Germany’s defense minister asked for an increase of $7.3 billion. He was given only $1.2 billion. German aid to Ukraine is cut in half.
Germany Promised to Step Up Militarily
The New York Times reports the non-surprise of the day: Germany Promised to Step Up Militarily. Its Budget Says Differently.
Two-and-a-half years after Chancellor Olaf Scholz vowed to overhaul Germany’s military, his government’s proposed budget for 2025 calls for only a modest increase in defense spending.
With the war in Ukraine grinding on, Russia continuing to saber-rattle and Donald J. Trump gaining momentum for a return to the White House, Germany has been under increasing pressure from its allies to step into a more robust security role.
To live up to that pledge, Boris Pistorius, Germany’s defense minister, had asked for an increase of 6.7 billion, or $7.3 billion, over the 52 billion euros, or nearly $57 billion, in this year’s budget. He was given only 1.2 billion. The shortfall deepened concerns that Mr. Scholz’s unpopular government lacks the will or political backing to push Germans to overcome their historical reluctance to take the lead militarily since the calamity of World War II.
The budget, which has to pass Parliament before being adopted, also proposes that Germany cut its military aid to Ukraine by half in 2025.
Mr. Trump has repeatedly complained about the European allies not paying their fair share in the NATO alliance, and said that he would “encourage” Russia “to do whatever the hell they want” to countries that had not paid the money they owed.
Aid to Ukraine and NATO
Germany is the second largest contributor to Ukraine. That contribution will be cut in half.
Senator J.D. Vance, Trump’s Vice President running mate, is an open critic of aid to Ukraine.
Trump won’t care much about the cut to Ukraine other than to welcome it. But expect an immediate confrontation over Germany’s military spending and contribution to NATO.
Debt Brakes and Treaty Requirements About to Smash the EU
On June 21, I commented Debt Brakes and Treaty Requirements About to Smash the EU
Long Term Fiscal Issues
In addition to the Excessive Debt Proceedings against many countries, every EU county has defense spending issues, climate spending issues, and demographic issues as shown in the lead chart.
EU’s Golden Rules
According to the reformed rules, an EU member state’s debt may not exceed 60% of gross domestic product (GDP).
Highly indebted EU countries with debt levels over 90% of GDP have to reduce their debt ratio by one percentage point annually, countries
Additionally, the general government deficit — the shortfall between government revenue and spending — must be kept below 3%.
According to the commission’s economic forecast, France is at -5.5%, Italy is at -4.4% and Belgium is at -4.4% and will breach this deficit limit in 2024.
Austria, Finland, Estonia, Hungary, Malta, Poland, Romania, and Slovakia also have deficits that are too high according to the rules. Spain is at exactly -3.0%.
France in the Crosshairs of Budget and Debt Rules
France is in the immediate crosshairs of EU deficit rules and debt rules.
Please note the EU Rebukes France, Italy and Others Over Excessive Debt.
The assessments of the 27 EU states’ budgets and economies will be published by the European Commission on Wednesday, with France, Italy and Belgium among the member states to be reprimanded over their accumulated excessive new debt.
The Commission said it was satisfied that “the opening of a deficit-based excessive deficit procedure is warranted” in the case of seven countries. The group also included Hungary, Malta, Poland and Slovakia.
The EU suspended debt and deficit regulations to help countries cope with the economic fallout of the COVID-19 pandemic and Russia’s invasion of Ukraine.
The rules are now back in place and now any EU country going over debt and deficit limits run the risk of legal action.
Long-Term Challenges
Also consider the ECB report Longer-Term Challenges for Fiscal Policy in the Euro Area
In the future, various longer-term challenges are likely to exert pressure on public finances in the euro area. On top of the existing fiscal burdens – as reflected in the high debt ratios in a number of euro area countries, which were exacerbated by the pandemic and the subsequent energy crisis – there are several important longer-term challenges for fiscal dynamics. This article starts by reviewing some of the most important challenges and discussing their fiscal relevance, with a focus on demographic ageing (Section 2), the end of the “peace dividend” (Section 3), digitalisation (Section 4) and climate change (Section 5). Acknowledging the uncertainties surrounding any quantification of these challenges, Section 6 then presents some tentative – purely indicative – estimates of the additional fiscal effort that could be required to ensure the long-term sustainability of public finances in the presence of such developments. The implications of digitalisation are excluded from that exercise, given the particular uncertainty that surrounds their quantification. Section 7 then provides some concluding remarks.
