1 00:00:02,440 --> 00:00:09,600 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. I'm Caroline Hepkee, and 2 00:00:09,680 --> 00:00:12,680 Speaker 1: this is Here's Why, where we take one news story 3 00:00:12,920 --> 00:00:15,360 Speaker 1: and explain it in just a few minutes with our 4 00:00:15,400 --> 00:00:21,200 Speaker 1: experts here at Bloomberg. In nineteen eighty nine, the Berlin 5 00:00:21,280 --> 00:00:26,720 Speaker 1: Wall fell and the US became the world's only military superpower. NATO, 6 00:00:26,920 --> 00:00:30,240 Speaker 1: the alliance that was founded forty years earlier on a 7 00:00:30,280 --> 00:00:35,400 Speaker 1: pact of mutual defense, had effectively achieved its aim. But 8 00:00:35,560 --> 00:00:39,080 Speaker 1: now that same alliance faces a new threat from its 9 00:00:39,120 --> 00:00:43,640 Speaker 1: old adversary, and possibly another one from its largest member. 10 00:00:44,479 --> 00:00:48,800 Speaker 1: Russia's invasion of Ukraine has created an inflection point for 11 00:00:48,920 --> 00:00:52,080 Speaker 1: the military alliance. It's something That's been made all the 12 00:00:52,200 --> 00:00:57,040 Speaker 1: more acute by Donald Trump's frequent criticism, both whilst he 13 00:00:57,160 --> 00:00:59,320 Speaker 1: was in office and now that he's running for a 14 00:00:59,400 --> 00:01:01,240 Speaker 1: second I have. 15 00:01:01,320 --> 00:01:08,360 Speaker 2: Been very very direct with Secretary of Staltenberg and members 16 00:01:08,400 --> 00:01:12,360 Speaker 2: of the Alliance in saying that NATO members must finally 17 00:01:12,400 --> 00:01:20,480 Speaker 2: contribute their fair share and meet their financial obligations. NATO 18 00:01:20,600 --> 00:01:23,560 Speaker 2: was busted until I came along. I said, everybody's going 19 00:01:23,560 --> 00:01:26,240 Speaker 2: to pay. They said, well, if we don't pay and 20 00:01:26,280 --> 00:01:29,600 Speaker 2: we're attacked by Russia, will you protect US. I said, 21 00:01:29,840 --> 00:01:34,319 Speaker 2: you didn't pay. You're delinquent. He said, yes, let's say 22 00:01:34,319 --> 00:01:36,920 Speaker 2: that happened. No, I would not protect you. In fact, 23 00:01:37,000 --> 00:01:39,720 Speaker 2: I would encourage them to do whatever the hell they want. 24 00:01:39,760 --> 00:01:43,080 Speaker 1: You got to pay. This summer, advisors for the Republican 25 00:01:43,120 --> 00:01:47,840 Speaker 1: presidential nominee floated the idea of demanding that NATO allah 26 00:01:47,880 --> 00:01:51,200 Speaker 1: Is spend three percent of their GDP on defense, a 27 00:01:51,240 --> 00:01:54,720 Speaker 1: warning shot that signals even more tension if the former 28 00:01:54,800 --> 00:01:58,960 Speaker 1: president does return to the White House. So here's why 29 00:01:59,160 --> 00:02:03,200 Speaker 1: Europe is unprepared to defend itself and why it may 30 00:02:03,280 --> 00:02:09,120 Speaker 1: need to. Joining me now to discuss is Bloomberg's executive editor, 31 00:02:09,160 --> 00:02:13,919 Speaker 1: Flavia Kraus Jackson, who oversees our EMEA and Latin America 32 00:02:14,040 --> 00:02:18,000 Speaker 1: Economics and government coverage. Lavia, thank you so much. How 33 00:02:18,080 --> 00:02:20,320 Speaker 1: much of a concern is it in Europe that a 34 00:02:20,360 --> 00:02:25,240 Speaker 1: Trump administration could pull the US back from its native commitment? 35 00:02:25,480 --> 00:02:27,920 Speaker 3: Short answer is extreme worry. And I think you know, 36 00:02:28,080 --> 00:02:31,400 Speaker 3: is your able to defend itself? Actually we can't. There's 37 00:02:31,440 --> 00:02:35,000 Speaker 3: been chronic underfunding on the defense spending. And you can 38 00:02:35,120 --> 00:02:39,000 Speaker 3: argue that Trump, with his sort of outlandish talk, has 39 00:02:39,080 --> 00:02:42,160 Speaker 3: actually given Europe the proverbial kickup to bottom that it needed. 