Summary:
Europe is shifting toward military Keynesianism, increasing defence spending in response to geopolitical tensions, particularly Russia’s war on Ukraine. While this approach aims to revive economies through state-supported arms manufacturing, it neglects urgent needs like climate action, social equality, and public infrastructure investment. Critics argue that military spending is a weak engine for long-term growth and deepens Europe’s fossil fuel dependence, undermining efforts to counter Russian aggression through sustainable energy transitions. A Green New Deal is proposed as a more effective strategy for fostering economic resilience and geopolitical stability.
What This Means for You:
- Economic priorities: Defence spending may divert resources from critical sectors like healthcare, education, and renewable energy, impacting long-term societal benefits.
- Climate action: Increased military investment could delay Europe’s green transition, perpetuating reliance on fossil fuels and exacerbating climate challenges.
- Job creation: Military spending creates fewer jobs compared to investments in green energy or public services, limiting economic inclusivity.
- Future outlook: Prioritizing a Green New Deal over military Keynesianism could strengthen Europe’s energy security and reduce dependence on petrostate regimes.
Original Post:

 
Author: Grace Blakeley, Economist, Author & Journalist
As Russia’s war on Ukraine rages on Europe’s eastern frontier, the continent’s leaders are finally willing to admit they have the power to revive their ailing economies. After decades of austerity, they are ready to spend again – but not to end poverty, accelerate decarbonisation, or reverse the collapse of essential public services. Instead, Europe’s fiscal firepower is being directed toward tanks, missiles and fighter jets. Reorganising the economy around state-supported defence spending is known as military Keynesianism, though John Maynard Keynes – who rose to prominence by condemning the punitive post-World War I peace treaty that was imposed on Weimar Germany, which ultimately helped set the stage for Hitler’s rise and another war – would probably not have endorsed the term.
The reasoning behind the resurgence of military Keynesianism is not entirely without merit, as the pursuit of austerity policies has left many European economies punching below their weight. European productivity, which has grown at half the pace of the US over the past decade, declined by one percent in 2023. Real wages fell by 4.3 percent in 2022 and 0.7 percent in 2023, following a decade of stagnation. Meanwhile, investment is nowhere near where it needs to be to tackle the twin crises of inequality and climate breakdown. Europe’s self-defeating commitment to austerity is epitomised by the German doctrine of ‘schwarze Null’ (black zero).
Even when Germany’s economic miracle was in full swing, politicians refused to invest in long-term growth. As a result, Germany – like most of the continent – has suffered from chronic underinvestment in physical and social infrastructure, constraining productivity.
The arms industry
Against this backdrop, rearmament may look like an easy fix. Unlike social expenditure, defence spending faces little political resistance. It enables politicians to appear tough – a valuable asset in an age of strongman politics – and keeps the arms industry, a powerful lobby with deep ties to political elites, flush with public money.
Modern militaries are among the planet’s largest institutional fossil-fuel consumers
But military Keynesianism is a dead end – both economically and politically. For starters, it is a weak engine of long-term growth. Modern weapons production relies on advanced manufacturing processes that use relatively little labour, so the industry has low multipliers compared to investments in health, education or green energy. It creates fewer jobs per euro spent and contributes little to the broader economy’s productive capacity. Military Keynesianism also deepens Europe’s dependence on fossil fuels, given that modern militaries are among the planet’s largest institutional fossil-fuel consumers.
Expanding defence capabilities means locking in demand for carbon-intensive technologies at a time when Europe should be phasing them out. Worse still, prioritising defence over decarbonisation sustains the very system of petropolitics that gives regimes like Russian President Vladimir Putin’s the resources to wage war in the first place.
As the Guardian reported earlier this year, the European Union has spent more on Russian fossil-fuel imports over the past three years than it has on financial aid to Ukraine. If the EU is serious about defeating Russia – not just on the battlefield, but geopolitically – then the bloc must confront the real source of the Kremlin’s power: oil and gas exports. Russia, after all, is a petrostate, and its war machine is financed by the revenues that flow from Europe’s addiction to fossil fuels. Oil and gas revenues have accounted for 30–50 percent of Russia’s federal budget over the past decade and still represent roughly 60 percent of its export revenues. These industries provide the vital dollars that enable Russia to import military technologies and other critical inputs. Without that income, the Russian economy would quickly collapse under the weight of hyperinflation.
A green transition
The most effective long-term strategy for countering Russian aggression, then, is not to ramp up military spending but to accelerate the green transition. What Europe needs is a real Green New Deal: a democratic, continent-wide mobilisation to decarbonise the economy, ensure energy security and create millions of well-paying green jobs. To be sure, this would require massive investment in renewable energy, public transit, retrofitting, and industrial electrification. It would also mean reshaping supply chains, restoring public ownership of key infrastructure, and breaking the stranglehold of fossil-fuel capital on European politics. But a Green New Deal would do more to strengthen the EU’s geopolitical standing than any number of new tanks and artillery shells. A Europe that produces its own clean energy, builds resilient green industries, and reduces its dependence on volatile global commodity markets is a Europe that cannot be held hostage by petro-tyrants.
Europe’s political elite faces a stark choice: continue propping up a broken growth model by funnelling public money into the military-industrial complex, or invest in a liveable future rooted in solidarity, sustainability and democratic control. In the long run, building an inclusive green economy is the only way to counter the rage and alienation fuelling the rise of far-right forces – the greatest and most immediate threat to Europe’s democracies.
Extra Information:
The Guardian report on EU fossil fuel imports highlights the financial ties between Europe and Russia, underscoring the need for energy independence. EU Green New Deal outlines the European Commission’s roadmap for sustainable growth, emphasizing the intersection of environmental and economic policies.
People Also Ask About:
- What is military Keynesianism? Military Keynesianism refers to economic policies that use defence spending to stimulate growth, often at the expense of other sectors like healthcare or education.
- How does defence spending impact climate change? Defence industries are major fossil fuel consumers, increasing carbon emissions and delaying green energy transitions.
- What is the European Green New Deal? A comprehensive EU initiative aimed at achieving carbon neutrality, energy security, and economic inclusivity through sustainable investments.
- Why is Russia considered a petrostate? Russia’s economy heavily relies on oil and gas exports, which fund its government and military operations.
- What are the risks of austerity policies? Austerity leads to underinvestment in critical sectors, stifling economic growth and exacerbating inequality.
Expert Opinion:
Military Keynesianism is a short-term fix that fails to address Europe’s long-term challenges. A Green New Deal offers a transformative pathway to economic resilience, energy security, and geopolitical stability, countering both climate change and authoritarian regimes like Russia’s.
Key Terms:
- Military Keynesianism
- European Green New Deal
- Defence spending impact
- Fossil fuel dependence
- Russia’s petrostate economy
- Sustainable energy transition
- European economic resilience
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