In response to the economic and financial troubles of the 2008-2012 crisis period, numerous European governments opted to implement severe budget cuts to stabilize national finances and reduce public debt. These austerity measures have been widely publicized for their impacts on education, welfare, health, and other sectors of national budgets. However, there has been less focus on the effects of the economic and financial crises on defense spending. Was defense spending also cut? If so, was this done with an eye to preserve certain capabilities over others? Did states cooperate in this process, or did they choose to undertake reform individually?
My research answers these questions and describes the response of Britain, France, Germany, and Italy (EU-4) to economic crisis and relative decline. The approach uses existing scholarly literature to develop a model which explains the logic of collective action and state retrenchment in the defense sector. The thesis provides a discussion of the origins and development of the Eurozone crisis as an issue EU-4 states must resolve both at the individual level and at the collective level. Working on this basis, the thesis evaluates how well EU-4 state response to the Eurozone crisis in the defense sector corresponds to what my model posits.
The model I develop is based on different subsets of international relations theory. It creates a framework in which an interconnected group of states in a multinational alliance can contribute different amounts to obtain a common good—security, in this case. Furthermore, states can affect how much of the common good each actor receives by adjusting the efficiency with which the resources they contribute are used. The model hinges on the notion that it is possible for states in an alliance to decrease their individual contributions to the common good, yet by increasing efficiency through collaboration and other measures actually maintain the common good provided.
Altogether, although EU-4 states differ significantly from each other in history, defense culture, economic and military power, and modern defense policy, they have each taken similar paths in response to the Eurozone crisis.
The Eurozone crisis struck Britain’s government deficits particularly hard, increasing national debt significantly over a brief period of time. As part of its general government reorganization, the British government thus ordered a wide-ranging defense review. Even though this document was not exempt from strong criticism, the MoD proceeded to implement the revision on force numbers and equipment stocks, as well as support the national defense industry’s exports. The key event, however, was the 2010 Lancaster House treaty with France, which set a framework for extensive cooperation in defense.
By contrast, although France did suffer from the effects of the Eurozone crisis, it escaped the negative plunges which impacted Britain. This permitted the French government to opt for a policy of continuity in defense planning and spending until the Eurozone crisis worsened, when the French government also chose to reduce defense expenditure. France chose a policy of external balancing and defense export promotion. As with Britain, the Lancaster House treaty set a benchmark in defense sector cooperation, establishing a trajectory that may significantly benefit both parties economically in the future.
Germany set itself apart from the other three countries considered by navigating the Eurozone crisis with minimal impact on most indicators. Germany too chose to retrench, yet it did so while trying to align its defense policy to the standards its allies expected of it. This meant placing more emphasis on being able to participate in foreign military interventions. The German government argued in favor of expanding existing European pooling and sharing initiatives and developed a number of bilateral partnerships with other European states while strongly supporting extensive defense exports.
Finally, Italy was the most negatively affected country of the quartet. Italy found itself on the verge of disastrous outcomes in its economy, finances, and defense, leading the Italian government to implement defense budget cuts within its broader austerity policies while at the same time pressing forward guidelines on how Italian defense should be reformed to make it sustainable and effective in the future. The Italian government spent considerable effort in promoting numerous bilateral and multilateral collaboration initiatives to strengthen EU foreign and defense policy capabilities as well as to strengthen ties with other regional partners.
Despite the differences which existed amongst EU-4 states before the onset of the Eurozone crisis, most notably the different strategic postures of the various countries and the fact that Britain is not a member of the euro currency area, these four states responded to the Eurozone crisis in a manner consistent to what my model suggests. Although defense expenditure declined—or is projected to decline—in each country, the EU-4 states sought to remedy any consequent individual losses in means and capabilities by working with each other and with other partners on cooperative programs, export promotion, and the formation of strong defense and security ties
This evidence supports the idea that reduced defense expenditures and capabilities can be offset so that the common good is still provided at levels acceptable to all, considering both costs and benefits. It is a sensible strategy for EU-4 states to take to address their relative decline in the international system. Although it is too early to determine whether these efforts will be successful, it is fair to say that the coherence of the theoretical model with the evidence discussed indicates that there is at least some possibility that the strategy of collaborative retrenchment will be successful.