Cumulative Impact
Achieving a government debt-to-GDP ratio of 60% by 2070 from today’s debt levels would require euro area governments to immediately and permanently increase their primary balances by 2% of GDP on average.
Moreover, additional fiscal burdens may well emerge in the medium term. For instance, the model-based simulations used in this article exclude the digitalisation gap, the long-term implications of which are still hard to grasp. Furthermore, one does not need to go back very far in time to find a large fiscal shock appearing out of the blue: the euro area’s government debt-to-GDP ratio increased by a total of 13 percentage points in 2020 in response to the COVID-19 pandemic. At the same time, the simulation of climate change is based on simplified assumptions and on the unlikely premise that limiting global warming to 1.5°C is still feasible. It also does not capture the impact of societal repercussions (such as conflict), tipping points or macroeconomic effects (such as changes to prices and productivity). This suggests that there could be substantial additional fiscal costs associated with climate change.
Fiscal Costs of the End of the “Peace Dividend”
After Russia’s annexation of Crimea in 2014, all NATO members agreed to spend at least 2% of GDP on defense.
Germany and France have reduced their spending from over 4% of GDP to less than 2% today.
Expect Major Trumpian Confrontation Fireworks
Macron wants an EU army and more support for Ukraine. But that will not happen because France is under severe budget constraints.
Germany can afford to spend more and pledged to do more, yet refuses to do so. Trump rates to be more than a little irate.
Expect fireworks because they are coming. And those defense spending fireworks will be on top of tariff fireworks.
Meanwhile, Back in the States a Recession has Started
Note that 5 out of 12 Fed Districts Show Flat or Declining Economic Growth
The Fed’s Beige Book solidifies the recession view.
Recession When?
I think a recession started in May or June and I have seen little to change my mind.
For discussion, please see Weak Data Says a Recession Has Already Started, Let’s Now Discuss When
Add a Surge in Continued Unemployment Claims, discussed today, to the trend of weakness appearing nearly everywhere.
Just keep this in your minds when reading anything about “War Funding.”
That money is round-tripped to the fuckers that we call Congress and the Administrations who are in on the fat.
It pays REALLY well, and there is no work involved because people FALL for the concepts of NATO and PREVENTING the spread of Russia ( Russia does not want any more NATO BASES, and COME THE HELL ON GET HIS IN YOUR HEADS).
Russia is RESPONDING to NATO aggression, not causing it.
Nato is built to be a burr in the side of the USSR, with the passing of the USSR, Nato is still a club (in both meanings of the word) to bludgeon Russia.
Russia resisted the Rothschilds attempt to create a League of Nation, Rothschild vowed to destroy the royal family and did, creating the communist state.
Russia is one of less than a handful of nations without a central bank ran by the Rothschilds. This makes them a target. Nato is part of the machinery to attempt the destruction of the Russian nation. I don’t love Russia, but I love NATO even less.
Nato has outlived its purpose and has become a corrupt shell like many organizations.
