There's no need to go back over the latest developments in the Russian-Ukrainian conflict: the war is on everyone's lips, in Europe and elsewhere. Donald Trump has announced the suspension of all aid to Ukraine, despite discussions with Volodymyr Zelensky. We won't retain much from this exchange, except that Trump has his eye on Ukrainian minerals and Zelensky has decided not to wear a suit until his country is at peace. This was a fitting response to criticism of his outfit during his visit to the White House, when the ex-actor pointed out that his future suit will probably cost more than that of the journalist who criticized him... once peace is restored. From now on, all eyes will be on Europe and its ability to rearm.

800 billion, that's a lot

Long mocked for lagging behind in artificial intelligence, Europe can now boast a sector that's really taking off: defense. Ursula von der Leyen warned that "Europe faces a clear and immediate danger on a scale that none of us has experienced in our adult lives". A phrase echoed by the Danish intelligence services, who estimate that a Russian attack could take place between now and 2029, particularly if NATO were to weaken. As a reminder, Trump is threatening to leave the Alliance if member states fail to meet their defense budget commitments.

Against this backdrop, the President of the European Commission has unveiled a colossal 800 billion euro investment plan to strengthen European defense. For if the EU lets Russia easily target Ukraine, Moscow may well find it just as easy to target Europe.

The plan is based on five initiatives:

  • €150 billion in loans to help member states finance their armaments, which can be sent to support Ukraine.
  • Budgetary flexibility to encourage military spending, even if it exceeds European restrictions (which have already been scarcely respected in recent years).
  • A mobilization of the Cohesion Fund (392 billion euros) to finance defense projects, whereas it is normally intended for the EU's most disadvantaged countries.
  • An appeal to the European Investment Bank, which is currently prohibited from directly financing military projects.
  • Involvement of the private sector, an idea that Ursula von der Leyen has suggested is still vague.

Taking stock

Before calling everything into question, it's a good idea to take stock of which companies could benefit from this additional budget, and which countries need it most.

Let's start with the potential winners. France has a lot to celebrate: Thales, Dassault Aviation, Airbus and Safran should all benefit from these investments. We also have Leonardo in Italy. Germany is not to be outdone, with Rheinmetall and MTU Aero Engines. Other European nations include SAAB in Sweden, and Rolls-Royce and BAE Systems in the UK. If you're interested in smaller caps, please consult our article dedicated to these.

Let's turn now to the military capabilities of European countries. According to Global Fire Power, France ranks 7th in the world, with some 226,100 active military personnel, 976 aircraft, 215 tanks, 110,932 land vehicles and a fleet of 129 ships. Italy is just behind in 10th place, with 175,000 soldiers, 729 aircraft, 200 tanks, almost 75,000 land vehicles and 196 ships. Germany is a little further back in 14th place, with 100,000 troops, 584 aircraft, 83,260 land vehicles, 296 tanks and a fleet of 61 ships.

Russia, ranked the world's 2nd largest military power, boasts impressive figures: 875,000 soldiers, 4,300 aircraft, 420 ships, 5,750 tanks and 130,000 land vehicles. A comparison that gives an idea of the challenges facing Europe.

While the United States is investing massively in AI with its Stargate project ($500 billion mobilized with the help of industry giants), Europe finally seems to be entering the big league with its $800 billion.

But, because there's always a but, the reality is more nuanced. The plan has to be voted on unanimously, and it's far from unanimous. The Hungarian Prime Minister, who is close to Putin and Trump, may well vote against it.

Other opposition comes from the countries that benefit most from the cohesion fund, who risk blocking its use for defense. Other states, already in budgetary difficulties, feel that these billions could be better invested elsewhere. Some MEPs are even astonished that such an effort is envisaged for armaments, when subjects such as energy transition do not receive similar treatment. In short, Europe remains true to itself: never in agreement, always dissatisfied. And the troubles don't stop there.

Members of parliament have also raised their voices, accusing the EU of granting itself rights it does not have, by taking advantage of the tensions created by the war. This criticism reopens the debate on the place and competences of the European Union. A subject already raised in the Draghi report, which called for European mobilization in strategic sectors such as AI to accelerate growth.

Design: Amandine Victor