The European Defense industry will be crucial for the future of the EU. The increase in military spending is already a fact after the historic past week where geopolitical relations, balances, and even the North Atlantic Treaty Organization (NATO) changed. The world changed, ultimately. Brussels wants this profound shift and the "hundreds of billions" of euros to be spent to be a boost for the European sector, for the continent's economy to gain competitiveness, and of course, to defend against Russia.
Because "Russia's war machine will not stop even if there is peace," according to EU sources. If there is finally an agreement, in Brussels, they affirm that Vladimir Putin will use that process to give rest to his troops and rearm. At this point, in the EU capital, they point out that the Russian country produces as much ammunition in just three months as the entire NATO, including the United States, does in a year.
"Putin will not stop in Ukraine," they continue in Brussels, where they fear the expansionist ambitions of the Russian president and insist time and time again that it is essential to "spend more and spend better." This will be an opportunity for countries that already have a Defense industry, including Spain. The others are Germany, France, Italy, Poland, and Sweden.
The growth prospects of the sector are very clear, the stock markets are already reflecting this with strong increases in potential benefiting companies, and in the EU capital, they emphasize "European spending." That is, that Europe's rearmament does not directly benefit, for example, the U.S. industry or does so to the least extent possible. This was something that was speculated in Brussels and, in the opinion of some, was behind the demands of the U.S. President, Donald Trump: for Europeans to spend more on Defense to buy from American companies. And surely there is a part of that, but the facts have shown that the magnate is not directly interested in continuing to defend Europe and wants to reallocate the funds that were previously allocated to this issue.
The opportunity to gain competitiveness is also very relevant. The former President of Italy, Mario Draghi, already mentioned this in the report he presented in September. Without yet knowing what would happen in the U.S. and the geopolitical change, the former head of the European Central Bank (ECB) already pointed out that Defense spending was a way to innovate, increase Europe's sluggish productivity, and even create quality jobs. And what has happened in recent days only reinforces these arguments.
To have a clear roadmap, Brussels is already working on a Defense document that will be known by mid-next month and is deemed crucial. By then, steps should also have been taken on how to finance the impending large expenditure. For now, proposals are piling up, and European leaders will have to negotiate as positions are divided.
Yesterday, beyond what was discussed and proposed by attendees at the Paris meeting, Economy ministers already provided some clues at the Eurogroup meeting in Brussels. Some, like the Spanish representative Carlos Cuerpo, advocate for burdening Europe with the effort: more European debt, increased participation of the European Investment Bank (EIB) chaired by Nadia Calviño, and even resorting to the European Stability Mechanism (ESM), the European rescue fund that has not been used for years. Others, like the Finance Minister of the Netherlands, Eelco Heinen, stated that increasing national Defense spending "requires making tough decisions in the Budget." "What you spend on one side, you cannot spend on the other," he added to reject the path of indebtedness.
"It is absolutely clear that Defense spending in Europe will increase even more in the coming years. The debate on how we will do it exactly will open quickly," said the President of the Eurogroup, Paschal Donohoe, defining the situation as "urgent." And the Commissioner for Economy, Valdis Dombrovskis, added that the European Commission will present "in the coming days or weeks" a detailed proposal on how to relax fiscal rules.
All very agile by European standards because the proposal was driven by the President of the European Commission, Ursula von der Leyen, at the presidents' summit held earlier this month. There she presented it privately and, according to EU sources, did not receive objections from any leader. She already made it public in her speech at the Munich Security Conference last Friday. Concrete and fast steps. Perhaps that has also changed after the historic week of February 10-16, 2025.