The Rearm Europe plan, now underway, marks a decisive moment. It puts the EU on a war footing.
The hawks are in charge. Von der Leyen’s commitment to a surge in European defence signals the arrival of a centralised European defence policy, even though this is supposed to be a strictly national competence. Macron has proposed that French nuclear arms could be sited across Europe, lending a European dimension to France’s nuclear weapons. German chancellor Friedrich Merz has vowed to provide all the financial resources needed for the Bundeswehr to become the strongest conventional army in Europe.
How to explain this massive militarisation? Why are EU governments so enthusiastic for it? Will Israel’s deliberate escalation of its genocide in Gaza and its attack on Iran entrench further a war economy? Sick though this sounds, can building weapons of death be the saviour of liberal capitalist society?
Military Spending Today
World military expenditure reached $2718 billion in 2024, an increase of 9.4%per cent in real terms from 2023, and the steepest year-on-year rise since the end of the cold war. The Stockholm International Peace Research Institute’s figures show that military spending increased in all world regions, but there has been particularly rapid growth in both Europe and the Middle East.
When we look at individual countries we see a clearer trend towards much higher military spending. The world’s by far the biggest military spender, in absolute terms, is the US. The proportion of GDP it spends on defence is 3.4% . Second and third come China and Russia, both at 7.1 % . Israel spends 8.8%, and Ukraine 34%.
The same report notes Germany is now spending 1.9% of the country’s GDP, approaching NATO’s current target of 2%. This is actually a big rise. The new German fiscal package will see Germany going to the world’s fourth largest military spender, behind the United States, China and Russia. It exceeds by far the spending boom that came with the postwar Marshall Plan and with German reunification in the early 1990s.
As the table shows, Germany’s increased military spending comes at a big social cost.
Table from Michael Roberts, CADTM, 24 March 2025
In recent years, German real wages have slumped; the country has experienced the biggest collapse in living standards since the second world war. And now that will get worse, all in the name of building for war.
The welfare-to-warfare logic will apply to all EU states from now on. Sweden, after ditching its neutrality and joining NATO, has increased its military expenditure by 34% to $12 billion, reaching the 2% of GDP sought by NATO. Its military budget has more than doubled over the last decade.
Ireland is a small player in the EU militarisation drive but nevertheless the trajectory is clear. This year’s Irish spending on defence is a record €1.35 billion – up 30%. Budget 2025 for Defence includes the highest ever level of capital funding, at €215 million. Over €805 million has been set aside for the recruitment of a net 400 additional Defence Forces members. Further increase is planned for next year.
Micheál Martin has been firm: Ireland needs to up its game on cyber and maritime security, including subsea cables, and strengthen the navy and military. “Ireland will not stand in the way of European countries’ defence and security needs when it comes to the existential Russian threat”. Yet increased public spending on defence will come with a greater social cost for Ireland, as it is already in the throes of a deep housing, health and public services crisis.
The ‘Russian Threat’
Playing up the Russian threat is a cynical ploy to sign up EU member states to rearmament. The EU talks up its opposition to Russia but, incredibly, in 2024, Europe was spending more money on Russian fossil fuels than on financial aid to Ukraine! The EU is estimated to have bought €22bn of fossil fuels from Russia in 2024 but gave only €19bn to support Kyiv. Europe has slashed its imports of piped Russian gas since the start of the Ukraine war but has kept up shipments of super-chilled gas from Russia. Use of LNG in the EU, and the UK, has grown dramatically since the start of the war in Ukraine. Russia was the number two LNG exporter to Europe last year.
Regarding Ireland and the threat of Russian cyber-attacks, spending millions on defence ships and sea cables may also be a bit of a red herring. Upgrading existing public service old IT systems is much more urgent. According to one expert, the debilitating cyber-attack on the health service two years ago could have been avoided had old IT systems and applications been upgraded.
