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We are witnessing a rapid transformation of the geometry of power in Europe, a change that opens up glimmers of liberation from the external yoke, on the one hand, while on the other it fears a tightening of subjugation. The European Union raises the alarm and calls for war, proposing shared action, military cooperation for a European army, a European intelligence, all for the modest sum of EUR 800 billion, which of course does not exist and will therefore have to be taken from the taxpayer. But is the project of a common European defence really so feasible?

The (bad) Italian example

Let us start with Italy.

The military relationship between the United States and Europe is similar to the financial relationship between Italy and the European Union: both represent a case of moral hazard, which generates parasitism (free riding) on the part of the weaker element (Europe and Italy), due to the lack of credibility of the stronger party (the U.S. and the EU). Both dynamics can be interpreted in terms of credibility, time consistency and moral hazard: economic theory provides essential tools for analysis.

Italy is a country that has been in economic stagnation for decades (sich!), burdened by a high public debt, which only manages to sustain itself because European institutions keep the cost of financing low. Without intervention from Brussels and Frankfurt, interest rates would rise, capital flight would occur, and the country’s crony system would collapse: Italy would be forced to choose between deep and swift reforms or default. Yet as long as the euro continues to guarantee the solvency of Italy’s debt, this scenario will not materialise: political mismanagement will be able to perpetuate itself through bargain voting, with no incentive to make public accounts sustainable or to revive growth.

One question to ask at this point in the discussion is how much the euro is artificially kept alive, but this is not the time to deal with that topic.

Europe, of course, suffers the consequences. The Eurozone cannot fight inflation decisively without raising interest rates too high, because that would jeopardise the resilience of the most fragile countries, such as Italy. Consequently, European citizens have to accept a loss of purchasing power. Moreover, for more than a decade after 2000, many countries have benefited from capital inflows on favourable terms to finance patronage spending or fuel speculative bubbles, dissipating billions in early retirements instead of investing in technological infrastructure, such as data centres for artificial intelligence.

The euro, in essence, lacks credibility: any attempt to impose conditions on Italy clashes with its ability to postpone reforms, counting on the fact that the Eurozone will continue to buy Italian government bonds. The euro was already born with a credibility deficit: when Italy’s entry was decided, spreads on Italian government bonds and other peripheral countries went to zero, despite the existence of the ‘no bail-out’ clause (which no one ever took seriously). The markets knew that, in the event of a crisis, Europe would intervene, and therefore had no reason to price the Italy-risk. This is where the Eurozone crisis developed from 1999 to the present.

But how does this relate to the relationship between the U.S. and Europe? If in the case of the euro the moral hazard mechanism is linked to monetary policy, in the transatlantic relationship it derives from military protection. Europe has been able to afford to minimise its defence capabilities because, since 1945, all major security problems have been solved by the United States. After 1990, the situation got even worse: European countries dismantled a large part of their armed forces in order to save a few percentage points of GDP, allocating resources to patronage spending or questionable policies such as energy transition and anti-nuclearism.

The United States may criticise the poor military capacity of its European allies, but it has little room for manoeuvre to change the situation: if it seriously threatened not to defend Europe, it would risk losing influence on the continent, leaving room for other powers, regional (Russia) or global (China). Consequently, while the likes of Trump may complain about European military budgets, solving the problem is another matter.

In both situations, there is also an issue of control. As long as Italy is dependent on European aid and guarantees, Italian governments will remain weak and subordinate. They will be able to accept European supervision with resignation, like disciplined beggars, or with resentment, like ungrateful beggars, but they will never really be able to oppose it. Italian Europeanism and anti-Europeanism are two manifestations of the same opportunistic attitude: Europe is seen as a tool to maintain the status quo and finance mismanagement.

As far as the United States is concerned, its soft and hard power over Europe is even more pronounced: Eastern European countries know that only Washington can offer credible protection against Russia, while European industry depends on American technologies, from semiconductors to fighter planes, making the purchase of U.S. products inevitable.

The diplomatic choices of European states must therefore take this condition of dependence into account. In theory, Europe could invest more in defence if it wanted to, but Ukraine’s security still depends on U.S. arsenals.

Finally, the dependency relationship also generates a problem of intellectual, even before moral, corruption. In Italy, there is a widespread belief that deficits are the solution to all problems, as in an assisted economy, because it is taken for granted that Brussels will pay in the end. In Europe, it is thought that foreign policy can be managed with good intentions, international tribunals and treaties on banned weapons, while avoiding facing reality: military deterrence is the only effective tool to influence an adversary. Thus, in Italy, financial parasitism is considered an acquired right, while in Europe, the idea that war, in certain cases, may be necessary is rejected: but there is no maturity without assuming responsibility.