Having actually worked for USAFE for 5.5 yrs, I find much of the arguments against NATO short sighted and unrealistic. 1). For the past 20+ yrs. Putin has complained in multiple speeches that “…my predecessors gave away too much territory…”, etc. and for all of his many faults, he is a man of his word and has begun to retake what he thinks is rightfully his. 2. Kaliningrad (look it up) is a Russian “island” much like Berlin was at the end of WW II, and Putin will eventually create “a land bridge” to it, which will require taking back at least one of the Baltic countries, and bring about a NATO Article 5 declaration. 3).Since the end of WW II, the U.S. has been willing to pay the majority of the cost to fund NATO in order to dictate its actions, BUT ALSO in hopes that any future war vs Russian would occur there. Note: in the age of cruise missiles, that is no longer a realistic outcome. 4). Putin still has troops stationed in Georgia and Moldova, so those countries are duly concerned that it will be “Crimea for Breakfast, and Moldova for desert”, as a Moldovan friend told me a couple yrs. ago. 5). NATO “owns” very little military hardware outside of the E-3 “AWACS” and and few RQ-4 “drones”. The rest of any assets that potentially could be used in military action are merely “promised”, via “voluntary national contributions”. So even though France, Germany, the U.S. have promised “X” number of fighter squadrons or Frigates, if a cruise missile hits a capital city, will that country actually “chop” the number of promised assets over to NATO, for their use say, in a Baltic country? That answer is unknown, but IMO it will be answered within the next 10 yrs.
Canada, France, and Germany have been using their neighbors and allies this way since WWII. Canada knows the U.S. will do whatever it takes to keep enemy forces from our northern border. In the 1960’s, France realized that with Germany and U.S. forces between them and Russia, they could cut way back on defence spending while bitching and moaning about the U.S. Today, with Poland in NATO, bordering Russia, Germany realizes the same thing – the U.S.and Poland protect Germany. If you can’t and/or won’t defend yourself, you eventually become irrelevant in the great scheme of things.
Canada is a dominion, not a nation. They are a proxy of the United Kingdom. Put in place by the Crown to block the US and provide a base of operations.
The Crown deep down, in private conversations, wants its colony back.
Germany has been a US colony since the war, we just run our colonies quietly and let them pretend while they house our nuclear weapon and base our troops for us.
Nato is a flytrap to ensnare all the powermad Europeans in one spot where we can keep an eye on them as they argue about who has the nicer office.
Trump wants NATO to go away to make Putin happy. He uses the 2% rule as an excuse.
What happens in a few years when Putin is building up on eastern Europe’s front. Putin did say he wants the Empire back and more than just Eastern Europe.
You appear to be espousing the old ‘domino theory’ that got us into the quagmire known as Vietnam. After 58K American lives, what did that get us? Vietnam is a one party Communist-Marxist government and has been that way since 1975 with the fall of Saigon. After 20 years of the US coalition ‘liberating’ Afghanistan, their government is a totalitarian theocracy dominated by the Taliban. So much for our spreading of democracy worldwide.
Russia is a constitutional republic…same as the USA.
I remember when I was young, communist China tried to spread communism in Asia. Supported communist parties and insurgents. Countries couldn’t tolerate. Lee Kuan Yu complained Deng Xiopeng and Deng stopped it.
Now China focus on cooperating and trading.
US has to stop lecturing the world about democracy as no system is perfect in the world. The earlier the US realizes the better for the world and itself.
When you were young, likely the Red Chinese were engaged in a civil war killing the “elite” and purging the history of their nation, sort of what the democrats have been trying so far unsucessfully to accomplish in the USA. Tearing down statues and burning books is not a path to a bright future.
Henry Kissinger is mostly responsible for building China into an industrial giant of sorts when they were starving in the mud of a broken nation. Thats not praise from me for his efforts, rather an attempt to put blame where it belongs.
if you study communism, socialism, democracy, it soon becomes apparent its the same song with slightly different lyrics. It always becomes an elite group, feeding off the efforts of the rest of the nation, using the political system to become, or stay, entrenched forever. Power not only corrupts, but it drives men mad.
The US is certainly not perfect, and should expound more effort domestically rebuilding this nation and its peoples, industries and ideas. Like a home in a high crime neighborhood, it needs a security system, whether it wants it or not. It just doesn’t need a Maginot line of capricious defenses that can be walked around.
We need to be clever as well as bold, we are not the model for the world, each nation has different needs and resources and it must find the proper political machine to utilize its resources and to strive, for when we fail to strive, we strive to fail.
pure propaganda.
care to cite Putin’s “empire” lust ?? didn’t think so.
“What happens in a few years when Putin is building up on eastern Europe’s front.”