Now the ‘existential threat’ has become Iran. It was Israel who attacked Iran on 13 June, to which Iran retaliated. Yet the EU’s reaction to Israel’s first strike on Iran was that Iran is not playing by the rules and it is its nuclear capability which needs to be stopped. While Israel, it seems, has a permanent right to self-defence, other states don’t. We can expect more of the demonisation of Iran if this escalates.
Imperialist Players
The catalyst for increased military spending has been rising ‘geopolitical tensions’ – in Marxist terms, heightened imperialist rivalry. The immediate backdrop to militarisation and increased arms manufacture has been war Ukraine and Israel’s genocide in Gaza – in which the US and Europe are major imperialist players.
Total EU support to Ukraine since the beginning of Russia’s war of aggression has amounted to almost €147.9 billion, of which €50.3 billion in military assistance measures. Ukraine has become Europe’s arsenal and arms manufacturers are hugely benefitting.
The valuation of European defence firms – Germany’s Rheinmetall, France’s Thales, Italy’s Leonardo – has soared since Russia’s invasion of Ukraine. Trump’s shift away from Europe to taking on China – itself a shift in imperialist realignment – has become the pretext to turbocharge European rearmament. The EU seeks now to mark out its own sphere of influence and assert more openly its imperialist ambitions.
Neighbouring states – which Russia grandiosely calls ‘its near abroad’ – may feel a bit fearful, after Russia’s bloody war in Ukraine, about exactly what threat Russia poses. But ramping up the war with arms will only prolong the suffering and feed into NATO’s agenda to expand its presence in eastern Europe. EU talk of supporting ‘the free world’ in supporting the war in Ukraine rings hollow when it has so obviously sided with US imperialism in its proxy war with Russian imperialism. Given that Trump’s idea of peace was to rob Ukraine of its resources, and that any peace emanating from the White House amounts to new forms of colonialism, it would not be hard for the EU to be less pro-the US and to to put forward a genuine path to a ceasefire. But its anti-Russian stance is so entrenched that that this is ruled out.
The EU’s unwavering support for Israel is part of the same trend. The EU is the second-largest arms supplier to Israel – after the US – led by almost fanatical support by Germany. The largest Israeli arms companies – Elbit and Israel Aerospace Industries (IAI) – receive funding from the EU. A European subsidiary of Israel Aerospace Industries is involved in 15 EU defence projects, including a multi-million-euro drone development programme co-funded by European governments. The list goes on. The genocide in Gaza, backed by western support for 20 months now, is funded with millions from EU defence funds with Germany providing one third of Israel’s arms.
Military Keynesianism
Governments in the EU and the UK are delighted with the rebirth of the war economy. Starmer’s government wants to see more military spending in what they see as a comeback of the state. Military Keynesianism will provide more jobs and be good for everyone. Bronwen Maddox, director of the Chatham House think tank, claims that defence spending is of the ‘greatest public benefit’ because it is necessary for defending democracy. This switch to an emphasis on common European defence allows the UK to become a major European player again.
For Germany, rearmament could not have come at a better time. Its top ammunition maker, Rheinmetall, is planning to repurpose struggling car plants – including Volkswagen’s factory in Osnabrueck – to mostly make defence equipment. The switch from cars to tanks is expected to provide a much-needed boost to the sluggish German economy. No wonder Mehr says that with rearmament, ‘Germany is back’.
The cynicism of capitalism knows no bounds. At the risk of stating the obvious, military Keynesianism is against the interests of working people and making arms in the name of creating jobs defies all logic.
This aside, military Keynesianism, Michael Roberts argues, cannot be a solution for the real problem of capitalism – its declining profitability. Only a full-scale war can deliver the required destruction of past accumulation of capital that is no longer profitable to employ. This is what Roberts claims was key in creating the post second world war boom, not arms production.
Capitalism and the Arms Economy
Other Marxists in the era of the cold war took a slightly different view about the role the arms economy played for capitalism. British based Marxist, Mike Kidron, writing in the early 1960’s sought to explain the sustained boom of western capitalism after the second world war. He identified investment in the arms industry as a state directed means of sustaining growth rates, avoiding slumps and offsetting the tendency for profit rates to fall.
