Can Kasapoglu and Peter Rough
Unsettled by President Donald Trump’s handling of Ukraine, Europe is in a rush to improve its armed forces. “Spend, spend, spend on defense and deterrence,” Danish prime minister Mette Frederiksen told reporters earlier this month.
On the same day Frederiksen made her comments, the president of the European Commission, Ursula von der Leyen, presented a plan that could—in theory, at least—unlock hundreds of billions of euros in defense spending. Most importantly, Germany’s next government is targeting a major military buildup that would exempt any defense spending above 1 percent of gross domestic product from the country’s constitutionally mandated debt brake. Hardly a day goes by without headlines of a new scheme for European defense spending.
The markets have taken notice. Great Britain’s BAE Systems, France’s Thales, Germany’s Rheinmetall, Sweden’s Saab—Europe’s major defense companies have been red hot in recent trading on European exchanges, significantly outperforming their American counterparts.
Earlier this month, Portuguese defense minister Nuno Melo captured the prevailing mood when he raised doubts about Lisbon’s plans to replace its F-16s with F-35s. “There are several options that must be considered, particularly in the context of European production,” he mused to local media.
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