Dear Reader,
Last week’s NATO summit in The Hague concluded with a landmark decision: allies committed to allocating 5 percent of GDP to defence by 2035, including 3.5 percent for military capabilities and 1.5 percent for defence-related investments, including civilian preparedness. The pledge is much needed and much praised, given the new security situation in Europe and worldwide, and the need to signal to Washington, D.C., that Europe is stepping up to protect itself. However, this is not the end of a months-long debate; it is just the start of a long-term political effort. And we should be under no illusion: in the medium to long term, such a substantial increase in defence spending will inevitably lead to resource constraints elsewhere. This shift will have distributional consequences, the political implications of which we will need to discuss.
Part of the decision is to set a joint goal for the civilian component of defence spending. This is much more than symbolic. My colleagues Helena Quis and Torben Schütz analysed, ahead of the summit, how the 1.5 percent can deliver measurable improvements in European civil preparedness – now more relevant than ever.
Immediately after The Hague, EU leaders convened in Brussels for the European Council – Chancellor Merz’s first at the table. Trade took centre stage, with US tariffs due to resume on 9 July following the 90-day break. My colleague Etienne Höra, together with Arthur Leichthammer from the Jacques Delors Centre, discusses the EU’s approach so far. They argue that this may be the moment to shift to a firmer posture, backed by internal EU cost-sharing, to avoid the emergence of deeper divisions between member states. Some of these divisions had already begun to emerge around the summit.
But EU leaders also turned their attention to the Middle East, in particular the war between Israel and Iran, which has rattled the region and heightened security concerns in Europe as well. While a fragile ceasefire is currently holding after 12 days of open hostilities, the conflict marked a sharp break from the usual proxy tactics to direct military confrontation. In their new publication, my colleagues Christian Hanelt and Nico Zillekens take a close look at how a triangular partnership between the EU, the Gulf Cooperation Council, and other MENA countries could be shaped to contribute to a more stable regional order.
Finally, as record temperatures hit Europe, our team went off to a strategy retreat in Potsdam, looking at a packed working agenda and beyond the immediate challenges Europe is facing. There is plenty ahead this summer. By the time of our next newsletter, Donald Trump’s 9 July tariff deadline will have passed, and the Commission will have published its proposal on the Multiannual Financial Framework. We will be ready to share our take!
Best wishes,
Daniela Schwarzer
Member of the Executive Board