With what? The vodka poisoned livers of old Russians who never had kids to replace them?
Russia is hard pressed to protect the immense area it already has. Ukraine; along with a few former Soviet states like the Baltics, Georgia and Moldova, are laydowns, since they, in many places, have a higher concentration of Russians per area than Russia itself. But to fantasize that Russia has the resources to occupy and submit France is just silly. Merde spewing farmers alone, would be enough to cause a rethink of priorities.
Russia _did_ want to sell gas, and other resources, to Germany. Making Europe effectively dependent on Russian relations; rather than on gas supplies through Greece from the Eastern Med. That never did sit well with a certain East Med actor who prefers Europe pliant, uncritical and dependent on them instead.
By now, Russian gas may be Asia bound for a long time, even if the Germans rebuild Nord Stream. It’s easier and more reliable to deal with Asian nations. They’re less obsessed with bending over, being stupid, collapsing and failing at every possibly thing yet still throwing childish tantrums, than what the once-was West now is.
Ukraine will give up and become part of Russia again. Eastern Europe is next on Putin’s menu.
The old ‘domino theory’ is strong with a few in this conversation. Total hogwash.
The military complex has been using the domino narrative forever to get the sheep to support their spending/theft/control plans. It’s amazing (and disappointing) that not everyone has learned the playbook by now, especially since it only has one play contained in it.
Yes, it is a 1/10 of a PAGE in the entire playbook. They could further reduce the word count with this:
“WAR=$$$$$$$$$$”
The M.I.C. exists to feed the huge Hogs at the war trough. It is deep, full of shit, and feeds JUST A FEW BIG WAR-MONGERING HOGS while the rest sit in slop prevented from getting in on it.
Think, McCain, Clintons, etc. These are the FAT HOGS that slurp up the Printed Treasuries and are living the good life.
Images of Biden’s Home were on the news last night. HE IS BUT ONE OF THE BIG HOGS.
it is global money laundering, a product of the things Eisenhower warned of. If one compares pre world warII usa to post war usa, it becomes apparent the war machine not only defeated the Axis, it also defeated the USA.
Might that be the ol’ Statue of Liberty play. Not so surprisingly, wherever we go Liberty disappears.
“Ukraine will give up and become part of Russia again.”
Only small parts of Ukraine. Parts where 50+-% are “Russian” to begin with.
“Eastern Europe is next on Putin’s menu.”
Putin presides over a country which has managed to outdo even the Japanese at barrenness. No non-“Russian” populations anywhere are realistically on any “menu.”
What, OTOH, should concern more people in the once-was West is: Those ending up on the Russian side of apossible eventual dividing line in Ukraine, Georgia, Moldova, The Baltics and possibly a few others; will; by nowmore likely than not; be BETTER OFF, than those ending up on the “Western” side. That’s how far The once-was West has now fallen.
allowing europeans to evade the cost of their own defense is the ONLY reason NATO still exists. europe LOVES NATO… free defense, no worries.
but the USA gets fleeced in the NATO bargain… USA gets nothing, but pays for everything. NATO turns the US military into a purely mercenary force – a mercenary force THAT NEVER GETS PAID.
USA has absolutely ZERO business or interests in ukraine, but we’re paying for everything there – the entire ukraine payroll, kleptocracy & “economy” rolls onto the US tab.
NATO is obsolete, and is doomed to fail+disintegrate… probably sooner than later.
NATO should have been moth-balled in the 1990’s, but europe/Clinton had other ideas… Bosnia… (Ukraine…) it’s the same european/globalist warmongering GRIFT.
At this point it would cost the US less to let Russia try to invade continental Europe and then clean it up, rather than prevent it in the first place.
Except that there is zero evidence that Russia wants to invade anyone. The Ukraine incursion was a very specific operation with many reasons behind it, plus it was precipitated by Ukraine’s own very un-neighborly actions.
If Red China wanted to put nuclear missiles in canda and mexico, the usa might start a war with canada and mexico.
Nato wants to put nuclear missiles in the Ukraine, you can sort of see why Putin is fighting the Ukraine.
