May 15 (Bloomberg) -- Confronted by the prospect of a new Iron Curtain in Russia’s borderlands, the European Union’s largest countries are turning the other way.
Germany, France, Italy and Spain are all cutting back on defense just as a swath of countries on the EU’s eastern flank from the Baltic Sea to Romania ramp up arms spending. Estonia, which borders Russia, spent a greater share of its national output on defense than France in 2013 for the second year running, NATO figures show.
Europe’s east-west divergence underscores Vladimir Putin’s leverage against EU leaders who lack the will and the means to face down his efforts to rebuild influence in the buffer area between Russia and North Atlantic Treaty Organization member states. Left unchecked in Ukraine, Putin is tearing up the post-Cold War order that saw the EU and NATO expand to 10 former Soviet satellites as Russia could only look on, said Jan Techau, head of the Brussels office of the Carnegie Endowment.
“The old EU paradigm of getting everyone to join a rules-based system has run into a wall because now the Russians won’t play ball,” Techau said in a phone interview. “Europe now needs a new toolbox with more unity, more money, and deepening of ties to non-members in the east.”
As Ukraine spirals toward civil war, the EU is struggling to show the solidarity it’s being called upon to provide. Splits have emerged over sanctions to tackle Russia, while money for defense is in short supply after more than four years of debt crisis in the euro area.
European defense spending dropped to an average of 1.6 percent of gross domestic product last year from 2.5 percent in 1990-1994, according to NATO estimates released on Feb. 24. The U.S. figure of 4.4 percent is little changed in two decades.
Germany, Italy and Spain all spent less than the European average. Of the four big continental economies, only France punches above its weight -- and even then its share, at 1.9 percent of GDP, is declining. Italy and Spain each slashed defense outlays by more than 10 percent, while to the east, Poland raised spending.
The armed forces of Germany, the EU’s biggest economy, are undergoing “substantial downsizing,” including reductions of battlefield helicopters, according to London’s International Institute for Strategic Studies Military Balance 2014. Germany now has 322 Leopard 2 main battle tanks, compared with more than 4,000 Leopard tanks in 1989, the year the Berlin Wall came down, according to IISS data.
In Italy, Prime Minister Matteo Renzi’s government is preparing cuts to an order for Lockheed Martin Corp.’s F-35 fighter jets as it seeks 3 billion euros ($4.1 billion) in defense savings.
“Many, if not most, European countries have no appetite” for a conflict with Russia, Foreign Minister Sergei Lavrov said yesterday in a Bloomberg Television interview. The U.S. wants to keep Europe “on a short leash,” he said.
Italy plans to use its six-month EU presidency starting July to work on “re-establishing a partnership with Russia,” Foreign Minister Federica Mogherini said in Brussels this week after EU governments agreed to widen sanctions on Russia over Ukraine.
There’s a debate in the EU “between those that think Russia is already lost,” and others, including Italy, that believe “we should work and try to bring Russia back to play a responsible role in the international community,” she said.
Arc of ‘Instability’
That’s a divide Putin is able to exploit. Even as NATO estimates that Russia has 40,000 troops massed on Ukraine’s eastern border, Putin denies stoking unrest before the May 25 Ukrainian presidential elections, the touchstone for more sanctions.
The uncertainty fuels an arc of “instability” from Belarus south through Ukraine to the Caucasus that Techau says “will be the new normal in Europe.”
The Russian strategy “is to create problems on the ground in its neighbors to prevent them from joining the EU,” said Joerg Forbrig, a senior program officer at the Berlin bureau of the German Marshall Fund of the U.S.
Russia is following “a very clever policy by not announcing any end goal and making incremental moves and avoiding dramatic steps that would provoke harsh measures from the West,” said Forbrig. “This makes it very hard for EU decision makers to come up with responses.”
A unified response is all the more difficult because of a sense of disconnect between the EU’s eastern periphery and its core, where life goes on much as normal. In those countries wracked by the debt crisis, things are even starting to pick up.