In conclusion, the two problems are almost specular. However, while creating an adequate military apparatus for European countries would only require a modest increase in public spending (1-2 GDP points per year), solving Italy’s financial fragility and economic backwardness is a much more complex challenge. Europe’s military parasitism will probably be reduced, but Italy’s financial parasitism is bound to persist.

European defense spending

In recent years, defense spending by European countries has increased significantly, reflecting growing international security concerns and geopolitical tensions. This report analyses the development of defense budgets in Europe, highlighting key figures and recent trends.

Between 2021 and 2024, the total defense spending of European Union (EU) member states increased by more than 30 per cent to an estimated EUR 326 billion in 2024.

This increase is mainly attributable to the need to address new security challenges, in particular following the Russian invasion of Ukraine in 2022. The increase in military spending was particularly pronounced in 2024, with a growth of 17.9 per cent compared to the previous year.

According to an analysis by the Italian Public Accounts Observatory, the aggregate military expenditure of European countries in 2024, according to the NATO definition and at purchasing power parity, was 730 billion international dollars, exceeding Russian expenditure by 58%, estimated at 462 billion international dollars. Even considering only EU countries, military spending reached $547.5 billion international, or 1.95 per cent of GDP, still 18.6 per cent higher than in Russia.

Despite NATO’s target of allocating 2% of GDP to defense, only four European Alliance member states exceeded this threshold in 2024: Poland, Latvia, Estonia and Greece, with percentages above 3% of GDP.

On average, defense spending in the EU amounted to 1.3 per cent of GDP in 2021, with a forecast to reach 2 per cent in 2024.

In response to growing security needs, the European Commission has proposed a plan to mobilize up to EUR 800 billion for European rearmament over the next four years. This plan includes a mix of national funding and a new instrument that will provide EUR 150 billion in loans to member states, which can also be used to support Ukraine.

The aim is to strengthen the EU’s defense capabilities by promoting joint procurement of military equipment and improving interoperability between member states.

Despite efforts to promote collaborative procurement of military equipment, member states continue to procure mainly on a national basis. In 2020, spending on military procurement conducted within a European framework amounted to EUR 4.1 billion, a decrease of 13 per cent compared to 2019.

To stimulate collaboration, the EU established the European Defence Fund, with a total budget of EUR 8 billion for the period 2021-2027, of which EUR 2.7 billion is earmarked for research funding and EUR 5.3 billion for military capability development.

Despite the increase in military spending, Europe faces several challenges. Fragmented investments and a lack of coordination among member states can lead to inefficiencies and duplication of effort. Moreover, dependence on U.S. military capabilities highlights the need to strengthen the EU’s strategic autonomy. A study by the Bruegel and Kiel institutes estimated that to defend against Russia without U.S. help, the EU and the UK would need 300,000 additional personnel and an increase in annual defense spending of EUR 250 billion, bringing total spending to 3.5-4% of European GDP.

One can understand how the defense spending of European countries is constantly increasing, reflecting changing security needs. However, to ensure effective collective defense, it is essential to improve coordination of investments, promote collaboration in equipment procurement and strengthen the European defense industry. Recent EU initiatives are important steps in this direction, but their effectiveness will depend on the commitment and cooperation of the member states.

The ambitious project of a Single European Army

As the geo-economic analyst Giacomo Gabellini, author for the Strategic Culture Foundation, has brilliantly explained, the topic is more complex than is usually assumed.

The idea of a European army has distant origins, dating back to the early 1950s, when the continent was divided between the two Cold War blocs and discussions began on a possible common defense. In that historical and political context, Germany and Italy were among the main promoters of such an initiative, with the hope of strengthening European security without having to depend exclusively on the United States and NATO. This prospect, however, met with insurmountable resistance from France, which feared that a German rearmament would undermine its role as the dominant power on the continent.

France, which had been able to position itself among the victors in the post-war period, had every interest in maintaining a balance that was favorable to it; consequently, its strategy was to prevent Germany from regaining a significant military position, promoting instead a defense model in which Paris would maintain a pre-eminent role. This dynamic was also reflected in relations with the United States: although Washington had supported Germany’s economic reconstruction with the Marshall Plan, it viewed with concern the possible resurgence of an independent German power. It is no coincidence that NATO’s first Secretary General, Lord Ismay, summarized the Alliance’s function with an emblematic phrase: ‘Keep the Russians out, the Americans in and the Germans under’ – a phrase that has become something of a hidden motto of the EU.

