European Defense Spending: Trade-Offs and Consequences of Non-Alignment

The authors analyze the trend of rising defense budgets in EU and NATO member states following the 2022 invasion of Ukraine, noting that spending increases are uneven and unaligned. They argue that this lack of coordination risks worsening the fragmentation of the European defense industrial base, creating mismatches between industrial supply and operational needs, and undermining the concept of strategic autonomy. Furthermore, the paper highlights potential negative economic impacts, including the 'crowding out' of civilian industries and the diversion of funds from the green transition, specifically citing proposals to cut EU renewables funding to support military investments.

• EU member states have generally increased defense budgets since the 2022 Russian invasion of Ukraine, with collective military expenditure rising by 3.03 percent in 2022 and 11.03 percent in 2023 after inflation adjustments.
• Defense spending increases are highly uneven across Europe; while Poland saw a 75 percent increase and Finland a 54 percent increase between 2022 and 2023, spending actually decreased in Italy, Greece, Cyprus, and Romania during the same period.
• The lack of alignment in spending priorities means that increased expenditure may not lead to higher common EU industrial capacity and could instead worsen the fragmentation of the defense industrial base as countries prioritize 'national champion' companies.
• There is a risk of a mismatch between industrial supply and operational needs, as initiatives like the European Defense Fund (EDF) and the European Defense Industrial Strategy (EDIS) are criticized for prioritizing industrial objectives over the actual operational requirements of armed forces.
• Defense spending may conflict with the green transition, with some proposals suggesting the diversion of funds from renewable energy to military investments, such as a proposal by Charles Michel to reduce the EU renewables fund from EUR 10 billion to EUR 1.5 billion.
• Uncoordinated spending and differing threat perceptions undermine the EU's goal of a unified 'strategic autonomy,' as member states follow national imperatives rather than a common European vision.
• Competition between EU countries for components and raw materials may drive up prices rather than achieving economies of scale.

APA

Marsh, N., Martins, B. O., & Mawdsley, J. (2024). European Defense Spending: Trade-Offs and Consequences of Non-Alignment. Peace Research Institute Oslo. https://cdn.cloud.prio.org/files/6617b249-86c9-4621-9c73-dd734aa53368/econpol-forum-2024-4-marsh-martins-mawdsley-european-defense 1.pdf?inline=true

Chicago

Marsh, Nicholas, Bruno Oliveira Martins, and Jocelyn Mawdsley. European Defense Spending: Trade-Offs and Consequences of Non-Alignment. Peace Research Institute Oslo, 2024. https://cdn.cloud.prio.org/files/6617b249-86c9-4621-9c73-dd734aa53368/econpol-forum-2024-4-marsh-martins-mawdsley-european-defense 1.pdf?inline=true.

Wikipedia

{{cite report |last1=Marsh |first1=Nicholas |last2=Martins |first2=Bruno Oliveira |last3=Mawdsley |first3=Jocelyn |title=European Defense Spending: Trade-Offs and Consequences of Non-Alignment |publisher=Peace Research Institute Oslo |date=July 2024 |url=https://cdn.cloud.prio.org/files/6617b249-86c9-4621-9c73-dd734aa53368/econpol-forum-2024-4-marsh-martins-mawdsley-european-defense 1.pdf?inline=true |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{marsh2024european, author = {Marsh, Nicholas and Martins, Bruno Oliveira and Mawdsley, Jocelyn}, title = {{European Defense Spending: Trade-Offs and Consequences of Non-Alignment}}, institution = {Peace Research Institute Oslo}, year = {2024}, month = jul, url = {https://cdn.cloud.prio.org/files/6617b249-86c9-4621-9c73-dd734aa53368/econpol-forum-2024-4-marsh-martins-mawdsley-european-defense 1.pdf?inline=true}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }