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BRUSSELS — NATO countries need to return to Cold War-era defense budgets to fend off Russia, Secretary-General Mark Rutte said on Thursday.
Speaking at his first public appearance in Brussels since becoming chief of the defense alliance, Rutte was clear about the need for a boost in military budgets following reports that NATO will set a new spending target of 3 percent of GDP by 2030. The alliance’s current pledge — met by all but eight members — is to spend at least 2 percent of GDP on defense.
“It is time to shift to a wartime mindset,” Rutte said. “And turbo-charge our defense production and defense spending.”
The increased cash is needed to revive a “hollowed out” defense industry that has to ramp up production to meet the military threat from Russia.
“It is true that we spend more on defense now than we did a decade ago,” said Rutte. “But we are still spending far less than during the Cold War. Even though the threats to our freedom and security are just as big — if not bigger.”
“During the Cold War, Europeans spent far more than 3 percent of their GDP on defense,” the former Dutch PM said. In the early 1980s, before the collapse of the Soviet Union, NATO’s European members spent an average of about 3.8 percent of GDP on defense.
During a Q&A session after his speech, Rutte refused to commit to a specific new defense spending target, only saying that “considerably more than 2 percent” is needed.
Russia’s skyrocketing defense spending shows that the Kremlin is gearing up for a long-term conflict with both Ukraine and other European countries, Rutte said, citing figures that estimate Moscow’s military outlay at more than a third of the state budget, or over 6 percent of GDP.
There’s a growing consensus among allies that the current 2 percent goal is not enough to implement regional defense plans and meet NATO’s capability targets, which are expected to be updated with more requirements next year.
The European Commission estimates that EU defense spending over the next decade needs to rise by €500 billion.
EU Defense Commissioner Andrius Kubilius told POLITICO earlier this month that about €100 billion should be earmarked for defense in the EU’s next long-term budget — up from €10 billion in the current budget. He also said that military expenditures should be excluded from EU limits on national debts and deficits.
Defense financing will be a top priority of the upcoming Polish presidency of the EU Council.
Poland’s Finance Minister Andrzej Jan Domański said this week that two options are on the table for joint EU financing: First, EU countries could issue common debt, although that would require a difficult-to-reach unanimous decision. A second option would be creating a special purpose vehicle that countries could back on a voluntary basis.
However, frugal countries like Germany are very leery of such ideas, and the EU is unlikely to make bold proposals before the German election in February, he said.
Another way of getting cash is turning to the private sector. Rutte is in favor of encouraging banks and pension funds to invest in defense firms and also rewriting rules on military deals to make contracts easier to complete.
“Embracing risk requires you, governments, to change outdated procurement rules,” Rutte said, mentioning the need to ditch “detailed requirements.”
“Give our industries the big orders and long-term contracts they need to rapidly produce more and better capabilities,” he urged capitals.
He also had a message for weapons-makers: “Dare to innovate and take risks! … Put in the extra shifts and new production lines!”
The goal is to rearm countries that allowed their militaries to atrophy after the end of the Cold War.
“We are not ready for what is coming our way in four to five years,” the NATO boss said.
Giovanna Faggionato contributed to this report.
