Christoph Schmidt, Jochen Andritzky, The Wall Street Journal, 09.08.2016
INCREASED SECURITY SPENDING REQUIRES MORE RESTRAINT ELSEWHERE IN NATIONAL BUDGETS - NOT LESS DISCIPLINE OVERALL
From the terrorist attacks in Belgium, France and Germany, to Russia’s meddling in the Ukraine and the nearby instability and internal conflict that has set off a refugee wave, the security challenges in Europe are intensifying. The urgent question is whether the Continent is prepared for an adequate response.
Following the January 2015 Charlie Hebdo massacre in Paris, France’s President François Hollande announced a revision of his country’s military-planning law to free up an additional €3.8 billion ($4.21 billion), to be spent between 2016 and 2019. That corresponds to approximately 0.05% of France’s gross domestic product if the expenditure is divided equally over the four years. Further attacks in November prompted Mr. Hollande to announce additional security measures, such as the hiring of more police and military personnel, at an estimated cost of €800 million, or 0.04% of GDP in 2016. He also declared a national state of emergency.
Still, defense spending in France, at 1.8% of GDP, remains short of the 2% target for all NATO members. As a whole, the eurozone spends barely 1.2% of GDP on defense. Internal-security spending by the eurozone hasn’t grown in relation to GDP in the past decade. Expenditures for “public order and safety,” which includes police, courts and prisons, still amounts to approximately 1.7% of GDP.
This is understandable in some ways. The economic crises in many eurozone countries forced a focus on budget streamlining. Now is not an easy time to start new initiatives or reallocate scarce public funds.
Yet this attitude cannot justify neglect. Across Europe, the case for higher security spending and the reallocation of public funds toward counterterrorism is obvious. In addition to these new threats, the next U.S. presidential administration is likely to shift back to Europe much of the burden of providing European security.
In matters of internal security, the U.S. provides a model. Following the Sept. 11 attacks, America reacted decisively. The budget for homeland security rose to $74 billion in 2009, or 0.5% of GDP, from $17 billion allocated in 2001. It has remained largely constant since.
EU member countries have only recently begun revising their internal-security and defense strategies. Federica Mogherini, the EU’s foreign-policy chief, only calls for a “sufficient level of expenditure” for defense. To that end, Germany plans to increase military spending this year by €1.2 billion, or 0.04% of GDP, and €10 billion cumulatively by 2019, bolstering its army for the first time in 25 years. Belgium plans to spend €500 million, or 0.1% of GDP, on policing, jailing returning jihadists and reinforcing borders.
Small spending increases are unlikely to raise public confidence. In addition to the security threats spreading across Europe, southern European countries such as Greece and Italy now find themselves faced with massive influxes of refugees. Yet these two countries in particular are under great fiscal strain. Between 2010 and 2014, Greece decreased total spending on public order, safety and defense by 15%, and Italy, 6%.
Europe needs to do more. New threats and the declining “peace dividend” following the end of the Cold War are long-term challenges that are likely to dominate the agenda. Europe needs to review its defense strategies and redirect spending to areas that can effectively tackle the new threats. Intelligence gathering and sharing is a prime example. European governments and their allies such as the U.S. must make a greater effort to exchange information and coordinate intelligence gathering.
This will consume sizable fiscal resources, both in investment as well as current spending. Any shift in Europe’s security policy will require a similar shift in security spending. But it would be unwise to take the more convenient route and allow security spending to threaten budgetary discipline. Raising public debt, and thus the risk of a financial crisis, shouldn’t be the price for higher security.
That’s why the European Commission should remain vigilant and defend the path of fiscal consolidation enshrined in the EU’s fiscal framework. EC President Jean-Claude Juncker’s intervention in favor of extraordinary security spending without any offsetting measures, even for countries under the excessive deficit procedure, is counterproductive, since it undermines the EC’s mandate to safeguard the Stability and Growth Pact.
No such trade-off can be allowed to prevail. The citizens of Europe have a right to be protected from new and old threats. This will require a more forceful response than the one seen so far. Security must not be traded for fiscal and economic stability. The increased spending for security and defense should be matched by cuts in other areas of fiscal spending, or higher taxes. The EC should protect this faultless if inconvenient logic and not bend the rules, even in face of another terrible terrorist attack.
Mr. Schmidt is chairman of the German Council of Economic Experts, where Mr. Andritzky is the secretary-general.