Episode 40: Rearmament: Growth Engine or Costly Illusion

00:00:01: This is part three of a mini-series on the rearmament of Europe.

00:00:06: In the first two episodes, we looked at Ukraine where people face the daily horrors of war.

00:00:13: We spoke to a kindergarten teacher in the west of the country and a psychologist from The International Committee Of The Red Cross in Kiev.

00:00:31: If you haven't listened to the first two episodes, it's best start there.

00:00:37: Once it was a factory that made railway carriages now its place where parts for battle tanks are manufactured.

00:00:47: Görlitz in Germany is an example of how the defence industry is transforming pre-existing economic infrastructure To increase production capacity.

00:00:57: Some former employees have find new jobs while others can stay on perform their tasks.

00:01:04: The same is true in Brittany, France.

00:01:07: Until recently two hundred and eighty-five people were employed at an iron foundry there producing parts for the automotive industry.

00:01:16: In the future however it will be making ammunition.

00:01:20: Apart from forty People everyone Is set to keep their jobs?

00:01:29: It must become capable of defending itself and is ramping up its own defence industry.

00:01:41: Therefore, the EU has presented a security plan called Readiness- Twenty Thirty in the form of special fund.

00:01:49: This enables EU member states to invest more in defence.

00:01:53: The result increased orders for the defence industry.

00:01:57: Will this really create lots more jobs as some people have promised?

00:02:02: To what extent is this shift compatible with the EU's role as a union of peace?

00:02:12: Hello and welcome to We Work Europe, The podcast at the European Centre for Workers' Questions.

00:02:33: Over the past five years –the number of employees in the defence industry has risen by forty-four percent.

00:02:40: according to a McKinsey study It's six hundred thirty three thousand employees across the european NATO member states.

00:02:49: That is equivalent to one-tenth of all workers in agriculture, forestry and fisheries in the EU.

00:02:55: The head of German defence firm Rheinmetall Armin Pappberger recently told a journalist that a large proportion of their new recruits come from the automotive sector mainly because of recent job cuts in that sector….

00:03:09: …and similar skills needed by the defence industry.

00:03:13: However Not everyone will be able to find a secure job in this industry, says Nan Tian.

00:03:20: It won't create jobs but it would not as many jobs than what has been touted.

00:03:25: Nan Tian is program director for military expenditure and arms production at the Stockholm International Peace Research Institute, SIPRI.

00:03:34: Because its become so political that the question of defence or development politicians with loudest voices might be saying things that are completely unsure.

00:03:47: That by increasing defense spending in your EU countries to five percent of GDP, it will I think create nine million jobs and essentially a stimulus for the EU economy is going through essentially sluggish period growth.

00:04:03: The evidence just does not support that.

00:04:05: The defence industry as farmers what we know isn't very labour intensive anymore.

00:04:14: the jobs that transfer is, I mean maybe the current industry but it's similar.

00:04:18: But those that are let say low skilled they will not be able to enter the defense sector because the defense section now currently looking for really high-skilled laborers who look into developing these emerging technologies.

00:04:30: Research indicates increased military spending results in fewer jobs overall.

00:04:36: This is known as crowding out where civilian investment and production get displaced.

00:04:42: Take Russia's defense industry, for example.

00:04:45: It now accounts for thirty-five percent of the overall economy.

00:04:49: The huge spending in twenty-twenty three and twenty-four did help the economy to grow by four percent But it looks like the country has hit a capacity limit.

00:05:00: Productivity is going nowhere fast while inflation and interest rates are through the roof.

00:05:07: Oil and gas money have been used to pay for rearmament so far in russia But falling oil and gas prices, along with sanctions mean that this won't be sustainable for long.

00:05:19: The defence industry is not a major economic driver in the long term except if it creates technologies that can be used for civilian purposes but putting all of eggs into the defence basket would an unbalanced move to the future.

00:05:34: Let's think about short-term effects.

00:05:39: In his academic paper published in November, Nantian uses the idea of a fiscal multiplier to make this point.

00:05:49: This shows how much a country's inflation-adjusted gross domestic product grows when it spends an extra euro on defence.

00:05:57: In both industrialised and emerging economies The multiplier is less than one.

00:06:03: So economically speaking you get back less then invested.

00:06:08: If you invest in health or education instead, You'll get two to four euros back for every one euro.

00:06:15: according To the same research

00:06:18: People get educated.

00:06:20: They can take on let's say higher-skilled jobs with people that are healthier Can work longer and generate more revenue into economy.

00:06:28: In twenty twenty five The German University of Mannheim released a study That examined the economic effects Of military spending.

00:06:37: It concluded that higher defense spending doesn't lead to high production, but rather at a higher dividend payment for the companies involved.

00:06:50: If

00:06:57: you improve transparency oversight it leads to efficiency gains which means there's likelihood money can be saved in the hundreds of billions of dollars that we spent on defense.

00:07:10: And some of our savings can then be repurposed for, let's say development

00:07:13: spending.".

00:07:15: A view that a lot trade unions and social organizations all over Europe share.

