The EU’s Overdue Defense Buildup: How ReArm Europe Can Succeed
On March 4, the President of the European Commission, Ursula von der Leyen, announced a new EU-wide initiative, the ReArm Europe Plan. This package aims to unlock €800 billion in additional European defense spending. It also reflects a serious reckoning in Brussels: the United States expects Europe to guarantee its own security and defense, not just in word but also in deed.
Both sides of the Atlantic have a stake in ReArm Europe’s success. For the United States, robust European rearmament would allow a drawdown of U.S. force posture in Europe and facilitate greater U.S. focus on the Indo-Pacific, where Washington’s long-term strategic priority lies. For Europeans, a rearmed continent would provide a potent military deterrent–one capable of effectively countering regional threats without relying on the constant availability of substantial portions of U.S. military strength. Ultimately, ReArm Europe has the potential to advance U.S. burden-sharing goals and materially improve European security outcomes worthy of support in Washington and sustained political commitment in European capitals. However, in order to build a significant enough threshold of combat power for meaningfully independent defense capabilities, European states will need to make targeted investments to address their most important capability gaps. Critically, key players, especially Germany, need to rise to the occasion.
The Buildup That Might Be
Despite its name, the ReArm Europe plan is not really a “European” initiative in the sense that the EU has set aside €800 billion in defense funds. Much of the rearmament plan hinges on the political will of individual EU member states to increase their national defense budgets and to take advantage of EU tools to do so.
The ReArm Europe plan has three main parts. First, the plan stands up a new fund, Security Action for Europe (SAFE), which will offer €150 billion in low-interest loans to support joint procurement efforts. The goal is for joint procurements to enable individual European countries’ defense resources to go further by enabling greater economies of scale than each member state could achieve on its own. For example, SAFE loans could supplement existing European Defense Agency-led joint procurement of 155mm artillery ammunition by allowing for sustained investment in higher production capacity.
Second, ReArm Europe loosens EU fiscal rules for defense spending purposes. By allowing member states to activate the “National Escape Clause” of the European Stability and Growth Pact, the plan enables EU countries to bypass normal deficit restrictions and take on low-interest loans. This seeks to add up to 1.5% of their GDP in new defense spending through 2028. All EU member states spending an additional 1.5% on defense could amount to an additional €650 billion over four years, according to von der Leyen.
Finally, ReArm Europe aims to boost the European defense sector through additional access to European Investment Bank (EIB) funds and private capital channeled through the EU’s Savings and Investment Union. At this point, the exact resourcing is unclear, with the EIB only pledging to double its annual defense-related investments to €2 billion.
Ultimately, the commitments contained in ReArm Europe are largely notional. The vast majority of the defense spending package hinges on the hypothetical additional amounts that EU member states could choose to spend on defense. These factors make the participation of Europe’s most powerful states essential if ReArm Europe is to succeed and make a meaningful difference.
Germany’s Central Role
Germany is no longer the frontline NATO state it was during the Cold War. Berlin has traded this status for a more peaceful frontline position leading the EU’s economy, with consequences for its military readiness. Germany fields Europe’s largest economy and population, and is by far the largest European donor to Ukraine. As such, Germany’s recommitment to defense is necessary to turn ReArm Europe from a white paper into a reality on the ground.
Germany is capable of this role. Cold-War Germany, despite its society’s complicated relationship with the military post World War Two, maintained a formidable fighting force. At its peak, the West German Bundeswehr had roughly 500,000 active service members under arms and fielded 12 divisions, comprising more than 7,000 tanks, infantry fighting vehicles, and other armored platforms.
However, decades of post-Cold War neglect have left German defensive capabilities a shadow of their former strength. The Bundeswehr now has just over 180,000 service members and has struggled to field even a single promised division for NATO deployment. German parliamentary reports have indicated for years that structural underinvestment has created a readiness crisis for the Bundeswehr. Shortages of personnel, spare parts, hardware, and munitions have led to an “ageing and shrinking” force with “too little of everything,” in some cases even resulting in soldiers having to buy their own equipment. Prior to Russia’s 2022 invasion of Ukraine, Germany’s eight brigades only stood at 65% readiness, according to the German Armed Forces Association.
In March 2022, then-Chancellor Olaf Scholz announced Germany’s “Zeitenwende” or “turning point” in defense policy. In the immediate aftermath of the Russian invasion, Germany pledged an emergency fund of €100 billion, which would go towards closing critical capability gaps and backfilling empty arsenals. But so far, the results have been middling. Because the Bundeswehr already needed substantial reinvestments just to recover from previous underfunding, simultaneously supporting Ukraine’s war effort actually set the force back. Due to severe shortages of artillery, air defense, and soldiers, the German Armed Forces Association now estimates the Bundeswehr’s land readiness at an abysmal 50%. For a country with Germany’s latent strength, this lack of preparedness is shocking, especially when compared to other NATO members, such as Poland and the Scandinavian states, which have made more meaningful strides to increase their collective capabilities since 2022. It should come as no surprise that Warsaw has repeatedly criticized Germany’s pace and proceedings on defense improvements.
Room for Optimism?
Fortunately, Germany may finally be taking the necessary steps to more seriously follow through on its Zeitenwende, right as ReArm Europe takes shape. Following the Christian Democratic Union’s victory in Germany’s February elections, incoming Chancellor Friedrich Merz rapidly assembled a new ruling coalition and quickly moved to bypass Germany’s self-imposed budget spending caps (the “debt brake” mechanism) to allow for increased defense spending.
