OR Europe enters a new phase, increasing significantly investment in defense and military equipment. But what does it mean to move to a * “war economy” * and what are the consequences of this choice for state societies and economies?

Although a formal definition is absent, the term * “war economy” * describes the organized disposition of resources, productive potential and workforce in the service of military preparation and production – usually in view or during a war.

Changes in industrial production and state control

In *war economy *, industrial activity is turned by consumer goods to armsthe ammunition and military equipment. The development of such technologies requires large investmentoften leading to more centralized government management and more systematic control of industries and resources. Thus, governments set priorities, channeling raw materials and resources available to defense needs.

Winned and lost along the way

Resources in defense touches the whole of society, often at high financial costs and successive phenomena such as increased government spending; lending; inflation and increased taxation. Social welfare and investment in other sectors are often limited.

As Bruegel from Bruegel points out, businesses specializing in military industry, digital and medical technologies are among the key beneficiaries of a war economy. The *shift to a war economy can be a catalyst for scientific and technological innovations ” *, as he points out, with potential benefits for other industries beyond defense.

The modern transition to Europe and the planet

The process of transition to * war economy * varies with the country and circumstances: it can be rapid and imposed by threats or gradually evolve. In the World War II, Germany was systematically preparing, while the US and the United Kingdom were found to respond to new conditions under pressure.

Today, Russia has drastically increased military spending by imposing capital controls and mobilizing industrial and human resources by supporting its war effort, which is accompanied by intense inflationary pressures. Ukraine, with much less economic power, now spent 58% of its budget to military needs, having essentially mobilized the whole society and industry for the country’s defense.

Similar phenomena are observed in countries such as Myanmar, Sudan, Yemen, but also in Middle Eastern states – with Israel also on the list of those who implement extensive changes in their financial operation due to constant conflicts.

The European Answer: To new defense models

The EU, in the face of the restriction of US support for Ukraine, but also in expanded uncertainty in the wider region, is dynamically focused on strengthening the European Defense Industry. Most NATO member states-including European countries-face difficulties in achieving the goal for defensive costs 2% of GDP, which is now considered inadequate.

Characteristics of the turn are the “Rearm Europe” plan announced on March 4 by Commission President Ursula von der Laien: Defense package of 800 billion euros and 150 billion loan to member countries with the aim of upgrading military capabilities. Germany, in order to support the defense industry, has amended restrictions on the state budget by providing more funds.

For Europe, the Prioritize resources available And improving energy access are critical conditions, according to experts. At the same time, transnational cooperation in research and development of new technologies could limit costs and boost the common European defense.

Curated by: George Passas