member states‘ economies; according to a Eurostat office’s evaluation, the first quarter of 2020 saw a GDP decrease of 3.2% in the euro areas and of 2.6% in the EU, in comparison with the first quarter of 2019 (Eurostat, 2020). Moreover, Commissioner Gentiloni noted that „The EU economy is expected to contract by a record 7.4% this year, 7.7% in the euro area. More than in 2009, where the contraction was around 4.5%.“ (Gentiloni, 2020).
Furthermore, the IMF recognised that the world is experiencing the most significant economic shock since the Great Depression (Gopinath, 2020), which will affect the lives of billions of people and numerous sectors.
Defence budget’s downturn and the new growth
In times of economic crisis, usually, the authorities choose to cut expenditures; the immediate example of how the spending cut has a direct impact on the European defence project is the 2007-2009 economic crisis. The experts, including General Henri Bentégeat, mentioned that due to the so-called Great Recession, the governments tended to reduce their military budget; a decision that affected the EU missions and interventions abroad and slowed down the European defence project (Crépu, 2019).
The years before the Great Recession, the European Defence Agency (EDA) calculated a total defence expenditure (which includes personnel, infrastructure/construction, defence investment, operation & maintenance and other spendings) between €192 Bn in 2005 and €204 Bn in 2007 (EDA 2005-2019). However, when the economic crisis struck the EU, the Member States had to reduce their financial contribution to the European defence project; therefore, since 2008, EDA defence expenditure steadily decreased, dropping from €201 Bn (2008) to €190 Bn (2013), the lowest ever recorded.
In 2014, the defence budget grew again in conjunction with Russia’s invasion of Ukraine (Fiott, Terlikowski & Schütz, 2020), recording €194 Bn, and increased even more in the following years, jumping from €204 Bn in 2015 to €223 Bn in 2018 (EDA, 2018); therefore -taking inflation into consideration- the total defence expenditure reached a similar level as 2007 (EDA, 2018).
The increase in the European Defence Project’s budget ostensibly demonstrated the willingness of member states to continue the same course of action initiated more than years ago. Furthermore, in 2016, the (former) Commission President Jean-Claude Juncker proposed the European Defence Fund –officially established in 2017- aiming to boost the research’s budget and the development and acquisition expenditure of the Member states (European Commission, 2016). The research field would have benefited from €90 mln until the end of 2019 and then €500 mln per year after 2020. Moreover, development and acquisition were financed with €500 mln in 2019-2020 and later would have received €1 bn per year after 2020 (European Commission, 2017).
Furthermore, in July 2018, the European Commission announced that, for the long-term EU budget 2021-2027, it would have increased the budget up to €13 Bn; €4.1 Bn allocated to research and €8.9 Bn were available to the Member states for development and testing requirements (European Commission, 2018).
The defence spending cut’s consequences
However, 2020 has been marked by a global pandemic that involved all sectors, without exception and caused massive losses in the Member states‘ GDPs. As it has happened in the past in times of economic contraction, the defence budget has undergone cuts. On this regard, some estimates mention that in 2020, Europe will cut between $20.6 to $55.9 Bn in defence expenditures (Berenson, Kimla & Leboulanger, 2020).
The experts argue that it is essential to avert the past mistake (defence spending cut) in order not to stop the European defence project. Indeed, a massive budget decrease can affect the research and development sector and the ongoing programmes (especially those on new technologies) and military progress (Marrone et al., 2020).
Furthermore, the experts state that the defence budget’s cut would increase the EU’s reliance on third parties, and it would compromise its credibility as a military partner, especially with NATO (Kington, 2020).
Academics and experts of the field firmly agree on the importance of not sacrificing the defence budget because the aftermath of COVID 19 may bring unease and unrest in different regions, that can escalate into security concerns, even war, and the EU cannot afford to be unprepared (Fiott, 2020).
Europe was one of the first areas affected by the coronavirus pandemic, and it appears its recovery is steadily improving. In the international arena, this condition translates into Europe’s need to be immediately ready to face the current crisis (for instance, migration and hostilities near its borders), and support its partners. Moreover, the EU is already engaged in numerous civil and military missions; its personnel can support locals in addressing the challenges that arose during the lockdown and those that will emerge in the post-pandemic period (Fiott, 2020).
The experts say that cuts are inevitable; indeed, in May 2020, the European Commission, while announcing a recovery plan to support the Member states‘ economies and the European policies, declared that the new European Defence Fund’s budget over the 2021-2027 period was set to €8 Bn (European Commission, 2020).
Nevertheless, the extent of the spending cuts will determine the future European engagement in security and defence matters. Moreover, it will define Europe credibility in terms of conflict prevention, humanitarian crisis management and its reliability as a partner in security issues (Fiott, Terlikowski & Schütz, 2020).
A new wake-up call on the European defence project
After the Great Recession of 2008, it took several years to raise the defence budget again, partly because the austerity policies implemented by Member states. On this regard, to prevent the same repercussions, the experts recommend the Member states to secure the defence budgets (Fiott, Terlikowski & Schütz, 2020). Both the European Union and the Member States are developing multi-billion plans to stimulate the economy; leaving the defence expenditure out of them would lead to long term consequences. The industry would suffer from the cuts as well as the research projects on new technologies and development sectors that would increase the European capabilities and autonomy on security and defence matters; moreover, Europe would be more competitive in the international arena. It is relevant not to forget that in 2019, the global military expenditure saw its most significant boost in the past decade; the United States, China, India, Russia and Saudi Arabia alone had 62% of the total expenditure (SIPRI, 2020). Europe cannot fall behind; on the contrary, it must keep its role of a significant actor in the international arena.
The economic contraction is inevitable; however, Europe must be ready to face the challenges of the post-COVID 19 world. Moreover, it has to persevere on its missions abroad, guaranteeing the security of its citizens and enhance its performance in terms of cooperation and humanitarian assistance. Therefore, the Member states have to preserve the defence budget rather than cutting as it happened in the past to allow the European defence project to prosper.
Written by Luca Dilda
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