00:07:21: The problem is not investment in an army.

00:07:23: it's which we spend what we spend.

00:07:27: Mato Braccialli his vice president of ACLI.

00:07:34: He thinks the EU's investments, as they are right now….

00:07:38: …are a waste of money.

00:07:40: Instead of each country focusing on its own defence and military capabilities... ...they should concentrate on establishing a joint European army.

00:07:48: If you create real cooperation in countries It's normal to have a Europe common defence and the investment could be less than we spend now.

00:08:01: In this way, we can invest on military pillar with social

00:08:05: justice.".

00:08:06: In the previous episode Nantian proved that higher defence spending leads lower investments in social sectors.

00:08:14: investing more efficiently would therefore according to Mato Braccialli save money that could then be used in those areas.

00:08:23: He is not alone with this opinion, some politicians such as Ukrainian President Volodymyr Zelensky and Spanish Prime Minister Pedro Sanchez are among the supporters of this idea.

00:08:36: However it's a new concept.

00:08:38: As early as the nineteen fifties countries were working on such solution Under the banner of the European Defence Community, France, Italy Germany and the Benelux countries were to provide contingents for armed forces under the joint command a common defence ministry.

00:08:57: As is well known this never came to pass.

00:09:01: One reason was that France which had initially launched the idea ultimately have too many reservations about limiting its own military sovereignty in favour of supranational organisation.

00:09:13: During the Cold War, finally cooperation on a military basis did take place.

00:09:19: The UK France Spain Italy and Germany began developing the Jaeger-Ninety – A modern fighter jet manufactured in Europe which would later be renamed the Eurofighter.

00:09:32: .The aim was actually to achieve European independence from arms imports as well as save costs.

00:09:39: However ,the project became increasingly expensive and sales figures fell short of expectations.

00:09:46: The completed fighter jet was prone to errors, and cost too much even for EU member states.

00:09:53: While the Eurofighter Typhoon Jet is still in use –the British Air Force has started decommissioning it.

00:10:01: Since then there have not been new attempts at uniting European military.

00:10:06: Instead individual States focus on national military interests.

00:10:11: Mato Braccialli is concerned about the direction in which the EU is heading.

00:10:19: I think we are creating a new Europe with different value from what we have done over the last eighty years.

00:10:29: He urges us to reflect on the EU as a union of peace.

00:10:34: he challenges popular sayings like, if you want peace prepare for war.

00:10:38: With the words of Pope Leo XIV The current Pontiff If you want peace, you must create institutions of peace.

00:10:47: ACLI is thus working very practically to bring this message to the people.

00:10:53: It created a mobile information station The Caravan Of Peace that travelled through Italy for almost six months in twenty-twenty five stopping at seventy eight places At schools prisons farms and many more

00:11:09: support people to meet each other and talk about the culture of peace.

00:11:13: That is not only a thing that concerns big political things but just every day's action, everyday relationship with others.

00:11:23: For example I went to Sardinia met people from eighty seventeen sixteen years old a connection of the social network.

00:11:36: and we see if you have friends that talk bad to you.

00:11:42: We try to explain, maybe go out from the social networks using bad behaviour... ...and try to reconnect with other people your colleague in good behaviour.

00:11:59: ACLI's way of peace-building can be seen as a grassroots approach on one hand, but also with the goal of the politics of persuasion.

00:12:08: At the end of the tour The Caravan Of Peace stopped in Strasbourg at the European Parliament.

00:12:15: ACLI gave a manifesto to the politicians there.

00:12:20: The most important is to create the House of Peace, a place where people could have relationship and they can train on relationships with other people in peace way.

00:12:34: And the House Of Peace it's just an idea for people that meet each others.

00:12:38: so there are lots ways to do this In jail or school...in the house of retirement.

00:12:47: Mato Braccialli has loads of ideas on how to make a house of peace.

00:12:51: For now, the proposals are with EU members of parliament but he is not waiting around for response.

00:12:58: He's still working hard with ACLI To promote peace and do so via peaceful diplomatic channels.

00:13:08: While Europe isn't at peace The war in Ukraine Is still ongoing.

00:13:13: The EU solidarity is solid But public opinion is split over the widespread rearmament strategy.

00:13:21: Most people agree that we should invest more in defence, but the idea this will bring prosperity and jobs is a bit of gamble as scientific studies show.

00:13:32: They also talk about how uncontrolled rearmement can harm social investment.

00:13:37: It's not just military making EU strong against aggressors.

00:13:42: As trading power for peace.

00:13:45: The European community might perhaps find a way to create a future that is both secure and socially just.

00:13:54: If you'd like to find out more about this topic, I recommend taking a look at the latest issue of the ESA magazine – You'll find the link in show notes!

00:14:20: ESA at easa.org.

00:14:22: WeWork Europe is the podcast from ESA, The European Centre for Worker's Questions which receives financial support from the European Union.

00:14:31: This podcast was narrated by me Rebecca Sharp Script and production by Escucha Audio Identity.