The New World Ordoliberalism, Part 8: A New MIC Becomes the EU’s New Austerity Loophole. Maybe.

Life on earth real­ly can’t afford anoth­er major mil­i­tary indus­tri­al com­plex (MIC). But that’s what’s com­ing. Or at least the financ­ing is get­ting worked out as Europe deals reels from the dam­age already inflict­ed on the Transat­lantic alliance in the open months of the sec­ond Trump admin­is­tra­tion. It’s urgent. A new era of secu­ri­ty inde­pen­dence has begun for the Euro­pean com­mu­ni­ty and there’s no time to spare in get­ting start­ed on build­ing it. Plans are already tak­ing shape. Plans to dra­mat­i­cal­ly increase EU-wide defense spend­ing by effec­tive­ly forc­ing each EU mem­ber to achieve at least 3% of GDP on defense spend­ing, well about the 2% NATO min­i­mum. Rough­ly 650 bil­lion euros in extra defense spend­ing over the next four years. But what about the EU’s strict debt and aus­ter­i­ty rules? There’s a plan for that too: extra defense spend­ing will not count towards the EU’s debt and deficit rules. At least for the next four years. And per­haps longer. And yet, all signs indi­cate that this extra debt will have be repaid even­tu­al­ly. So are we look­ing at the begin­ning of a new MIC? Or the largest aus­ter­i­ty trap in EU his­to­ry? Time will tell.

Oth­er plans include 150 bil­lion euros in direct loans from the EU to mem­ber states for approved mil­i­tary hard­ware pur­chas­es. Loans that, again, will have to be repaid. But the loans will also be pro­vid­ed at low­er-than-mar­ket inter­est rates from funds raised direct­ly by the EU Com­mis­sion. In oth­er words, joint­ly-backed bonds, some­thing pre­vi­ous­ly anath­e­ma to Ger­many and the rest of the EU’s wealth­i­er mem­bers. Remark­ably, Ger­many isn’t just strong­ly behind the loan plan but wants it expand­ed to poten­tial­ly include loans to non-EU mem­bers like Nor­way, Switzer­land, or Turkey. These big spend­ing plans keep get­ting big­ger, with Ger­man back­ing. It’s an his­toric shift. Beyond that, Ger­many is already plan­ning an 800 bil­lion euro defense spend­ing splurge of its own over the next decade and call­ing for the EU’s plan to be extend­ed well beyond the four year pro­pos­al. Yes, Ger­many is back­ing much high­er EU-wide debt lev­els for the indef­i­nite future. As long as that debt is spent on the mil­i­tary, of course. That’s the incred­i­ble sto­ry cur­rent unfold­ing. The kind of sto­ry that points towards a big new EU MIC, much high­er EU debt lev­els, and, per­haps, the biggest aus­ter­i­ty trap in EU his­to­ry. The dev­il in the details. Details yet t be ham­mered out, and pos­si­bly not ever ham­mered out until long after the EU has com­mit­ted itself to this path and the trap has already been set.