Does Europe need to declare a 'wartime economy'?

2023-05-30 08:18:00, Kosova & Bota CNA

Taking over factories? Price controls? Food rations? What do European politicians mean when they emphasize - or dismiss - the need for a 'war economy'?

The interchangeable terms "war economy" or "wartime economy" bring to mind dramatic measures from the dark days past: Governments reconfigure their entire economic systems and industrial production to prioritize production for the war effort .

EU Commissioner Thierry Breton began using the concept regularly in early March as he demanded and continues to demand a rapid increase in EU government orders for and production of ammunition and weapons, both to supply Ukraine and also to replenish their reserves.

The commissioner has just visited more than a dozen arms manufacturing facilities across the bloc where he reportedly heard complaints about the lack of long-term contracts being signed. Despite the EU's numerous decisions to increase funding and lower barriers to joint procurement, the effort is moving too slowly, he thinks.

"The delays are inconsistent with our immediate needs," Breton said at a May 3 press conference. "There is therefore, and I say this clearly, the necessity to push the industrial base and move it into a 'wartime economy,' if you will allow me to put it in those terms."

Permission not granted?

Germany may be among the most sensitive to the concept. As Berlin's ambassador to Poland, Thomas Bagger knows a thing or two about pressuring for arms supplies. He finds Breton's tactics unproductive. "You will not get a positive response to the term 'war economy' in Germany," Bagger said briefly at the Lennart Meri Conference in Tallinn, Estonia earlier this month. "It's not the right way to mobilize efforts."

How the lack of ammunition in Ukraine defines the war

This reaction is not entirely surprising, explains Edward Lucas with the Center for European Policy Analysis (CEPA), who tells DW that he would ban the phrase entirely. "It means very different things in different places," he notes.

"A real 'war economy' is one where men with guns come in and take over your factory and make it produce more weapons. I don't think anyone is actually suggesting that" in Europe, although Lucas points out that Russia has already taken such steps.

Another analyst, Ben Tallis with the German Council on Foreign Relations (DGAP), notes that French President Emmanuel Macron has also talked about a "war economy" without taking the dramatic action it entails. "That would have a lot of implications," says Tallis, "a lot of state control over the economy and state guidance over the economy. It would probably mean rationing of various kinds, which would send a very interesting signal to the European population. I don't think the generation the current crop of politicians in Western Europe is ready to deliver."

But it is necessary to send an urgent signal if the EU and NATO want the weapons production machinery to appear. It's understandable why some EU officials are experimenting with the term, says Nathalie Tocci, who heads the Italian Institute of International Affairs. They need to bridge a huge gap in threat perception across Europe, "convincing those member states that are far from the front line, that instead of spending funds on internal affairs in - whatever, Calabria - they should spend it on the defense industry to send weapons to Ukraine." Tocci says some people already support this, "but it just takes time to make that argument compelling to everyone."

Estonian Defense Minister Hanno Pevkur says no one needs to explicitly call for a "war economy" in his country, which has already given more than one percent of its GDP to help Ukraine

While he supports this goal, military historian Slaëomir Debski, director of the Political Institute of International Affairs (PISM), does not think framing a "war economy" is necessary—at least "not yet"—and tells DË that he doubts that the politicians themselves don't really know what they mean when they say it.

Ben Tallis suggests that instead of just throwing the term around, politicians should start explaining the thinking behind a "war economy". "Ukraine is fighting for all our freedom, and I don't think this message has fully spread to parts of Western Europe," he told DÄ in Tallinn./ DW