The press is owned by the war machine, they won’t tell you they provoked the entire mess via the US department of state.
I’ve been saying that (Chinese bases in Canada and Mexico) forever on Facebook and I get mostly laugh emojis. It’s sad how people still cannot see the “Ukraine war” for what it is and what it was designed to be. Whoever in the US war complex put Zelenskyy in power knew full well that Russia CANNOT allow NATO bases to be in such close proximity. But not only proximity, we’re talking about a nation that was basically Russia not long ago, was a huge/important component of the Soviet Union AND also a nation that more or less physically blocks Russia’s access to the Black Sea. A NATO-ized Ukraine was and is never going to fly and every last Russian will be sacrificed in order to prevent it from happening….and “they” knew that was going to be the case which is why they kept poking and poking until they got the bear to bite. It’s such an obvious scheme yet few can see it! The worst are the democrats who are ok with the wholesale of slaughter of hundreds of thousands of boys only because they feel it hurts Putin…and by extension Trump (?). How evil can you get?
Canada(1.4%) and UK(2.3%) not in that graphic.
Good for Germany. The US should follow suit. Given that we have about 600 military locations around the world we could shut down 500 and nobody would notice.
Resource extraction fat cats would notice.
Thank you.
Sincerely,
Putin and Xi
“…tariff fireworks…” indeed. From what I read yesterday and assuming Trump follows through, 60% to 100% on China and 10% on everything else. China will simply move production to Vietnam or elsewhere. Expect retaliatory tariffs. I see lots of inflation in the future. Prepare…..
23 out of 31 NATO members have military budgets above 2% as of June this year. The laggards are Croatia (1.81%), Portugal (1.55%), Italy (1.49%) Canada (1.37%), Belgium (1.30%), Luxembourg (1.29%), Slovenia (1.29%) and Spain (1.28%). Collectively European NATO members are above 2% and going higher.
https://www.forces.net/news/world/nato-which-countries-pay-their-share-defence
Collectively the EU’s debt to GDP ratio is around 82% compared to the US’s 120% due to the ECB’s keeping the screws on. France’s ratio is 110% and falling. Could be better but the direction is down.
The increases in the defense budgets will be a strain but Europe doesn’t have much a choice on that.
Your article contains “estimates” and “projections” for both 2023 and 2024. It does not demonstrate that “23 out of 31” NATO members have actually spent >2% of GDP on defense yet.
It’s easy to “plan to spend money”, projected and estimated in paper reports. The EU nations in particular are masters of this sort of economic masturbation, given all the conflicting treaty requirements they face.
What matters is the actual spending, and beyond that, how effectively the funds are used. There, they tend to be a bit more limp.
If the spending continues at the same rate for the rest of the year, then those targets will be met. That is where the “projection” and “estimate” part come in. This money is already voted and budgeted so they are reliable. One-third of the money is spent on equipment. Ukraine aid is not included so it is an increase of actual war-making potential.
Even before Ukraine Europe was the second largest military-industrial complex in the world behind the US. They make just about everything but stealth but since the European armies had cut back, they kept alive and many cases prosperous by selling to the rest of the world. The Europeans know Trump was right and they say it in public now.
Old perceptions take a long time to die, especially when those perceptions are actively promoted. The reality is that that spending is taking place, the research on new weapon systems is in high gear and armies are expanding.
The only thing worse than a Europe without weapons and armies, is a Europe with weapons and armies. I’m tired of world wars and infinite stupidity. Can’t we just nuke Europe if they start another world war instead of tying our fortunes to them?
Europe has nukes too so that might be counterproductive.
Expanding NATO to the Russan border was a choice. They could have chosen not to do that. Two days before the Russian invasion of Ukraine, VP Harris could have chosen not to say that Ukraine should join NATO. The invasion was not unprovoked.
With less US and European aid to Ukraine there might be peace in the continent.
