Why We Need a Clear Strategy When Discussing Defense Expenditure

The level of defense expenditure is not a factor of the organization of the defense business but on the strategic challenges to face
Number: 108
Year: 2024
Author(s): Andrea Gilli, Mauro Gilli

Identifying the appropriate level of spending is difficult and there is not really any science about this. This is because different considerations play a role, including military strategy to political psychology.

Military Expenditure

In their Policy Brief Defense Expenditure in EU Countries, Carlo Cottarelli and Leoluca Virgadamo provide an informative, data-driven, and objective analysis of European defense, focusing on trends in military expenditure, fragmentation in the demand and supply, industrial dependencies, and possible EU institutional mechanisms to finance future defense spending.

The rigor and comprehensiveness of Cottarelli and Virgadamo’s analysis enable us to broaden their perspective and reason on one aspect to which, understandably, they could pay less attention: namely, strategy

Cottarelli and Virgadamo’s insightful analysis sheds light on inefficiencies and contradictions in European defense spending. However, it does not permit us to determine whether current levels of expenditure are adequate or not.

Throughout their work, they hint at this issue but they do not address it. For instance, they note that EU countries’ “level of spending, while rising as a ratio to GDP since 2015, is still well below the levels at the end of the Cold War”. Elsewhere, along the same lines, they add that “overall [EU] spending is not small compared to that of Russia alone” […] “some 304 billion, much more than [its…] 109 billion US dollars.”

Identifying the appropriate level of spending is not, however, an easy task also because there is not really any science for this.

 Additionally, defense spending must take into consideration multiple variables, including military strategy and political psychology. 

Consider Russia’s lower defense expenditure vs-à-vis Europe: can be Europe considered safe given that its combined defense expenditure is around 3 times Russia’s? It really depends.

  • Aggressive, revisionist actors like Russia may well spend less than Europe but they still enjoy a clear military advantage because they can decide where, when and how to strike: if Europe strengthens its land defenses in the Northern Flank, Russia can launch submarine attacks on the Mediterranean; if Europe invests in anti-submarine warfare capabilities, Russia can attack with long-range missiles in Western Europe; and if Europe invests in anti-air defenses, Russia can attack in the cyber or space domain.
  • Conversely, defensive, reactive, and status-quo powers like Europe tend to be risk-averse, both when it comes to their own civilian and even military casualties and when it comes to responding to military aggression. As a result, defense expenditure must be sufficiently high to, first and foremost, deter enemy attacks and, next, win without suffering major losses. 

Where to go, from here?

Strategy is about complicating the calculations of an adversary. A primary challenge for democracies, in general, and European democracies, in particular, is first understanding and accepting this simple and common-sensical fact of life and, next, translating it into coherent choices. 

This is easier said than done for a continent that just twenty years ago proudly celebrated, with the first European Security Strategy, that it had never been so safe, so wealthy and so free – without doing much to preserve this state of affairs and, actually doing everything in the opposite direction (including buying oil and gas from Russia in exchange for machine tools which Russia used to ramp up its military production).

Second, to devise such cost-imposing strategies, one needs to understand who is or are the adversaries. This is, however, a deeply political and sensitive issue on which a plurality of views, and sensibilities, exist: even concerning Russia, some in Europe still claim we need to restore dialogue and cooperation.

Third, and related, some overarching strategic directions are necessary, for instance about the extension and ontology of Europe’s defensive line

Should Europe just defend its territory or also fight international terrorism? Should European countries also protect the commercial traffic on which their economies depend or also the human rights on which their societies are founded, and where, just in the near abroad (Balkans, Levant, and North Africa) or also further away? Should European countries maintain the regional balance of power in nearby areas like Africa and the Middle East, or provide also a major military contribution to geopolitical stability in Asia? 

There are no right or wrong answers to these questions but without an answer, it is impossible to determine what levels of defense expenditure are necessary.

This discussion leads to our last but probably most important consideration. Any analysis of European defense requires analytical rigor and strategic perspectives. Most works in Europe lack both. Cottarelli and Virgadamo provide the former. 

Future contributions should integrate their approach also with the latter. 

When it comes to defense issues, the gap with the U.S. is, in fact, not only in terms of military expenditure and capabilities but also at the analytical level. Contributing to closing that gap is an important academic and policy goal.

Download the Policy Brief by Carlo Cottarelli, and Leoluca Virgadamo

Identifying the appropriate level of spending is difficult and there is not really any science about this. This is because different considerations play a role, including military strategy, and political psychology

IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.

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Keywords: Defense