The German plan will exempt up to 1% of additional defense spending from any fiscal constraints, essentially allowing unrestricted government borrowing for defense purposes. The plan also allows an additional €500 billion in combined defense and infrastructure investments. To further bolster the initiative, Germany also made constitutional changes to expand the definition of defense spending to include, for example, intelligence work and military mobility. The explicit inclusion of infrastructure spending was in part a “log-rolling” agreement to secure the constitutional changes, but it also reflects Germany’s view that these investments will also supplement its long-term military readiness. Merz’s recognition that Germany must do “whatever it takes” to rebuild its defensive capabilities is an overdue acknowledgement that Europe is hearing Washington’s message—and is willing to act.
How Europeans Can Make the Most of ReArm Europe
The first guiding principle for the successful implementation of ReArm Europe must be Quality, Not Just Quantity. Many European NATO members have made progress, if long belated, in finally reaching the alliance’s target of devoting 2% of GDP to defense spending. However, this benchmark is a necessary minimum for building out a credible defense capability and should not be viewed as a culminating point. Many European states, like Germany, need to reach this level simply to reconstitute combat power and readiness before they can even begin to contemplate increases in their larger-scale deployable contributions to NATO. Over a decade on from the Wales pledge, and with war in Ukraine still ongoing, NATO would be justified in setting a new baseline target of 3% for its members at the alliance’s next summit this June in The Hague.
Beyond the topline number each European state devotes to its defense, how these countries spend their defense resources is of equal, if not greater, importance. Europe is heavily reliant on the United States for several core capabilities that may be unavailable to it in the long term, particularly if Washington faces contingencies elsewhere.
Fortunately, the EU’s Joint White Paper highlights several focus areas to guide ReArm Europe investment priorities. These include air and missile defenses, artillery systems, munitions production, drones, and military mobility. ReArm Europe further emphasizes European investments in strategic enablers such as aerial refueling and command, control, communications, computers, intelligence, surveillance, and reconnaissance assets. Closing these capability gaps will require many European states to devote substantially higher shares of their military budgets to additional equipment procurement. Many states have begun doing so in the past year, but this trend needs to be sustained for European firms to be comfortable taking the investment risk of building out supply chains that can support a wider continental rearmament.
The second pillar of the ReArm Europe efforts should be Regional Alliances. Individual European states should consider deepening their cooperation in regional defensive blocs to harness regional synergistic benefits and achieve faster effects. These groupings can still work within the overall NATO framework, while helping improve local interoperability and operationalizing contingency planning of different joint force command headquarters.
One example EU member states might look to emulate is the growing security cooperation of the Scandinavian states. Now that Finland and Sweden have joined NATO, existing regional cooperation organizations like the Nordic Defence Cooperation have more meaningful capability. The Scandinavian states’ decision to establish joint Nordic Air Force operations has allowed them to collectively field over 250 combat aircraft, a force larger than the UK’s Royal Air Force. These combined operations improve the interoperability and survivability of each state’s air forces. Nordic integration also lowers the costs of responding to Russian gray-zone interactions through better intelligence sharing, policy coordination, and a larger pool of military assets. These efforts also provide a model that could be replicated with a heavier land focus between the Baltic States, Poland, and Germany. Berlin’s effort to set up a permanent base in Lithuania, for example, shows that European states can demonstrate leadership capability within NATO, something U.S. policymakers should continue to encourage.
Finally, the EU needs a Focused Force Posture. EU authorities should prioritize supporting procurement projects and deployments that directly advance Europe’s main security goal: deterring Russia. Too often, European states overvalue the strategic and political benefits of operations further afield compared to building up robust deterrent capabilities closer to home.
For example, the UK, France, and Germany have deployed dozens of ships to the Indo-Pacific in recent years. These deployments reflect a mix of concern about Beijing’s foreign policy and a desire to demonstrate good faith to the United States. Europeans should recognize that their limited defense resources require clearer prioritization. Right now, European states lack the ability to concentrate a credible deterrent against Russia on their own. They need to achieve this goal instead of spreading already insufficient forces further afield. Building up greater European combat power to deter Russia would free up U.S. resources to focus on the Indo-Pacific, which could materially alter the balance of power in Asia in a way that can better protect European interests in the region as well. Politically speaking, U.S. policymakers, particularly in the Trump administration, will likely value this strategic division of labor, something that Defense Secretary Pete Hegseth argued for in Brussels earlier this year.
The Stakes of Success
If EU members prove serious about committing, the ReArm Europe plan is an exciting opportunity to mount a defense effort that the United States has been calling upon Europe to make for decades. Even so, European states have failed to live up to defense resourcing commitments before. Given U.S. imperatives to avoid overstretch and seize opportunities to shift defense burdens where practical, American policymakers should create positive incentives to encourage the plan’s success.
On the one hand, the United States can reward states pursuing greater defense investments with leadership opportunities within NATO, and defense production cooperation can reinforce responsible decisions. On the other hand, reducing collaboration and U.S. basing presence with NATO members that continue to lag can make the consequences of foregoing necessary defense spending clear.
European states can position themselves for success through smarter defense investments. By closing critical capability gaps that the United States has thus far filled, Europe can show its commitment to investing in its security, forge a credible, independent deterrent, and improve the overall transatlantic relationship. For generations, Europe has had the resources to take the reins of its own defense but has lacked the political will. Latently powerful states like Germany should take advantage of ReArm Europe to reverse their security fortunes, setting a trend that others can follow.
Views expressed are the author’s own and do not represent the views of GSSR, Georgetown University, or any other entity. Image Credit: France24