The US and the European recycled most of their junk equipment from the 80’s, 90’s and the early 2000’s and beefed up their armies with modern and cheaper weapon. Missiles and drones instead of $130M fighter planes. Less money for smarter weapons. Doubling and tripling the firepower with more accuracy and less troops and dollars. Self driving APC with 8 wheels and AI for logistic and supply.
Milquetoast Europeans love to complain about those American cowboys and how they push everyone around but they sure do love all that American taxpayer money don’t they? And by the I’m a first generation American from Europe.
Good, then start pulling our Troops in Germany out, and place them on our BORDERS,!!
The problem isn’t that Europe spends too little on defense. The problem is that America spends too much. If we would just stop instigating trouble around the globe we could get a start on righting our budgetary ship.
You mean like Trump did. Shore up the Military, so wars are not needed. “Peace Through Strength”
Also don’t dictate like Biden, and sell out all the time. Stand up for your damn country like we know you will, and set an example for JD to follow!
Could it be that Russia is spending too much on defense and not that Europe is spending too little?
We are in no place to judge Russia’s ever-militaristic posture. It is a resource-rich country that is surrounded by people on all sides that would love to have a big piece of their pie. Setting aside all the more ancient incursions, we know that both Napoleon AND Hitler tried to take a bite of that apple, and now the USA, I mean “NATO”, is trying to close the noose yet again. So can you really blame them for never letting their guard down? Unlike Americans, they don’t have two oceans and two friendly neighbors acting as permanent geographic shields.
Russia gets a waiver and Europe doesn’t because it’s smaller? That doesn’t make sense.
I don’t care how much money the Europeons want to waste giving money to the American military industrial complex. Russia wants nothing from the West but to be left alone. They never would have set foot in what used to be the Ukraine if the US hadn’t toppled the elected government there. Their wading into the civil war in the Ukraine in 2022 came shortly after Blinken told Lavrov that not only would the Ukraine become part of NATO, but also that we reserved the right to station nuclear missiles there. Instigating trouble. See also Georgia, Armenia, Kazakhstan, Myanmar, Thailand,etc.
“Russia wants nothing from the West but to be left alone”
Sounds like you swallow Putin’s line of thinking. Not working out well for him or Russia.
Doug, watch some YouTube videos from John Mearsheimer, starting with his lecture from 2015 called “Why is Ukraine the West’s Fault?” You’re welcome.
He’s too far gone, if he hasn’t figured out the reality behind the Russia/Ukraine/NATO/$$$ narrative by now, he’s never going to.
Funny how you know what Putin thinks simply from listening to your “well-meaning” and impartial government and the media that spreads and reinforces the narrative. It is clear as day that the Ukraine incursion is an act of self-defense, a very sane refusal to accept NATO bases on all sides, particularly a new side that blocks access to the Black Sea. When Putin rolls tanks into Poland for no good reason, then we can start labeling him “the global villain”.
Agree that we need to stop instigating trouble, and agree that a more peaceful world would allow ALL nations a peace dividend on defense spending.
However, we do not currently live in such a world, and the path to get there does not involve unilateral disarmament.
With – what – 900 bases around the world, we’re so far away from “unilateral disarmament” it’s ridiculous.
The fascist communist NATO parasites are not worth defending.
In 2019, the Department of Defense reported that the total cost for U.S. forces in Germany was about $8.125 billion.
$8.125 billion too much.
that’s a lot of bratwurst…
Everybody wants something for nothing. War in their backyards and they don’t pony up. We are not the world’s policeman. If these countries don’t step up, good luck to you
George Washington (1796 farewell speech))
“It is our true policy to steer clear of permanent alliances with any portion of the foreign world”
Dwight D. Eisenhower (1961 farewell speech)
“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex”
we are living inside Eisenhower’s nightmare and told its “normal”.
And much more so, Washington’s.
Even today, far and way the best and most efficient DEFENSIVE force anywhere; the Afghan Mujaheddin; is remarkably similar to the one the US had under Washington: A militia of people with no restrictions on what guns they can buy.
And not by happenstance: That’s how ALL free people defend themselves. ANY other scheme, is strictly inferior at both freedom and defense.