Italian 10-year government bond yields dropped below 3 percent for the first time on May 6 and equivalent Spanish debt is also at an all-time low. Irish 10-year yields dropped to a record 2.64 percent yesterday as the euro area showed more evidence of pulling out of the crisis.
As western Europe begins to relax, Poland is girding for years of insecurity. Poland, the largest of the former communist countries to join the EU in 2004, borders Russia, Belarus and Ukraine.
“We must brace ourselves for continued instability in the east,” Foreign Minister Radoslaw Sikorski said in a May 8 speech to parliament in Warsaw.
Poland, which already spends above the European average on defense, plans to sign a deal to buy 70 long-range tactical transport helicopters and to take a share in a missile-defense partnership.
Latvia, a Baltic state bordering Russia and Belarus, jacked up spending by almost 12 percent last year while the biggest increase, of almost 15 percent, was seen in Romania, which abuts Ukraine.
That’s still dwarfed by military expenditure in Russia. At $91 billion in 2012, Russia had the world’s third-biggest spending behind the U.S. and China, according to the Stockholm International Peace Research Institute.
Russia “regards the NATO front-line states in the Baltic Sea region and possibly in the Black Sea region as a sort of soft underbelly of the alliance,” Estonian Defense Minister Sven Mikser said in a May 6 interview. He called for a “stronger NATO footprint on the soil of front-line states.”
The sentiment extends to traditionally neutral Sweden. A non-NATO member, Sweden wants to buy more Jas 39E fighter jets, two more submarines and medium-range anti-aircraft artillery. Russia “has acted ruthlessly and aggressively” in Ukraine, Deputy Prime Minister Jan Bjoerklund said on April 22. “There’s now an increased focus to protect Sweden.”
Russian or Russian-backed forces now control territory in four of the six nations in the EU’s Eastern Partnership, a program set up in 2009 to deepen ties between Brussels and the post-Soviet region. French President Francois Hollande, in a visit to Tbilisi on May 13, cautioned partnership country Georgia “not to be in a rush” to join the EU or NATO.
“The new Russian readiness to use force to change borders” now “clearly requires a firm deterrent response including sanctions and reassuring NATO members,” the Brussels-based International Crisis Group said in a report today. It urged Ukraine’s leaders to declare the country won’t seek NATO membership and to proclaim “permanent neutrality.”
Europe’s most potent instrument may instead be “radically beefing up” its Eastern Partnership policy to make it just one rung below full EU membership, said Shada Islam, a director at the Friends of Europe policy-advisory group in Brussels.
That means “far more money, trade deals and a much deeper EU role in reforming these nations in things like fighting corruption, helping central banks and building functioning markets,” she said. “Russia may be a declining power but it’s showing its fangs as it declines.”
Russian intervention in its neighbors under Putin has shades of the Brezhnev Doctrine in the Soviet Union under which satellite states and neighbors weren’t free to set domestic policies. Soviet leader Leonid Brezhnev ordered invasions of Czechoslovakia in 1968 and Afghanistan in 1979.
With the rise of Europe’s post-Cold War rules-based system of the EU, the Council of Europe and the Organization for Security and Cooperation in Europe, the Brezhnev Doctrine was junked and replaced by what a Soviet Foreign Ministry spokesman in 1989 called the “Sinatra Doctrine,” an allusion to Frank Sinatra’s song “My Way,” whereby former satellites were allowed to decide internal policies themselves. This ended with the 2008 Georgian War.
What is now being witnessed “is something like Brezhnev-lite, as it would give Moscow a veto power over some aspects of some countries’ foreign policy,” Techau said. “The West does of course not officially accept this, but is silently willing to go along with it.”
To contact the reporter on this story: Leon Mangasarian in Berlin at email@example.com
To contact the editors responsible for this story: Alan Crawford at firstname.lastname@example.org Eddie Buckle