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Europe struggles to balance defense and debt burden

Posted June. 30, 2025 07:38,   

Updated June. 30, 2025 07:38


Europe was abuzz last week over a “father and son” controversy. On June 25, NATO Secretary-General Mark Rutte likened the United States to a father after U.S. President Donald Trump compared Israel and Iran to children fighting on a school playground. “Sometimes Daddy needs to use strong language,” Rutte said, prompting backlash across Europe. Critics called the comment overly deferential and an affront to European autonomy.

Europe’s deference to the United States extended beyond words. Following the NATO summit, all 32 member states pledged to raise defense spending to 5 percent of GDP by 2035. This target has long been promoted by President Donald Trump, who warned that the United States might withdraw from the alliance if other members did not increase their contributions. The pledge made Europe appear as if it were dutifully following the lead of its “father.”

But behind this pledge lies deep unease. Many European nations have effectively made promises they cannot keep. A growing number of experts argue that ballooning national debt makes it nearly impossible for many countries to meet the 5 percent target. According to the EU, the average debt-to-GDP ratio among the 20 Eurozone countries was 87.4 percent last year. One think tank’s analysis suggested that only a handful of countries might realistically meet the goal. These include Germany, Poland, the three Baltic states (Estonia, Latvia and Lithuania), and the Scandinavian nations (Sweden, Norway and Finland).

As defense budgets rise under tight fiscal conditions, cuts in other areas are becoming inevitable. Social welfare is often the first to be targeted. This has raised concerns that Europe is shifting from a welfare state to a warfare state. Reductions in welfare spending come with significant consequences. Although Europe is often praised for managing its aging population through immigration and pro-natalist policies, seniors still represent a large portion of the population. Last year, 21.6 percent of EU citizens were aged 65 or older, an increase of 2.9 percentage points from a decade earlier.

Calls for fiscal restraint are easy to make but difficult to carry out. Austerity measures often trigger public discontent and political turmoil. In France, then-Prime Minister Michel Barnier proposed a budget plan in December to save 60 billion euros. Just three months later, strong opposition forced him to resign, leading to the collapse of the French cabinet for the first time in 62 years.

With both budget reallocation and spending cuts proving difficult, some governments are leaning toward simply increasing overall expenditures. Countries such as Italy have requested revisions to the EU’s fiscal rules, which set debt limits for member states. In response, the European Commission has introduced a “European rearmament strategy” that exempts defense spending from certain fiscal constraints. This, however, has fueled concerns about further debt accumulation. Rising debt could limit governments’ future spending power and reduce economic momentum, posing a serious risk in an already fragile economic climate. Europe now finds itself in a bind.

In South Korea, where the debt-to-GDP ratio is lower than in Europe, some advocate for more active fiscal spending. During difficult economic times, government expenditure can be necessary. Still, Korea must carefully evaluate whether spending is efficient and avoid misallocation. Despite relatively favorable numbers, Korea has the highest rates of low birth and elderly poverty among OECD members. Concerns over the pace of its debt growth are widespread. The country cannot afford complacency simply because it appears better off than Europe.