Will Europe have to choose between welfare and warfare?

European experts suggest that the notion that Europe must choose between defending its social model or defending itself is misleading.

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US President Donald Trump has urged NATO European countries to increase their defence spending, with the aim of reducing the US financial and military burden in the Alliance and achieving a more balanced burden-sharing arrangement. Under his pressure, there has been a shift from a two-per-cent spending guideline to a much higher new commitment of five-per-cent of GDP on defence by 2035.

He has also consistently demonstrated that his ‘Make America Great Again’ programme would be implemented regardless of, and potentially to the detriment of, the interests and values of the US’s traditional partners. His ambitions – and threats – regarding Greenland have seriously undermined the trust that Europeans once placed in their American ally.

So, with the combined shock factors of Russia’s war against Ukraine and the volatile administration in the White House, Europe appears to have no option but to boost spending on defence and security.

The end of the welfare state?

Europe is known for its welfare system. For decades, its citizens have seen economic development and social protection as two sides of the same coin. Our social protection system reduces inequality through wealth redistribution, provides equal opportunities, and ensures access to essential services. It also helps to make our societies more stable and resilient and less likely to be torn apart by internal conflicts.

European countries dominate the global ranking of countries least affected by poverty. Yet, if the market was free and unregulated, says the OECD, 30 per cent of Europeans would be at risk of poverty. So-called ‘social transfers’ – primarily state-provided benefits or services – bring this figure down to 10 to 15 per cent, while in the United States it falls no lower than 20 to 25 per cent.

Now, does greater investment in defence inevitably lead to cuts in transfers and public spending on vital services such as schools, healthcare and pensions?

For Maurizio Franzini, an Italian economist who teaches at the Sapienza University of Rome, the equation is not that simple.

Maurizio Franzini, Professor of Economic Policy at the Faculty of Economics of La Sapienza University of Rome, Interview by Giulia Cannizzaro, Radio 24 (in Italian)

“Increasing military spending means having a budget that makes room for these expenses. This room can be made on the expenditure side, by reducing other spending; on the revenue side, by creating additional revenue; or even on the debt side, that is, by borrowing more. […] But there is no automatic mechanism; it’s a question of political choices. And political choices are complicated.”

One way to make room for additional expenditure would be to fight against spending fragmentation, not only across countries but also inside, to allocate existing funds more efficiently within state budgets. For professor Herbert Wulf, a political scientist and researcher in peace and conflict studies, if national, regional and local public authorities agreed on the most efficient way to allocate funding, this could help to reduce the public deficit and enable new priorities to be financed.

Herbert Wulf, Professor, German political scientist and researcher on peace and conflict, Interview by Jean-Claude Majerus, Radio 100,7 (in German)

“In Europe, a lot of money is wasted on what I call European ‘small-scale nationalism’, because all countries want the funds they spend to benefit companies in their own country. And so it is not the most efficient or least expensive company that is chosen. Other, completely different, interests are taken into account; not security interests.”

And according to another university professor, Georgi Shopov, a Bulgarian social welfare specialist, we need to get a bit more creative when it comes to balancing both priorities.

Georgi Shopov, Professor at the Bulgarian Academy of Sciences and at Paisii Hilendarski University of Plovdiv, Interview by Antoaneta Petrichanska, BNR (in Bulgarian)

“War or social welfare? Both! Because black-and-white thinking is not a good approach in politics. [We need to] increase military spending and modernise the EU’s defence capabilities, while at the same time maintaining an adequate social protection system. It is not a question of undermining one system or the other – a question of either-or – but of both, while optimising other public expenditures. There are many reserves that can be reallocated to meet defence objectives.”

Money wisely spent?

In the ‘welfare vs warfare’ debate, there are, though, voices that run counter to the apparent consensus among EU leaders that military spending should – within reason – be increased. Kuzman Iliev, for one. This economic analyst leads Bulgaria’s conservative ‘Can’ party.

Kuzman Iliev, Leader of the ‘Bulgaria Can’ party, Interview by Antoaneta Petrichanska, BNR (in Bulgarian)

“The topic of defence is very important, but the best defence is, above all, diplomacy. In abandoning diplomacy to move in the direction of running deficits, accumulating debt and preparing for war, we are heading in a direction where, if this scenario comes to pass, it could spell the end for Bulgaria.”

This debate is indeed a sensitive one that carries the risk of causing social and political division – and such important decisions need to be debated publicly.

