Russia's war is grinding on in eastern Ukraine, and France's Macron wants Europe to prepare for a 'wartime economy'

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Smoke and dirt rise in the city of Severodonetsk during fighting between Ukrainian and Russian troops at the eastern Ukrainian region of Donbas on June 2, 2022.
Smoke rises over Severodonetsk during fighting between Ukrainian and Russian troops, June 2, 2022.ARIS MESSINIS/AFP via Getty Images
  • Emmanuel Macron says Europe needs a "wartime economy" to deal with the geopolitical and economic impact of the war in Ukraine.

  • France's president has advocated European strategic autonomy to enable the continent to better defend itself.

  • Amid unprecedented times, economic actors need to move faster, for cheaper, and innovate more quickly, Macron says.

With the war in Ukraine at its four-month mark, French President Emmanuel Macron says France and Europe need to prepare for a "wartime economy" in order to deal with the geopolitical and economic effects that continue to ripple across the continent.

In the inaugural address at Eurosatory 2022, a defense and security industry exhibition, on June 13, the French president called the times "unprecedented" and said it is necessary for not only states but all economic agents to move faster, at a lower cost, and innovate more rapidly to address the new challenges.

Macron added that there can be no "national security, strategic autonomy, and therefore no peace" if those actors don't adapt to the current geopolitical conditions.

Fired up spending

Bastille Day parade
Tanks on the Champs Elysees during the Bastille Day parade in Paris, July 14, 2017.Associated Press

To facilitate this adaptation, Macron requested an adjustment to the French Ministry of the Armed Forces' defense spending plan to reflect the new geopolitical situation and to give the French military the means to handle the current threats.

In 2020, the French defense budget rose to 2.1% of GDP. In 2022, it reached $43 billion and under the previous plan was expected to reach $53 billion in 2025. This figure will now be adjusted upward.

France is not the only European country ramping up defense spending because of the Ukraine War.

Finland, an EU member that has applied for NATO membership, announced an increase amounting to 70% of its defense spending over the next four years. It also intends to buy 64 F-35A fighter jets — its largest military procurement ever.

NATO members Latvia, Estonia, and Lithuania have each said they will increase their defense spending to 2.5% of GDP. The three countries border Russia and host NATO battlegroups.

In a significant boost, Poland will also increase its spending from about 2% of GDP to 3% in 2023. Romania will over the next few years increase its spending to 2.5% of GDP from about 2% now. Most notably, Germany, which for years has been criticized for low defense spending, announced in late February the creation of a one-off fund totaling $105 billion to support its neglected military.

However, Macron said, simply increasing defense spending is not enough.

European strategic autonomy

Olaf Scholz Emmanuel Macron Volodymyr Zelenskyy Mario Draghi Klaus Iohannis in Ukraine
Macron shakes Ukrainian President Volodymyr Zelenskyy's hand outside Mariinskyi Palace in Kyiv, June 16, 2022.Pavlo Bagmut/Ukrinform/Future Publishing via Getty Images

The French president also called for increased integration of Europe's defense industries, echoing his previous calls for European strategic autonomy, which would allow the countries of the continent to defend their own traditional security as well as energy and industrial security without having to rely on the US or other foreign countries.

In his speech, Macron called for strengthening the European defense industry so that it can satisfy the demand produced by increasing European defense budgets.

"Let's not repeat the errors of the past going forward," Macron said. "Spending large sums on purchases from elsewhere is not a good idea" and will create "future dependencies."

To support Europe's defense industry, the EU created the European Defense Fund in 2021, giving it a budget of $8.4 billion. The fund will support defense research and development of related capabilities.

Despite misgivings in some European capitals, strategic autonomy is gaining traction both at the national and the EU level.

In 2020, Josep Borrell, the EU's top diplomat, wrote that because the world has changed, it will be difficult for the EU "to claim to be a 'political union' able to act as a 'global player' without being 'autonomous.'"

In line with this goal, in March the EU released its Strategic Compass, which maps out the bloc's geopolitical and security priorities for the coming years. It is similar in scope to the US National Security Strategy, which reflect its importance to the EU.

The document calls for the EU to "invest more and better in capabilities and innovative technologies" to "fill strategic gaps and reduced technological and industrial dependencies."

The document also calls for the development of "next-generation capabilities in all operational domains."

United European arms

German Germany Leopard 2 tank Norway Trident Juncture NATO
A German Leopard 2 tank during a NATO exercise in Norway November 3, 2018.SGM Marco Dorow/Bundeswehr

A number of European projects are already in development to provide next-generation capabilities to European militaries.

France and Germany are working with Spain to develop the Future Combat Air System program, which includes the sixth-generation Next Generation Fighter and accompanying drones. The fighter, which is scheduled for use by 2040, will replace the Dassault Rafales, Eurofighter Typhoons, and EF-18 Hornets — all 4.5-generation jets — that those countries currently use.

France and Germany are developing the Main Ground Combat System program, which will produce a main battle tank and accompanying unmanned aerial and ground vehicles. Other European countries may join the program. The new tank will replace Germany's Leopard 2, which used by several European militaries, and France's Leclerc tank. It won't be fielded before 2035.

Numerous other smaller projects are also being developed under the EU's Permanent Structured Cooperation (PESCO) framework, with the participation of many EU members.

In the future, "it won't be enough to continue having the same ambitions we had during the past five years," Macron said, referring to his first term as president.

"We'll have to go farther and be stronger because the geopolitical context forces us to," the French president added. Increased defense budgets and an empowered defense industry will allow Europe to do so.

Constantine Atlamazoglou works on transatlantic and European security. He holds a master's degree in security studies and European affairs from the Fletcher School of Law and Diplomacy. You can contact him on LinkedIn.

Read the original article on Business Insider