s NATO observes its 75th anniversary, members are assessing ways to strengthen economic security as a means of bolstering collective defense and democratic resilience. Economic security is vitally linked to both collective defense and democratic resilience, and key to shaping the political considerations behind tough agenda items at the July NATO Summit in Washington, including support for Ukraine and accelerating defense industry production.
NATO’s support for Ukraine following Russia’s full–scale invasion two years ago is a classic example of where the politics around hard defense issues and preservation of democracy are further shaped by economic realities. On both sides of the Atlantic, consumers and business communities are growing more and more restless over inflationary pressures brought on by the war, particularly higher energy prices. And Russia is escalating hybrid attacks on European infrastructure in an attempt to weaken European public support for Ukraine. Meanwhile, defense companies in Europe and the U.S. are struggling to produce weapons at a pace necessary to support Ukraine’s defense, due to labor shortages and supply chain issues. So the fight for Ukraine’s future is, in many ways, a test of endurance between the democratic West versus Russia’s increasingly closed war economy.
Outgoing NATO Secretary General Jens Stoltenberg and others have warned allies not to allow the same kind of crippling economic dependencies on authoritarian states, “not least China,” that Europe had with Russian energy prior to the war. Developments such as China’s use of economic coercion tactics against Lithuania in 2021 have proven the need for concrete action.
Under the last European Commission and Parliament, the EU urged an approach of “de–risking through diplomacy” and passed an Anti–Coercion Instrument to deter future attacks on EU members. Also introduced for debate: a framework of economic security strategy initiatives, including a proposal to strengthen investment screening and harmonize national rules. Europe is also seeking to coordinate approaches with the U.S., including discussions at the Hiroshima G7 Summit in 2023 and the transatlantic Trade and Technology Council. The future of these efforts is somewhat uncertain, given shifting political winds on both sides of the Atlantic.
European business is hoping the new European Commission, shaped by recent European Parliament elections, will dial back some of its past regulatory impulses. Competitiveness is the plea from European industry associations, with some saying there will not be an EU industry left to defend against Chinese coercion if the next Commission does not find ways to turbocharge competitiveness. Major industrial leaders in Europe in the automotive and chemicals sectors see few good short–term alternatives to major dependencies on China. As one EU–based auto industry leader put it, “Show me a pathway to profitability for our industry that doesn’t involve major dependencies on China.”
Europe’s ability to balance competitiveness with economic security will involve a number of challenges. Among them: Can Europe afford an expensive new industrial policy to promote a secure and competitive European industry, given high debt levels in its major industrial economies? And how can Europe strike a healthy balance between competitiveness and economic security without political will for new free trade deals that could lessen the continent’s dependencies on China? Additionally, what about the impact on defense capabilities?
It will be a struggle to find the funds or public support to spend more on defense without competitive, thriving economies. And partnership with the U.S. in countering Chinese aggression will be sorely limited if Europe’s industry is not resilient to Chinese economic coercion. Europe’s ability to do both will be crucial for continued American political support for NATO, a subject of intense debate in recent years.
So “guns not butter” will be atop the agenda at the 2024 NATO Summit in Washington. And the ability of member countries to generate the political will to make and follow through on summit commitments will be determined by how they balance competitiveness, security, and democratic resilience.
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Economic security, democratic resilience concerns shape NATO Summit agenda
Vilnius, Lithuania. Lithuania was targeted by a Chinese economic coercion campaign, highlighting the need for economic security to ensure democratic resilience, according to CIPE. Image by Evgeni Tcherkasski from Pixabay.
July 5, 2024
NATO support for Ukraine’s defense illustrates how the politics around preserving democracy are further shaped by economic realities. As NATO prepares to convene, members are assessing ways to strengthen economic security to bolster collective defense and democratic resilience, writes Jeff Lightfoot
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s NATO observes its 75th anniversary, members are assessing ways to strengthen economic security as a means of bolstering collective defense and democratic resilience. Economic security is vitally linked to both collective defense and democratic resilience, and key to shaping the political considerations behind tough agenda items at the July NATO Summit in Washington, including support for Ukraine and accelerating defense industry production.
NATO’s support for Ukraine following Russia’s full–scale invasion two years ago is a classic example of where the politics around hard defense issues and preservation of democracy are further shaped by economic realities. On both sides of the Atlantic, consumers and business communities are growing more and more restless over inflationary pressures brought on by the war, particularly higher energy prices. And Russia is escalating hybrid attacks on European infrastructure in an attempt to weaken European public support for Ukraine. Meanwhile, defense companies in Europe and the U.S. are struggling to produce weapons at a pace necessary to support Ukraine’s defense, due to labor shortages and supply chain issues. So the fight for Ukraine’s future is, in many ways, a test of endurance between the democratic West versus Russia’s increasingly closed war economy.
Outgoing NATO Secretary General Jens Stoltenberg and others have warned allies not to allow the same kind of crippling economic dependencies on authoritarian states, “not least China,” that Europe had with Russian energy prior to the war. Developments such as China’s use of economic coercion tactics against Lithuania in 2021 have proven the need for concrete action.
Under the last European Commission and Parliament, the EU urged an approach of “de–risking through diplomacy” and passed an Anti–Coercion Instrument to deter future attacks on EU members. Also introduced for debate: a framework of economic security strategy initiatives, including a proposal to strengthen investment screening and harmonize national rules. Europe is also seeking to coordinate approaches with the U.S., including discussions at the Hiroshima G7 Summit in 2023 and the transatlantic Trade and Technology Council. The future of these efforts is somewhat uncertain, given shifting political winds on both sides of the Atlantic.
European business is hoping the new European Commission, shaped by recent European Parliament elections, will dial back some of its past regulatory impulses. Competitiveness is the plea from European industry associations, with some saying there will not be an EU industry left to defend against Chinese coercion if the next Commission does not find ways to turbocharge competitiveness. Major industrial leaders in Europe in the automotive and chemicals sectors see few good short–term alternatives to major dependencies on China. As one EU–based auto industry leader put it, “Show me a pathway to profitability for our industry that doesn’t involve major dependencies on China.”
Europe’s ability to balance competitiveness with economic security will involve a number of challenges. Among them: Can Europe afford an expensive new industrial policy to promote a secure and competitive European industry, given high debt levels in its major industrial economies? And how can Europe strike a healthy balance between competitiveness and economic security without political will for new free trade deals that could lessen the continent’s dependencies on China? Additionally, what about the impact on defense capabilities?
It will be a struggle to find the funds or public support to spend more on defense without competitive, thriving economies. And partnership with the U.S. in countering Chinese aggression will be sorely limited if Europe’s industry is not resilient to Chinese economic coercion. Europe’s ability to do both will be crucial for continued American political support for NATO, a subject of intense debate in recent years.
So “guns not butter” will be atop the agenda at the 2024 NATO Summit in Washington. And the ability of member countries to generate the political will to make and follow through on summit commitments will be determined by how they balance competitiveness, security, and democratic resilience.
