A couple of weeks ago I was at NATO Headquarters in Brussels for a workshop to discuss the future of the organization’s defence challenges. There were two dozen of us: former generals, intelligence operatives, politicians, diplomats, academics, defence analysts, tech bros and even senior scientists, and drawn from across NATO members. It’s fascinating – and troubling – that while everyone in that room was utterly convinced of the need for European NATO members to dramatically rearm, the wider public of most countries in the west are far less troubled. Rather, for most people, worries and anxieties are more local: the challenges of day-to-day life and what is immediately in front of them. The most recent Opinions and Lifestyle Survey (OPN) in the UK, for example, listed the cost of living, the NHS, the economy, crime, housing, and climate change and the environment as the top five concerns, and in that order.
Much further down the list are worries about defence and whether Putin’s Russia – or any other of our enemies – poses an existential threat. Yet, the global order is shifting, our enemies are becoming emboldened and our stoutest and most important ally in Europe, the USA, is going through a seismic shift in outlook and approach. The ideals of Presidents Roosevelt and Truman, who profoundly believed in democracy, global prosperity, low tariffs and free trade and then of President Eisenhower, who chose to have the USA be the military dominant partner in NATO, have all been dramatically kicked into the long grass since 20 January this year.
NATO’s European members remain inextricably linked militarily to the United States through satellites, shared systems and, of course, intelligence. This cannot be unpicked, and nor should it be, but much has changed: Europe now needs to stand on its own two feet militarily. The US is expecting European members of NATO to provide 70% of the footfall and 50% of the materiel to defence on the continent going forward. It doesn’t matter what President Eisenhower wanted back in 1952; it’s now 2025 and the current President wants this to change. Yet right now, NATO’s European members are a long way from 70% footfall and 50% supply. What’s more, those figures being demanded by the US apply now or in the near future, could easily change again. If America gets drawn militarily further into the Indo-Pacific, for example, that is where its military will head. And Europe can go hang.
So, on the face of it, the problems confronting democratic Europe appear immense. History tells us that global economic disorder, as I have written about before in these pages, does not dovetail well with long-term peace. Rather, it leads to political turmoil and very often war. Europe is already struggling badly economically and the decisions across the Atlantic look set to make that situation even worse. Domestic troubles top the concerns of the voting populace, making mobilization a huge issue; our armed forces in Europe are currently tiny, and not least in Britain, France and Germany. With this in mind, political leaders are wondering how to repair potholes and fund health systems ahead of how to urgently rearm. ‘The coffers are bare,’ comes the cry. Meanwhile, an emboldened Russia, apparently gaining the admiration rather than condemnation from its biggest historic enemy of the past eighty years, continues to fire ever-more missiles at beleaguered Ukraine. And if Putin is allowed to prevail there, where else will his ambition lead him? All in all, the future is troubling, to say the very least.
Yet, the road ahead can and should be far brighter for Western Europe. The population of Russia is shy of 144 million and declining; the USA’s population is 340 million. By contrast, the population of Europe is 744 million and filled with brilliant minds and enough people to achieve all that needs to be achieved. The EU represents the third largest economic bloc in the world.
What’s more, there are ways and means of mobilizing and preparing Europe for any future conflict that can enhance many people’s lives and lead to a dramatic boost in the economy. Ten years ago in Sweden, for example, the government introduced the Total Defence Duty, which made everyone aged 16 to 70 eligible for national service. This was greeted with dismay by some, but actually, the Swedes have discovered that it has instead led to greater political awareness, an increased sense of national cohesion and a less self-centred society. Total Defence Duty might mean military service but it could also be served in a civilian capacity – with rescue services, childcare and healthcare, for example. It also stretches to ‘general national service obligation in activities that must also function in the event of danger of war, or war.’
There is some talk now that all NATO members in Europe should adopt a similar approach. Not everyone is cut out for military service and even within the military there are today many roles that do not involve being in frontline infantry units, for example. The belief is that such an obligatory service can help create a sense of purpos and unity and be used as a means of generating bottom-up human capital. Advocates believe there are huge benefits to society as a whole if structured correctly. I’m not so sure, but we certainly need to increase the size of our armed forces and that applies to both full-time and part-time reservists. Highlighting the broader benefits of service is certainly key to this.