A short digression into Marx here. The tendency of the rate of profit to fall, Marx noted, was a central feature of capitalist accumulation. This may seem counterintuitive to us today as profits of some sectors of the economy soar. Nevertheless, this tendency goes some way to explaining a major inherent problem with the capitalist system – that of over accumulation.
Competition between individual capitals leads capitalists to invest more in the means of production (plant, machines, technology and equipment) or constant capital – than in labour power, variable capital. But labour power is the source of profit. If investment in constant capital grows more quickly than labour, there will be a downward pressure on the rate of profit. This contradiction thwarts the development of capitalism, is a threat to the production process itself and contributes to crises of the system.
Marx also noted however that other things could temporarily offset the rate of profit to fall. Getting more value out of workers – increasing the working day, cutting wages and so on; a fall in the costs of machinery, technology, raw materials; and finally economic crises themselves which allowed larger capitalist to scoop up other companies on the cheap and thereby restore their own rates of profit.
Kidron’s valuable insight was to show how the permanent arms economy in the cold war period was another means of temporarily offsetting the falling rate of profit. The production of arms avoided the logic of other commodities which flow back into the system via consumption. Surplus value which would otherwise be productive capital is diverted into producing commodities which are either stockpiled or destroyed. In an early formulation of his theory, Kidron put it quite starkly “Since arms are a luxury in a sense that they are used neither as instruments of production nor as a means of subsistence, in the production of other commodities, their production has no effect on profit rates overall”.
Kidron’s theory may have had some shortcomings, in particular overstating the development towards national state capitalism. It was precisely the internationalisation of private and finance capital, not state capitalism, which would later become the hallmark of the neoliberal period.
Nevertheless, what Kidron’s theory provides is an explanation of increased arms production in terms of the workings of capitalist accumulation and its direction by the capitalist state, both east and west. In the case of China whose arms spending will increase by 7.2% this year, situating this as a logical outcome to China’s status as a rising imperialist rival to the US, this is an important insight. Despite Kidron being critical of some aspects of Lenin’s understanding of imperialism, his theory is based on the classical Marxist precept which sees military spending as the logical extension of inter-imperialist rivalry.
Is the permanent arms economy theory relevant to today? Military spending today has significantly grown – but as a proportion of global GDP it amounts globally to 2.5% – somewhat lower than the cold war global figure of 8-9%. Rises in productivity have reduced the economic weight of arms manufacturing – and probably also, as Alex Callinicos points out, the capacity to offset as much the falling rate of profit. However if further escalation and militarisation occurs, that may change.
Capitalism and War
What we can be sure of is that capitalism and war are tied together. We are living in a world in which our governments under the direction of the EU have rowed full in behind war and genocide for their own interests. Since its foundation, the EU has always been a key player for US imperialism, but this dimension is far more open today. For them the defence of liberal capitalism demands large scale military spending even if this goes against some of the tenets of the liberalism they defend.
This, along with increasing inter-imperialist rivalry, is what lies behind governments shifting to military Keynesianism. State intervention is welcomed as a means to end austerity and to boost the economy. The problem is that the state is a capitalist state and state-sponsored strengthening of the arms economy is about boosting profits through the production of weapons of death and destruction. Does Ireland, with its tradition of neutrality and anti-colonial past, want to be part of that? Does it really want to be pulled into a justification for war on EU terms?
Rearmament is a social cul-de-sac. However it is dressed up, it inevitably leads to longer wars and more wars, more deaths. Already, EU governments siding with Israel’s genocide of the Palestinian people has shocked the peoples of Europe, who demonstrate in their thousands, often in the face of state repression, at their governments and the EU’s complicity. This alone has dented the credibility of our rulers.
The EU, up until now, has relied on vague notions of a social and liberal Europe to bolster its political stability. A militarised, war-embracing Europe, which rules out neutrality and silences resistance, has more than echoes of the 1930’s and may just be a step too far. Wars in the past have been the undoing of ruling orders. Across the countries of Europe, we need to build opposition to war and make it so again.