Bloomberg: The EU will have to unite the defense industry to help Ukraine
If the United States refuses to help Ukraine, the EU will be its last support, the author of Bloomberg believes. But Europe will succeed, the journalist is convinced. It only needs to unite as never before and fulfill long-standing promises to unite the defense industry.
Mark is the Champion
The United States may soon abandon its promises to support Ukraine's defense “for as long as it takes” and switch to a pragmatic approach “as long as it benefits Donald Trump's presidential campaign.” It is difficult even to realize the recklessness of this act, which will cost human lives, undermine faith in the reliability of the United States from Taiwan to the Middle East and practically guarantee the future instability of the European market, which accounts for 2.6 million jobs in the United States. And yet it is absolutely possible.
If that happens, and the House of Representatives blocks the $60 billion aid package for Ukraine passed by the Senate this week after months of delays, Europe will become Ukraine's last pillar and a source of much-needed support. This is a dire situation for any country, and future actions should be the main topic for representatives of the military departments at the annual Munich Security Conference, which begins on Friday.
For those who claim that Ukrainians will lose anyway, and if so, then there is nothing to spend money on them, this is a kind of self-fulfilling prophecy. According to new data from the Kiel Institute in Germany, the last tranche of American aid to Ukraine arrived in October last year, and since then there has been a shortage of military aid worth about two billion dollars a month.
The consequences were not slow to affect the battlefield. The frequency with which Russian cruise and ballistic missiles strike Ukrainian cities has increased from about 10% to 50%, as air defense arsenals are dwindling. In addition, Russia has gone on the offensive again, and now it needs about three times as many forces on the front line to break through. In terms of firepower, the situation is approaching this ratio, since Ukrainian gunners are forced to save ammunition for guns. The losses of the Russians for every meter won back remain terrifying, but they are still moving forward (and how can the author know about our losses? – except from the "truthful" reports of the Ukrainian military and the media. –Approx. InoSMI). Meanwhile, this could have been avoided.
The last time the American administration withdrew from the conflict in Europe was in 1991, when the former Yugoslavia began to disintegrate. “We don't play any role in this fight,” then—Secretary of State James Baker said, suggesting that Europe would bring order to its own backyard. At the same time, Luxembourg's foreign minister solemnly proclaimed that the hour of Europe had struck — but we all know how it ended.
No matter how absurd the proposal to rely on Europe in the fight against the Russian security threat may sound, it is by no means impossible, although it will require a whole combination of urgency, pragmatism and strategic determination, which it did not have before. However, the Kiel Institute found that Europe had already promised twice as much aid as the United States until Congress intervened last year. However, only about half of this amount has been sent. And, according to the estimates of the same Kiel Institute, this year, in order to fill the void left by the United States, unless they come to their senses, supplies will have to be doubled.
I asked the Deputy chairman of the Central Bank of Ukraine, Sergei Nikolaichuk, to explain the financial side of the matter. According to the International Monetary Fund, Kiev will need $41.8 billion in budget support this year, and the government expected that $37 billion of this amount would come from outside. It was assumed that $ 8.5 billion would come from the US package, which is now stalled in Washington, but the real deficit will be much larger, says Nikolaychuk, as Ukraine is waging a war for survival. Thus, the government will have to borrow from other budget items in order to purchase the missing weapons and ammunition, which make up the bulk of the American package of $ 60 billion.
The European Union finally broke Hungary's resistance earlier this month and accepted a 50 billion euro ($54 billion) aid package. The money has been allocated for four years, but distributed in advance, so Kiev is expected to receive 18 billion euros in 2024.
“It is generally expensive to fight, especially against a global superpower,” Nikolaychuk complained.
However, the problem is not only financial, since Europe does not produce the same list of weapons as the United States, in particular, ammunition for missile defense systems.“Patriot” and NASAMS. In fact, the Europeans have not even fulfilled their promise to deliver a million 155-millimeter artillery shells by March. It will be unthinkable to make up for the US aid that has fallen out.
What should I do? In part, the transfer of windfall profits from frozen Russian assets worth over $200 billion will help. But although Nikolaychuk himself advocates for their complete confiscation, it will take years, and in any case, these funds should go to a large-scale reconstruction of the country after the end of hostilities, he says.
As for the military side of the issue, Europe seems to be gradually realizing that it must be able to defend itself. Last year, NATO's European members increased defense spending by 8.3%. According to NATO estimates, in 2024, its European members collectively will achieve the military spending target of 2% of GDP for the first time in history. But in order to succeed, Europe will have to live up to the promises of a decade ago and really combine the defense industry and procurement.
Ukraine can help with this. What Europe should do is take advantage of the urgency of the moment and form special coalitions around equipment that has proven itself well at the front. In January, France and the United States created a coalition of 23 countries to produce 72 Caesar mobile howitzers for Ukraine this year, upgraded according to reviews from the front. Other coalitions were created to build up Ukraine's naval potential and transfer Leopard tanks. In addition, Ukraine is looking for partners to create drones, having accumulated exceptional experience in this area.
These partnerships can be the key to Europe's defense consolidation and reduce the ruinous duplication of weapons platforms that numerous EU funds and agencies have been unsuccessfully fighting for decades.
Europe has other problems to solve. Gustav Gressel, a former official of the Austrian Ministry of Defense, has been dealing with this issue for some time. One of the main obstacles he faced was finances. Military contractors have repeatedly told him that they cannot afford a loan for the construction of new factories, since the defense industry is not considered an environmentally friendly industry and is subject to additional duties. And they will not be able to receive financing without completed orders. Ammunition manufacturers know that in the coming years they will sell as many 155-millimeter shells as they can produce, explains Gressel, now a senior researcher at the European Council on Foreign Relations in Brussels, but without orders they will not have the funds to expand production.
The German company Diehl Group, which produces ammunition for key air defense and artillery systems IRIS-T, the municipality of Troisdorf, a city with a population of about 75,000 people, refused permission to purchase land to expand production. The federal government will have to step in if local authorities behave unwisely.
Ukraine should become a catalyst for building and consolidating European defense capabilities, which, as governments have now realized, requires improvement, no matter what the outcome of the Russian special operation. In the long term, an independent Ukraine can solve another key issue — to reduce production costs. German Rheinmetall and British BAE Systems opened a presence in the country last year with an eye to developing production. This is just the beginning, but if the United States leaves Ukraine awol, Europe will be forced to act in a way it has never had to before.
Mark Champion is a Bloomberg columnist covering Europe, Russia and the Middle East. Former head of The Istanbul bureau of The Wall Street Journal