From: lessgovt@gmail.com   
      
   The ‘Peace Dividend’ Is Over in Europe. Now Come the Hard Tradeoffs.   
   By Cohen and Alderman, May 3, 2023, NY Times   
   In the 30 years since the Iron Curtain came crashing down, trillions of   
   dollars that had been dedicated to Cold War armies and weapons systems were   
   gradually diverted to health care, housing and schools.   
      
   That era — when security took a back seat to trade and economic growth —   
   abruptly ended with Russia’s invasion of Ukraine last year.   
      
   “The peace dividend is gone,” Kristalina Georgieva, the head of the   
   International Monetary Fund, recently declared, referring to the mountains of   
   cash that were freed up when military budgets shrank. “Defense expenditures   
   have to go up.”   
      
   The urgent need to combat a brutal and unpredictable Russia has forced   
   European leaders to make excruciating budgetary decisions that will enormously   
   affect peoples’ everyday lives. Do they spend more on howitzers or   
   hospitals, tanks or teachers,    
   rockets or roadways? And how to pay for it: raise taxes or borrow more? Or   
   both?   
      
   The sudden security demands, which will last well beyond an end to the war in   
   Ukraine, come at a moment when colossal outlays are also needed to care for   
   rapidly aging populations, as well as to avoid potentially disastrous climate   
   change. The European    
   Union’s ambitious goal to be carbon neutral by 2050 alone is estimated to   
   cost between $175 billion and $250 billion each year for the next 27 years.   
      
   “The spending pressures on Europe will be huge, and that’s not even taking   
   into account the green transition,” said Kenneth Rogoff, an economics   
   professor at Harvard. “The whole European social safety net is very   
   vulnerable to these big needs.”   
      
   After the Berlin Wall fell, social spending shot up. Denmark doubled the money   
   it funneled to health care between 1994 and 2022, according to the latest   
   figures compiled by the Organization for Economic Cooperation and Development,   
   while Britain    
   increased its spending by more than 90%.   
      
   Over the same period, Poland more than doubled funding for culture and   
   recreation programs. Germany ramped up investments in the economy. The Czech   
   Republic increased its education budget.   
      
   Military spending by European members of North Atlantic Treaty Organization   
   and Canada reached a low point in 2014 as the demand for battle tanks, fighter   
   jets and submarines plummeted. After Russia annexed Crimea that year, budgets   
   started to rise again,   
    but most countries still fell well below NATO’s target of 2% of national   
   output.   
      
   “The end of the peace dividend is a big rupture,” said Daniel Daianu,   
   chairman of the Fiscal Council in Romania and a former finance minister.   
      
   Before war broke out in Ukraine, military spending by the European members of   
   NATO was expected to reach nearly $1.8 trillion by 2026, a 14%t increase over   
   five years, according to research by McKinsey & Company. Now, spending is   
   estimated to rise    
   between 53-65%.   
      
   That means hundreds of billions of dollars that otherwise could have been used   
   to, say, invest in bridge and highway repairs, child care, cancer research,   
   refugee resettlement or public orchestras is expected to be redirected to the   
   military.   
      
   Last week, the Stockholm International Peace Research Institute reported that   
   military spending in Europe last year had its biggest annual rise in three   
   decades. And the spendathon is just beginning.   
      
   On Wednesday, the European Union announced a plan to upgrade and expand   
   weapons production, and provide 500 million euros ($551 million) to   
   manufacturers. While the proposal seeks to ramp up weapons production for   
   European militaries, it could help the    
   bloc’s member nations meet a deadline to deliver a million rounds of   
   ammunition to Ukraine this year, said Thierry Breton, the European Union’s   
   trade commissioner.can be increased.   
      
   Poland has pledged to spend 4% of its national output on defense. The German   
   defense minister has asked for an additional $11 billion next year, a 20%   
   increase in military spending. President Macron of France has promised to lift   
   military spending by    
   more than a third through 2030 and to “transform” France’s nuclear-armed   
   military.   
      
   Some analysts argue that at times cuts in military budgets were so deep that   
   they compromised basic readiness. And surveys have shown that there is public   
   support for increased military spending, pointedly illustrated by Finland and   
   Sweden’s about-face    
   in wanting to join NATO.   
      
   But in most of Europe, the painful budgetary trade-offs or tax increases that   
   will be required have not yet trickled down to daily life. Much of the   
   belt-tightening last year that squeezed households was the result of   
   skyrocketing energy prices and    
   stinging inflation.   
      
   Going forward, the game board has changed. “France has entered into a war   
   economy that I believe we will be in for a long time,” Mr. Macron said in a   
   speech shortly after announcing his spending blueprint.   
      
   But the crucial question of how to pay for the momentous shift in national   
   priorities remains. In France, for instance, government spending as a   
   percentage of the economy, at 1.4 trillion euros ($1.54 trillion), is the   
   highest in Europe. Of that, nearly    
   half was spent on the nation’s generous social safety net, which includes   
   unemployment benefits and pensions. Debt has also spiraled in the wake of the   
   pandemic. Yet Mr. Macron has vowed not to increase what is already one of the   
   highest tax levels in    
   Europe for fear of scaring off investors.   
      
   Debates over competing priorities are playing out in other capitals across the   
   region — even if the trade-offs are not explicitly mentioned.   
      
   In Britain, on the same day in March that the government unveiled a budget   
   that included a $6.25 billion bump in military spending, teachers, doctors and   
   transport workers joined strikes over pay and working conditions. It was just   
   one in a series of    
   walkouts by public workers who complained that underfunding, double-digit   
   inflation and the pandemic’s aftermath have crippled essential services like   
   health care, transportation and education. The budget included a $4.1 billion   
   increase for the    
   National Health Service over the same two-year period.   
      
      
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