EU Needs to Ramp Up Defense Spending to Deter Russia Alone

Following the contentious/disastrous meeting between President Donald Trump, Vice President J.D. Vance and Ukrainian President Volodymyr Zelensky at the White House last week, European leaders have rallied around Ukraine, reassuring the country of their unwavering support. The meeting and the White House’s subsequent decision to halt military aid to Ukraine have made clear to Europeans that they can no longer fully rely on the United States when it comes to deterring Russia and helping Ukraine defend itself against the Russian invasion.

Replacing U.S. military aid to Ukraine in case the U.S. decided to withdraw its support permanently would be the easier of the two tasks. According to first estimates from researchers at the Kiel Institute for the World Economy, the EU would only need to spend another 0.12 percent of its GDP annually to replace U.S. military contributions, which have added up to €64 billion over the past three years. Permanently protecting Ukraine and deterring Russia would require significantly higher financial commitments, the authors find. According to the estimates, Europe would have to raise around €250 billion in additional military spending annually, which would bring its joint defense spending from just under 2 percent of GDP to around 3.5 percent of GDP per year.

“In economic terms, this is manageable in relation to the EU's economic strength, with the additional costs only amounting to around 1.5 percent of the EU's gross domestic product,” Professor Guntram Wolff, co-author of the analysis and Senior-Fellow at the Kiel Institute for the World Economy, said. “That is far less than had to be mobilized to overcome the crisis during the Covid pandemic, for example." The additional spending requirements could even bolster the European economy, Wolff finds. "A debt-financed increase in defense spending could also act as an economic stimulus if it is spent within the EU, especially in times of declining external demand due to US tariffs and trade conflicts.”

As our chart, based on historical data from Eurostat and recent estimates from the European Defence Agency shows, the required spending level would be a significant step up from the EU's usual defense spending, which has been hovering around 1.5 percent of GDP for large parts of the past three decades.