The Indicator from Planet Money - Can Europe stand without the US?

Episode Date: March 26, 2025

As relations between the US and Europe continue to sour, European countries are working to lower their reliance on the U.S. for weapons and security. Today on the show, we ask what Europe needs to do to become independent militarily and what potential barriers could stand in the way.Related episodes:Europe's NATO members take an economic hit (Apple / Spotify)Two Indicators: Economics of the defense industry (Apple / Spotify)For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org.Fact-checking by Sierra Juarez. Music by Drop Electric. Find us: TikTok, Instagram, Facebook, Newsletter. See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

NPR. This is the indicator from Planet Money. I'm Patty Hirsch. And I'm Adrian Ma. This week, more evidence surfaced of the Trump administration's acts to grind with Europe. It came from a leaked group chat with texts from Vice President J.D. Vance and Defense Secretary Pete Hegset. In this conversation, they're discussing whether to launch a military strike on Houthi rebels in Yemen, which have been disrupting commercial shipping in the Red Sea. Vance said he just hated, quote, bailing Europe out again.

unquote. Hexeth replied, quote, I fully share your loathing of European freeloading. It's pathetic, unquote. All of this means that things are getting real in Europe. If Europe wants to avoid war, Europe must get ready for war. This was European Commission President Ursula von der Leyen, speaking at the Royal Danish Military Academy last week. At the same time, European leaders were working on a rearmament plan aimed at decouple. crippling Europe from the U.S. and lowering its reliance on America for weapons and security. So today on the show, we'll ask what Europe needs to do to stand alone militarily without America, how long that might take and what the barriers could be.

That's coming up after the break. As we've reported before on this show, U.S. administrations, at least as far back as George W. Bushes, have been pushing European nations to increase their defense spending. But throughout, the U.S. has remained committed to the principle of NATO's operations. Article 5, which says that an attack against one ally is considered as an attack against all allies. That commitment appears to have ended with President Trump. Well, I think it's common sense, right? If they don't pay, I'm not going to defend him.

No, I'm not going to defend him. I got into a lot of heat when I said that. You said, oh, he's violating NATO. And, you know, the biggest problem I have with NATO, I really, you know, I mean, I know the guys very well. They're friends of mine. but if the United States was in trouble and we called them, we said, we got a problem, France, we got a problem, a couple of others, I won't mention. Do you think they're going to come and protect us?

They're supposed to. I'm not so sure. Now, for the record, Article 5 of NATO has only ever been invoked once, and it was by the United States. Bronislav Slanchev teaches military and war studies at the University of California, San Diego. When Article 5 was invoked after 9-11, the Europeans responded. Canadians, they went and they died. The British went and they died. Everybody responded. That includes the French, by the way, who supported the U.S. by sending troops to Afghanistan, 89 of whom died and more than 700 of whom were wounded.

Trump's public scorn for these sacrifices is just one barb on the arrowhead that has pierced the heart of the European-American relationship and shredded trust between them. And it's galvanized European governments to make themselves independent of the U.S. when it comes to their defense. But Fennella McGurdy says Europe was already ramping up its defense spending, long before Trump came into office. Fennela is a senior fellow for defense economics at the International Institute for Strategic Studies in London. In 2024, we saw record defense spending growth already, 11.7% in real terms. And that was itself an increase. So an acceleration from the level of growth we saw in 2023, which reached 5.2%. And that was an acceleration from the

growth the year before. The EU plan announced last week will likely break new records. It advocates a massive ramp-up of defence industrial production capacity, and it unlocks a combined $866 billion in military spending over four years. That's a bite of. what the U.S. spends in a single year on defense. So Brannislav says it's not even close to a conversion to a war economy, but it could still be good medicine for Europe. The European manufacturing base is astonishing. It can produce high-precision machinery.

It has all sorts of talent. If it's done right, it should generate economic benefits for these countries. And so that should alleviate some of the problems that Europe has been struggling with. Governments will be pumping money into building factories and strengthening manufacturing. It could mean a boom for companies, those sectors. Hopefully, lots of new jobs. But to come up with that funding, countries are going to have to make some hard choices, Fanella says. In fact, in some cases, they already are. It's requiring countries to incur more debts. It's requiring restructuring of debt laws. Germany just last week

approved an historic change to its debt laws, allowing it to borrow more for defense. Denmark did similar, and other countries seem likely to follow suit. All of this, of course, could balloon deficits and stoke inflation. But even if European governments do manage to pull a Goldilocks and get their borrowing and their spending just right, there are still plenty of other challenges to building out a coherent defence. Arguably, Europe can increase the funding. They can increase the money. They can incur more debt, but it's the capacity of European defence industry to then respond to that increase of demand. Because defence industry had been run on a lean outlook. It was very much all about efficiencies, targeted production runs, no stockpiling.

Right now, the US dominates Europe's military supply chain. It provides rocket launcher systems and artillery shells and fighter jets to European forces. Yeah, and to wean themselves off America, the EU's 27 nations and 27 armies will have to find new suppliers of equipment and ammunition. Some of those suppliers will themselves be European, but others will come from overseas. The whole process of coordinating who makes what and when and for whom will be complicated. It will really be key to ensure that there is that cohesion across Europe

and including countries that aren't in the EU looking at how to work with NATO, coordinating the demand across industry to make sure that everyone isn't demanding the same thing at the same time, creating competing demands for the same resources and creating those further supply chain issues. It's one of the issues at the moment as well. And no matter how much money Europe throws at the ramp up of its defence capacity,

The creation of these new supply chains and production lines won't happen overnight, Branislav says. So it will be years. These are all future investments that will take two to three years to start seeing some significant changes, for sure. The military strategist now is spending a lot of time trying to figure out exactly where these investments need to be made. Which is no easy task.

The military threat from Russia is very different to what it was just five years ago, and it keeps changing. Brannislav says that means Europe needs to adopt new technologies and wean itself from old ones, even those that have required considerable investment in the past. Everything is changing right now. This current war, things have evolved dramatically. Initially, for instance, everybody was talking artillery in tanks. That was a big thing. Then the tanks turned out not to be super effective. Now everything is drones and the missiles, right? And everything then is related to how you can keep electronic warfare from the interference.

Do you have eyes in the skies or the satellites? So these are the kind of capabilities. We should not be building to fight the last three wars, we should be building to fight the next one. Europe can do all sorts of things to move quickly, or at least more quickly than it usually does. It can convert old factories to make arms and reconfigure existing ones to become dual-use, civilian and military production hubs. It can develop supply relationships with other arms providers like South Korea or Israel. But whatever it does, it'll take time, Fennela says. And because of that, the U.S. will likely remain part of the European defense equation for the foreseeable future. It takes decades for a lot of these programs. So I think that there's some level

of dependence will always be there, certainly in things like heavy lift transport and things like that, because those capabilities do take time to develop. And I think Europe could get there, but not in, perhaps in the timeframe it needs. So there's always going to be that some level of reliance on the US and hopefully some partnerships going forward, which ultimately is good for US defence industry as well. partnerships. Because in future, it won't just be Europe relying on the U.S. America's withdrawal from Europe is part of a pivot to Asia that began under the Obama administration. Whether President Trump likes it or not, as the U.S. continues to square up to China, it will need allies. It will need Europe, just as it did after 9-11 when it asked for help and got it.

This episode was produced by Cooper Katz-McKim and engineered by Jimmy Keeley. It was fact-checked by Sierra Juarez. Kicking Cannon edits the show and the indicator for production of NPR.