Europe wavering between the Green Deal, Ukraine, and building its own military capacity

While the US Congress has blocked the $61 billion aid package announced for financing the war in Ukraine, even though Donald Trump has not yet been re-elected, European Union (EU) countries are preparing to shoulder the burden of financing the war in Ukraine on their own. Having failed to meet even their existing commitments so far, it remains a matter of curiosity how they will sustain this if they are left entirely alone. Within the EU, which had committed to providing 1 million artillery shells to Ukraine by March, there is now a debate over whether ammunition can be procured from countries outside the EU to fulfill these commitments.

On the other hand, this is not the only problem the EU is trying to find a cure for. Ongoing farmer protests in many European countries, led by France, are also rooted in cost increases and other issues related to the EU's green transition target in the agricultural sector. The European Commission had announced that, taking these grievances into account, they would evaluate measures to provide certain flexibilities and conveniences in the agricultural sector. The fact that the protests are most intense in France is due not only to France's history of political activism but also to Emmanuel Macron's leadership having gone overboard in its pro-market stance. Most recently, among the EU finance ministers who met in the Belgian city of Ghent last week, there was again French Minister Bruno Le Maire, emerged as the most radical member of the council in discussions on creating a guarantee mechanism that would facilitate the lending of securities across the Union by banks for investments by individuals and companies.

Regarding this project, which can be summarized as establishing an EU-level oversight mechanism for securities-type assets and placing them under an EU guarantee if they are lent to investors, Le Maire, “Il y a chez moi beaucoup d'impatience,” did not hesitate to state that he was filled with great impatience. The French minister, who also expressed that he was ready to move forward with even just one other state separate from France if necessary, “2, 3, 4, 5 states, it doesn't matter,” said, while the majority facing him, led by Germany, preferred a more moderate approach, wanting to first see if it was possible to proceed together with all 27 EU member states. Le Maire even went further, claiming that more than 10 trillion euros of the 35 trillion euros in European banks, “are sleeping in bank accounts,” in bank accounts were "lying dormant", arguing that they should be put to use. This sense of urgency to find resources and this extremism are also manifesting in the debates over whether the EU should utilize the Russian financial assets it froze after the outbreak of the war in Ukraine.

No consensus has been reached on financial oversight across the EU. The matter appears to have been postponed until March 12, when the ministers will meet again. before the meeting of EU leaders scheduled for March 21-22, we will see whether a formula can be reached on this issue. The ultimate goal of these efforts is to reach some form of Capital Markets Union . Regarding this, there are also proposals presented by the European Investment Bank at this meeting in Ghent. These proposals include goals such as investments in the agricultural sector, protection against the effects of drought, and the creation of an efficient water cycle. Supporting strategic technologies—such as investments in new technologies and infrastructure in the field of security and defense, the green and digital transition, and chip production—with new financing instruments is also among the stated objectives.

Across the EU, there are complaints about a kind of “investment gap,” especially under the competitive conditions faced in many critical sectors with China. The fact that half of the financing provided by the European Investment Bank still goes to “cohesion regions” is the clearest indicator of the discrepancy between efforts to align living standards across the Union—known as “convergence”—and efforts to incentivize capital. While it is known that Trump attacks efforts toward the green transition regarding the environment, now the leader of the anti-immigrant AfD in Germany, Alice Weidel, also describes these efforts as “costly garbage.” accusing them of being [the cause]. It is not just Trump or the AfD; even political parties in Europe that previously expressed positive intentions on this issue are showing signs of reluctance under conditions of financial strain. Concerns are frequently voiced that even a few years of hesitation by the US and the EU—the second and third largest carbon emitters after China—will have dire consequences for the planet. While there is a clear and serious reluctance even on such a vital issue, it is certainly not surprising that difficulties are also being encountered in supporting Ukraine's military struggle against Russia. EU officials admit that they will only be able to fulfill half of their commitment to provide 1 million artillery shells by spring.

The failure to meet the commitment for ammunition support to Ukraine is also linked to a state of underinvestment caused by the fact that EU countries have not faced state-sponsored or conventional military threats for decades. In fact, concerns are also being raised that this problem will bring greater risks for Europe in the event of a possible US inward turn. The argument that Europe needs to relearn wartime industrial production is frequently repeated. It is certain that the EU presents a pessimistic outlook in the face of its goals for green and digital transformation, the alignment of living standards, supporting Ukraine, and building its own defense capacity. Among these goals, it will have to prioritize some at the expense of others. These choices will be determined by the political struggles that we will all watch together, both across the Union and within individual member states.