However, there is a risk that, under the guise of upholding peace, this discussion could be hijacked by pro-Russian parties and groups. Far-right parties such as the Czech Freedom and Direct Democracy ‘SPD’ and the Polish Confederation Liberty and Independence, for example, have presented themselves as peace promoters while opposing support for Ukraine’s defence.

Viktorija Čmilytė-Nielsen, chair of Lithuania’s opposition Liberal Movement and a member of the Seimas’s national security and defence committee, notes that there are parties in Lithuania – even in the ruling majority – that manipulate the allocation of national defence and social welfare funding to promote their own agenda.

Viktorija Čmilytė-Nielsen, Chairwoman of the Lithuanian ‘Liberal Movement’, member of the Seimas National Security and Defence Committee, Interview by Augustė Lyberytė, Žinių Radijas (in Lithuanian)

“If the government decides to significantly increase the defence budget, it is natural that there are not enough resources for everything. Among other areas, social needs and education can be forced to take a back seat. This may accelerate the emergence of radical forces in the next political cycle that see things differently, that perhaps want to ‘befriend’ all our neighbours, essentially morally surrendering to the aggressors, no longer supporting Ukraine, not increasing its defence capabilities, and so on. This is a dangerous path, and one that it is absolutely not necessary to take. I really do not think that Lithuania will take it. Not if people retain confidence in the government’s ability to make decisions.”

And, as the saying goes: “Si vis pacem para bellum” (“If you want peace, prepare for war”).

But, alluding to the aforementioned choice between guns and butter, Professor Shopov puts it even more simply…

Georgi Shopov, Professor at the Bulgarian Academy of Sciences and at Paisii Hilendarski University of Plovdiv, Interview by Antoaneta Petrichanska, BNR (in Bulgarian)

“To eat, you must be alive. If you cannot defend yourself, you will not be able to eat your butter. In other words, peace is a priority for me!”

So, investing jointly in security and defence is both a logical and necessary step when its comes to protect our values and our way of life, says Romanian professor Enache Tușa.

Enache Tușa, Romanian university professor and doctor in social and political sciences, Interview by Magda Vâjaica, Radio România (in Romanian)

“There is of course a certain cost to quality of life, with such a high percentage of GDP spent on armaments. But in order to preserve what we have achieved so far, where we have managed to get, what we have developed, we must arm ourselves, because this is a means of deterrence. The [bloc’s] combined armies provide an important counterweight.”

Indeed, unity is strength!

Make do

But perhaps it is not all about draining the public coffers, says Georgiana Teodorescu, a conservative MEP from Romania. Instead, it could actually bring some socioeconomic benefits, thereby helping to bolster the bloc’s welfare state. She cites the example of the 800-billion-euro Rearm Europe programme, which could provide a lot of new jobs in Romania.

Georgiana Teodorescu, Member of the European Parliament – ECR, Romania, Interview by Magda Vâjaica, Radio România (in Romanian)

“A person employed in a local arms factory pays taxes to the state, which are then distributed to sectors such as education and health, thus creating added value.”

The European Gini coefficient reached a record low of 29.4 in 2024 and has continued to fall since then. This means that our societies have never experienced such low levels of inequality. This reflects a fairer distribution of disposable income, which is an interesting finding for those who doubt the effectiveness of social transfers.

We’ll conclude with a few optimistic words from Gerald Knaus, Austrian political scientist and founder of the European Stability Initiative. In his view, Europe’s future isn’t as grim as it might seem…

Gerald Knaus, Austrian political scientist, founder of the European Stability Initiative, Interview by Neža Katzmann-Pavlovčič, Radio Agora (in German)

“We are currently experiencing a very dangerous development in Europe, namely growing cultural pessimism, a feeling that everything is going in the wrong direction. International law, innovation, Europe’s economic power… a sense that ‘we are doomed to decline’. This picture does not correspond to reality. If we look at the most innovative societies in the world, we see that small European states such as Sweden, Switzerland, Denmark, Finland and the Netherlands are often at the top of the list and are also among the most popular countries in the world. Sixteen of the top 20 most respected countries are European. There are currently 10 candidate countries that want to join the EU. Soon, Iceland may be added to this list. Perhaps Greenland wants to return, and perhaps Norway too. So, seen from the outside, the EU’s member states and institutions are more attractive than ever before in history.”

So, it looks like we’re going to need to make guns and butter work – by optimising budgets, increasing efficiency through cross-border cooperation, and perhaps even leveraging the economic growth generated by the defense industry. But we’re starting from a position of strength to achieve this.

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• Author: Hermine Donceel, Euranet Plus News Agency