How Europe debt crisis affects Africa

Against the backdrop of the ongoing debt crisis in Europe, the Nato leaders and observers raised concerns that the bloc’s capabilities would be weaken by massive fiscal austerity in European countries. Moreover, unbalanced defence spending among Nato members may split the alliance from within.

To cope with heavy pressure on defence budgets, Nato highlighted the importance of “smart defence”, urging for sharing defence resources together with limited money. But experts pointed out that there would be many difficulties and great uncertainty in implementing this strategy. In 2011, European Union’s deficit/GDP ratio remained at a high level of 4,5 percent, according to the European Commission. Under heavy pressure from sovereign risks, European nations have been experiencing large-scale fiscal austerity, which has been causing many Nato member countries to slash defence spending.

Hence, defence budget shortfall becomes a focus of the current Nato summit and is being discussed widely by participants, who are challenged by this predicament. The impact of the European debt crisis to defence and security was expected to be the theme of the first discussions at the Chicago summit, said the bloc’s Secretary General Anders Fogh Rasmussen on Saturday.

During the period from 2008 to 2011, 20 out of 28 Nato members cut their defence spending, with reduction even in giant players such as France, Britain and German, said Nato. Due to sovereign debt crisis, military expenditures in central and west Europe declined 1.9 percent in 2011, with Greece, Spain, Italy and Ireland seeing the largest cuts, according to the latest data from the Stockholm International Peace and Research Institute (SIPRI), which has considerable influence on Nato’s policy.

The United State, Nato’s biggest military provider, also cut its military expenditure by 1,2 percent to US$711 billion. With fiscal reduction continuing, a further cut in military spending in Europe and the US is expected, noted SIPRI. In addition, analysts said that opposition from voters against reduction in welfare might cause some European governments to cut more defense spending to realise austerity goal.

As fiscal austerity is underway, the Nato summit participants and analysts are increasingly concerned about its negative impacts on the bloc. On one hand, Nato’s military capabilities would be weakened by European countries’ constant defence spending reduction. Since economy and security are interlinked, a weak economy suggested fewer resources for security, Rasmussen. The budgets reduction in many European states could adversely affect military readiness, Nato Supreme Allied

Commander for Europe James Stavridis cautioned.
The reduction of defence spending in some European countries would limit their defence and security purchase and affect Nato’s whole allying system, Hung Q Tran, Deputy Managing Director of Institute of International Finance, told Xinhua.

Debt crisis consumed a huge amount of time and energy on the part of European leaders, so they’re always “preoccupied” at every European meeting on the debt crisis, Steven Pifer, a senior fellow at Brookings Institution, told Xinhua.
On the other hand, unbalanced defence spending among Nato countries might divide the alliance. Due to severe debt problems, the gap between the United States and its European allies is steadily growing, with America accounting for about 75 percent of all Nato military spending, up from less than 50 percent before 2010.

Vast numbers of Nato members are not able to sustain benchmark of 2 percent of GDP allocated to defence needs, signalling the majority of Nato members will not be able to reach further defence transformation and modernisation levels. To deal with the defence budget shortfall, Nato has introduced an ambitious “smart defence” initiative, urging for better spending and better investment for money available to help allies to preserve capabilities and to deliver new ones.
“Smart defence” encourages Nato members to share defence burden by multinational approaches and solutions to undertake the alliance’s essential core tasks

agreed at the Lisbon summit in 2010, including ballistic missile defence, intelligence, surveillance and reconnaissance, maintenance of readiness, training and force preparation, effective engagement and force protection, and so on. The new strategy, recommended strongly by Rasmussen, was welcomed by many Nato countries.

There is need for the Nato member nations to invest in new technology to support their goals in an era of budget constraints, US President Obama said Sunday afternoon in his opening remarks at the summit.
Debt crisis is one of the big drivers for “smart defence”, said Pifer, adding that Nato has to focus on more effective ways in using defence budget to produce more

capabilities. To avoid an alliance divided into first and second-class armies, Nato plans to launch more than 20 joint projects to share costs of military hardware and

promote a new mindset on weapons buying.
However, analysts hold that there are still many difficulties and great uncertainty in achieving “smart defense” goal, with Pifer questioning whether Nato could pool enough resources. In addition, sharing defence means some Nato nations have to sacrifice a degree of sovereign control in return for a less lopsided military bloc, which may face resistance from opposition politicians and public. Under the “smart defence” framework, European nations are required to bear more defense burden as the United States is shifting more defence tasks to them. But Europe’s weaker economic growth can’t afford it. — Xinhua