US Is Entering 'New Era' of NATO: Brooking's Angela Stent

Brookings Institution Senior Fellow Angela Stent talks the Trump administration's approach to NATO and what that means for Europe as Russia tries to expand its influence.

Discussions are gathering pace in the European Union on how to increase defense spending, with joint financing becoming a realistic option for a growing list of leaders, according to people familiar with the matter.

French President Emmanuel Macron hosted fellow leaders in Paris Monday, including the UK’s Keir Starmer and German Chancellor Olaf Scholz, to discuss ways to bolster Europe’s defense capacity. Even though joint bonds weren’t specifically addressed, Polish Prime Minister Donald Tusk said new funding measures would be presented in time for an upcoming March 20-21 summit.

Over the past week, top US officials have indicated they’ll move forward with decisions on the future of Ukraine that will alter Europe’s security architecture for years to come — without input from the European capitals. This has focused the minds of leaders in Europe, who have indicated a willingness to contemplate bold action to ensure it has a say in its own defense, including the controversial topic of joint bonds.

“In the face of this emergency, I think it is time to take historic decisions,” French Minister for European Affairs Benjamin Haddad said in an interview with Bloomberg. “And indeed, the question of eurobonds, for instance, is one of the mechanisms that we should be talking about.”

European bonds fell and shares in defense companies rallied Monday on the prospect of greater military spending.

German, French and Italian bonds all slipped, with 10-year bund yields — the benchmark borrowing rate for the euro area — reaching the highest in more than two weeks. Europe’s Stoxx 600 index rose 0.4%, while a Goldman Sachs Group Inc. index of European defense shares topped a record high.

Protecting Ukraine and expanding their own militaries could cost the continent’s major powers an additional $3.1 trillion over the next 10 years, according to a Bloomberg Economics analysis. NATO planners estimate the alliance will need to spend as much as 3.7% of GDP on defense, Bloomberg reported earlier. Just 23 out of the 32 North Atlantic Treaty Organization countries met the 2% spending target as of last year.

“This is a once-in-a-generation moment for the collective security for our own continent,” Starmer told reporters in Paris. “Today’s informal meeting of European leaders was a vital first step in responding to that.”

Funding options being discussed include triggering an escape clause to the EU’s fiscal rules to allow countries to boost funding without running afoul of the bloc’s regulations. European Commission President Ursula von der Leyen proposed activating that mechanism for defense investments last week in a speech at the Munich Security Conference.

The EU’s economy chief, Valdis Dombrovskis, emphasized that the bloc will find ways to support national spending. “We are currently looking in more flexibility as regards European fiscal rules for defense and looking how to apply the escape clause, which we have in our legislation,” he told reporters Monday in Brussels.

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