There is also a way of funding dramatically increased defence spending across the board without further bankrupting government coffers. Now being taken very seriously is a plan to create a Defence, Security and Resilience Bank – effectively an allied bank based along much the same lines as the World Bank and International Monetary Fund. This is what is known as a Multilateral Lending Institution – or MLI – and provides concrete plan to finance national security.
The idea is actually pretty straightforward. The DSR Bank would be built around sovereign guarantees provided by its member states — primarily European democracies to begin with, but open to values-based partners further afield, such as Canada, Japan or South Korea. These guarantees are the engine of this proposed new Bank: they don’t involve upfront spending, but rather sit on the Bank’s balance sheet as financial assets. This in turn allows it to raise capital on global bond markets at the cheapest possible rates.
For those in the dark about how this works, bonds are debt securities sold to investors. Bonds are effectively a loan, usually issued by governments. When someone buys a bond, the purchaser is essentially lending money to the issuer in exchange for regular interest payments or a return of the value plus interest at a specified future dates. The larger the economy of a government and the more stable it is, the greater the value of the government bond.
So, alongside raising capital through bonds, member nations would also contribute paid-in subscribed capital. But again, this is not a hard cost — rather, it is an investment. It sits as an asset on national accounts, counts toward a country’s defence investment, and carries a powerful multiplier effect: for every pound or euro subscribed, many more can be mobilised.
The genius lies in the structure. Because the Bank holds these guarantees and subscribed capital as assets, it gives member governments breathing space. They can ramp up rearmament and build long-term resilience without inflating their own national debt or triggering politically toxic cuts elsewhere. Defence, in other words, is no longer being pitted against healthcare or education – or even repairing potholes. Rather, defence investment and spending becomes part of a broader strategy for economic growth as well as national security. The Bank would issue long-term, AAA-rated bonds – ie, with the highest possible guarantees and security – backed by the full faith and credit of its membership, and then channel those funds directly into procurement, vital infrastructure, supply chain strengthening, and technologies that can be then used in both military and civilian day-to-day capacities; as everyone knows, there’s nothing like military advancement in developing future technology as a whole. The Second World War, and the dramatic developments that witnessed, is a case in point.
In other words, the DSR Bank offers a mechanism that turns shared risk into shared strength — a financial architecture for deterrence, built not on fear, but on collective resolve.
And the loans issued by the Bank would allow nations to act immediately, investing at scale in the defence industrial base. This would massively boost economic growth — and, critically, right here in Europe. It would also grow international markets and provide a long-term foundation to sustain Europe’s defence industry well beyond any single crisis. Europe would become not just better defended, but a strategic hub of global security.
In other words, Europe can become the new arsenal of democracy. We have the people, the brains, the scale and the wherewithal. What’s not to like? And, as I write this, the plan already has formal backing from the European Parliament, while John Healey, the UK Defence Secretary, confirmed in the House of Commons on 22 April that the UK government was working on the initiative. Everything is in place for the Bank to be operational by 2026.
The challenge, then, is not one of manpower or possibility – but of political will. The advantages of democracies – that the people regularly get to choose their political leaders – are also their shortcomings: that governments tend to think in short-term cycles and the next election rather than taking a long view. ‘No Russian tanks will be crossing the Pyrenees,’ noted Prime Minister Pedro Sanchez of Spain, for instance. Maybe not, but Spain is a part of NATO, part of an economic bloc and rearmament can and should be seen as a boost to both economic growth and national cohesion; Sanchez announced on 22 April that it would be increasing defence spending to 2%. It’s not enough, but it is a start and a step in the right direction.
In other words, Europe can turn matters around – if there is the will.
It is most likely Germany, France and Britain that will have to take the reins – their example, their drive, their leadership, will be vital. It is about selling a message: laying out the threats, and explaining what can be done about it and how the solution is one that can actually lead to vastly improved circumstances, both societally and economically. The final point is this: that any talk of mobilisation and rearmament is about creating a credible and viable deterrent. It is about making Putin, for example, think again before potentially invading the Baltic States and in so doing triggering Article 5 of the NATO treaty – which commits all NATO nations to militarily defend its fellow members. It is about preventing war. If Europe can unite, make itself militarily strong and independent of the USA and, at the same time, grow its economy, then we can all look forward to decades more of peace.
With thanks to Robbie Boyd and Rob Murray.
My new book, VICTORY 45, co-written with Al Murray is out now.