European defense companies seem to benefit from a massive EU in armaments, while the block reacts to an American pivot away from Europe's security under President Donald Trump.
However, the “Rearm Europe plan” of $ 860 billion faces the opposition of Hungary, which argues that the effort to continue to arm Ukraine in its war against the Russian invaders could set up the EU.
Stock gains
Several European defense actions have recorded enormous gains in recent weeks, cutting the general nervousness of the world markets about a potential trade war triggered by American prices.
Germany Rheinmetall, which makes the leopard tank widely used, has seen its stock jump almost 90% since the start of the year. The actions of the British weapon manufacturer BAE Systems have increased by more than a third, while Leonardo Italian and the French company Thales have also increased sharply.
Europe pushes to strengthen its own defenses after Washington said that European security is no longer a priority, said Tim Oshsner, a main merchant of the Wolfgang Steubing Ag Bank in Germany.
“The stock market has also realized that Europe is more alone and must defend itself accordingly – and that the United States has taken a rear seat as a reliable partner. In this regard, armaments and defense expenses should be higher and values are set accordingly, “Oechsner told Reuters.
Rearmed plan in Europe
US President Donald Trump has long called Europe to spend more on his own defense, arguing that Washington should no longer pay the bill.
Meeting in Brussels on Thursday, the leaders of the European Union, alongside the Ukrainian President Volodymyr Zelenskyy, approved the “Rearm Europe plan” of $ 860 billion, which will be funded by EU obligations and the periods of loans and expenses.
The block has shown in the past that it had the capacity to act quickly, said Mattia Nelles of the consulting company based in Dusseldorf, the German-Ukrainian office.
“Money is less a problem than resolution. We saw after Corona, after Cavid, that Europe and the EU were able to quickly mobilize hundreds of billions of euros, “he told Voa.
In addition to EU plans, Individual nation states also accelerate defense expenses. Friedrich Merz, who should be the next German Chancellor after his Christian Democrats won the largest share of votes in the elections of last month, have committed to soften the nation's strict borrowing rules, known as the “debt braking”.
“I want to be very clear here. The concept of “everything you need” must also opt for our defense now, taking into account threats to our freedom and our peace on our continent, “Merz told Berlin this week.
The Trump administration’s decision to end military aid to Ukraine and restrict the use of certain American manufacturing weapons stimulates Europe’s desire to strengthen its own capacities.
The stock prices of many European weapons companies have climbed this year, the prices of several US defense companies have decreased.
“It is important that the money we spend remains at least in Europe. We should not buy American weapons systems with him, “said Robert Halver, head of capital markets for the analysis of Baader Bank's Baader, in an interview with Reuters.
Ukrainian support
European leaders also undertook to continue to support Ukraine. In a five-point plan, he accepted on Thursday, the EU is committed to providing Ukraine $ 33 billion this year and said there should not be any cease-fire negotiations without the Ukrainian officials present.
But can the continent strengthen its defenses while supporting kyiv's forces in his war against the Russian invasion? Mark Galeotti, executive director of Mayak Intelligence and author on Russia, said that European rearmament would take time.
“Most of this cannot really affect the situation on the ground, for months or even years to come,” he said. “You do not build a defense-industrial complex overnight. This is not something that will suddenly manifest itself – and will certainly have no direct impact on the war of Ukraine. “”
Hungarian opposition
All Europeans are not on board Brussels plans. Hungary has expressed its opposition to continuous support for Ukraine. Hungarian Prime Minister Viktor Orban refused to sign the declaration of end leaders, he was therefore approved by the remaining 26 member states.
In an interview on Hungarian television on Friday, Orban warned that Europe could not afford to support Kyiv.
“If you say that war should continue, someone has to finance this. Now that the Americans are leaving, it will cost us a lot. If Europeans want to continue like this, our last penny will be spent on this war, “said Orban.
The European Union officials rejected the allegations that the opposition of Hungary revealed a lack of unity.
“We all want peace. The difference is that 26 (Member States) believe that the path of peace is to strengthen Ukraine's defense capacity. Hungary is isolated from this consensus; He is alone. A country alone does not create a division, “said the president of the European Council on Friday, Antonio Costa.
Apart from the EU summit, the demonstrators demanded that Europe enter $ 200 billion in Russian assets currently frozen in European banks and use the money to defend Ukraine. Although the idea obtains support, several European governments fear that such a decision may have an impact on global confidence in the euro as a reserve currency.