Throughout the Cold War, France strove to maintain its superiority over Germany in the military sphere. However, with the rise of Charles de Gaulle, French strategy took a turn: although the general harshly criticized the alliance with the U.S. and the UK, he at the same time promoted a more autonomous Europe, based on a Franco-German axis in which France would still hold the leadership. To ensure this sovereignty, Paris developed its own independent nuclear force, the force de frappe, and gradually detached itself from NATO, eventually withdrawing from the Alliance’s integrated command in 1966.

However, in the 1970s, the project of a militarily autonomous Europe lost momentum. The stability guaranteed by NATO and the growing economic integration led the main European political parties to focus on other priorities, relegating the issue of common defense to a marginal role. With the dissolution of the Soviet Union in 1991, the question re-emerged forcefully: if the main adversary no longer existed, what was the point of NATO? Among the first to ask this question was Italian leader Giulio Andreotti, who proposed the dissolution of the Alliance, arguing that it had served its purpose. However, the United States – and the British – were not of the same opinion: NATO remained a key element in containing Germany and maintaining a strategic balance favorable to American interests.

In the context of German reunification, strong resistance emerged, especially from British Prime Minister Margaret Thatcher and Andreotti himself, both worried about the return of an over-powerful Germany. Mikhail Gorbachev, however, in an act that turned out to be disastrous for Russia, authorized German unification and its inclusion in NATO without obtaining concrete guarantees in return, except for a vague American promise not to expand the Alliance beyond the Oder River. Over the years, this promise was repeatedly broken, leading to growing tension between Russia and the West.

In the 1990s, the European integration process moved forward with the Maastricht Treaty, which sanctioned the creation of the European Union and the future adoption of the euro. However, the issue of common defense remained blocked by deep divisions between the member states. If economic union could be accepted, albeit amidst many compromises, the creation of a European army faced insurmountable obstacles. On the one hand, NATO continued to guarantee the continent’s security, making an autonomous alternative superfluous; on the other, the United States would never allow the emergence of an independent European defense system, fearing to lose its strategic influence.

Today, the topic of the European army is back at the centre of the debate due to the positions of Donald Trump, who has repeatedly declared, over the past three months, NATO obsolete and no longer essential to U.S. interests. We emphasize: U.S. This is no small detail.

Washington is progressively focusing on other global scenarios, such as the competition with China, the promotion of Greater Israel, the antagonism with Iran, and suggests that Europe should take more responsibility for its own defence.

On the other hand, this raises fundamental questions: is NATO still a solid alliance? Would the United States really intervene to defend each member state in the event of an attack?

The Trump administration fueled these doubts with its sudden and chaotic withdrawal from Afghanistan, which left Europe to deal with the consequences without any warning. Moreover, statements by some Republican figures, such as J.D. Vance, question the solidity of transatlantic ties and underline how European elites have been trained to be strategically dependent on the United States without developing autonomous thinking on defense.

However, the idea of a common European army faces concrete obstacles: who should lead it? Would a German command be acceptable for the French or vice versa? And what role would countries like Italy, Holland and other smaller nations play? Internal rivalries between European states, already evident during the 2011 Libyan crisis and in Franco-German economic policies, make the creation of a truly unified armed force extremely difficult.

Another problem, by no means secondary, is the current state of the European armed forces: many countries have drastically reduced their arsenals in order to provide military aid to Ukraine and now find it difficult to replenish their stocks; the disaffection of citizens towards military careers, combined with the increasing individualization of society, makes it difficult to recruit new personnel. A European army therefore appears more a theoretical concept than a practically feasible reality. Because there is one fundamental and unavoidable fact to have an army… you need men to send out to fight!

From an industrial point of view, today’s European military complex is not structured to guarantee effective large-scale production. While Russia manages to produce more ammunition in a few months than the whole of NATO, European countries invest huge resources without achieving real deterrence capacity. The Western profit-driven system is not designed for prolonged war, and rearmament risks benefiting only a few large companies without significantly strengthening continental security.

It is therefore clear that the debate on a European army appears more a response to current geopolitical uncertainties than a practically feasible project. If the EU pushes it politically, there will still be the problem of timing, and Russia, or China, or Iran, or any other imaginary ‘enemy’ of the West will not be stupid enough to wait for a common army to be built.

Although the need for greater strategic autonomy for Europe is clear, political, economic and cultural obstacles make the emergence of a unified armed force unlikely any time soon. Meanwhile, Europe continues to depend on NATO and the United States for its security, without a clear vision for the future of its defense.