**Europe Needs to Rearm, Urgently**
The invasion of Ukraine by Russia and the broader threat posed by President Vladimir Putin’s regime require Europe to rearm. The US administration has made clear that neither Ukraine nor America’s NATO allies can count on continued US support.
**A Daunting Challenge**
Rearming is a daunting task for European governments. Their economies are weak, public finances are stretched, and many voters are loath to accept cuts to other government spending. Russia’s economy is on a war footing, its army is battle-hardened, and it has a huge stockpile of nuclear weapons.
**NATO Targets**
Europe’s big powers have struggled to meet NATO’s target of spending at least 2% of GDP on defense. France and Germany managed barely more than that last year, while the UK reached 2.3%. These figures are well below what is needed to avert Ukraine’s defeat and deter broader Russian aggression.
**Options for Financing**
There are three options for financing European rearmament:
1. **Collective Borrowing**: European governments could borrow collectively to finance a one-off investment in defense capacity, as French President Emmanuel Macron has suggested.
2. **Special Purpose Vehicle**: A coalition of willing governments could set up a special purpose vehicle separate from the EU, which could issue joint bonds backed by guarantees from participating governments.
3. **European Investment Bank Lending**: The EIB could be permitted to finance wholly military spending, such as investments in tank and ammunition manufacturing.
**Conclusion**
Upping defense spending is much less costly than fighting an all-out war. Otherwise, Europeans will need either to learn Russian or to move to New Zealand, as warned by NATO Chief Jens Stoltenberg. Europe needs to rearm now to avert Ukraine’s defeat and deter broader Russian aggression.