40 00:02:42,240 --> 00:02:43,800 Speaker 3: And you know, even when you look at someone like 41 00:02:43,880 --> 00:02:48,120 Speaker 3: Jen Staltenberg, the outgoing NATO Secretary General, sort of eccentially 42 00:02:48,160 --> 00:02:52,560 Speaker 3: acknowledges that much. And Rutter, who was a former Dutch 43 00:02:52,639 --> 00:02:55,720 Speaker 3: prime minister who's now incoming known as a Trump whisperer, 44 00:02:55,800 --> 00:02:58,280 Speaker 3: has essentially been saying listen, He's been saying the quiet 45 00:02:58,320 --> 00:03:01,399 Speaker 3: part out loud, folks. We really need to be able 46 00:03:01,440 --> 00:03:03,480 Speaker 3: to do it. I mean, the problem, of course is 47 00:03:03,560 --> 00:03:07,160 Speaker 3: having diagnosed the problem, how do you fix it? Because 48 00:03:07,560 --> 00:03:11,000 Speaker 3: the essential problem here is that you have twenty first 49 00:03:11,040 --> 00:03:14,480 Speaker 3: century wars with twenty century kit and there wasn't really 50 00:03:14,639 --> 00:03:18,359 Speaker 3: an understanding of where the conflict would be. Like hindsight 51 00:03:18,400 --> 00:03:21,800 Speaker 3: being twenty twenty, we all remember President Macran saying that 52 00:03:21,880 --> 00:03:24,960 Speaker 3: NATO was brain dead. We also remember NATO essentially kind 53 00:03:24,960 --> 00:03:28,040 Speaker 3: of putting its focus more in the Middle East with Syria, 54 00:03:28,200 --> 00:03:31,280 Speaker 3: so sort of it didn't almost see coming the conflict 55 00:03:31,280 --> 00:03:34,320 Speaker 3: in Ukraine, even though the writing was kind of on 56 00:03:34,360 --> 00:03:37,680 Speaker 3: the wall terms of Russian expansionism right twousand and eight, 57 00:03:37,720 --> 00:03:43,040 Speaker 3: Georgia twenty fourteen, Annexation of Crimea twenty twenty two, sending 58 00:03:43,040 --> 00:03:45,000 Speaker 3: the jets to Syria. So there's a question of why 59 00:03:45,080 --> 00:03:47,920 Speaker 3: NATO hadn't pivoted in the way it should have. 60 00:03:48,240 --> 00:03:51,200 Speaker 1: And even to me a non defense expert, I can 61 00:03:51,280 --> 00:03:55,800 Speaker 1: see from the data, you know, how few planes, how 62 00:03:55,920 --> 00:03:59,480 Speaker 1: few ships. The comparison between Europe, the US and other 63 00:03:59,520 --> 00:04:05,000 Speaker 1: countries China, for example, it is starkly illustrated. How big 64 00:04:05,080 --> 00:04:08,080 Speaker 1: is Europe's fighting force? Does it have the capability then 65 00:04:08,240 --> 00:04:11,840 Speaker 1: to act without US backing the other? Big big question? 66 00:04:12,320 --> 00:04:14,520 Speaker 3: It simply can't, right, I mean, and you're sort of 67 00:04:14,520 --> 00:04:16,719 Speaker 3: scraping the barrel right now. Twenty three out of the 68 00:04:16,760 --> 00:04:20,200 Speaker 3: thirty two members are hitting the two percent target. Even 69 00:04:20,200 --> 00:04:22,120 Speaker 3: if they were to up this to three point five, 70 00:04:22,520 --> 00:04:25,720 Speaker 3: it still wouldn't be enough. You can't conjure an army 71 00:04:25,760 --> 00:04:27,920 Speaker 3: out of nothing. And it's not just about the numbers. 72 00:04:28,160 --> 00:04:30,600 Speaker 3: It's also about the quality of the kit, the training. 73 00:04:30,880 --> 00:04:34,600 Speaker 3: If it's been basically left to gather rust. You're now 74 00:04:34,600 --> 00:04:36,680 Speaker 3: in a situation where you've got the check initiative, you're 75 00:04:36,720 --> 00:04:40,320 Speaker 3: having to revive old Slovak factories. In the meantime, you 76 00:04:40,320 --> 00:04:43,080 Speaker 3: have Putin, who's turned his economy into a war economy, 77 00:04:43,120 --> 00:04:46,800 Speaker 3: pumping the money. So Europe simply isn't able to keep 78 00:04:46,880 --> 00:04:49,520 Speaker 3: up with that, And the most important point is is 79 00:04:49,600 --> 00:04:53,880 Speaker 3: you as willing to keep its commitment because as we 80 00:04:53,880 --> 00:04:56,880 Speaker 3: well know, there could be a change of God. Trump 81 00:04:56,960 --> 00:04:59,960 Speaker 3: is the worst case scenario for Zelenski. But I don't 82 00:05:00,000 --> 00:05:01,520 Speaker 3: I think we should assume that things are going to 83 00:05:01,560 --> 00:05:05,039 Speaker 3: be that much better under a Harris administration, especially when 84 00:05:05,040 --> 00:05:07,720 Speaker 3: you see it to a degree what some might say 85 00:05:07,760 --> 00:05:10,480 Speaker 3: the double standard. I mean, if you have a crisis 86 00:05:10,480 --> 00:05:13,760 Speaker 3: in Israel with Hamas and Hizbola, you're essentially giving a 87 00:05:13,800 --> 00:05:17,520 Speaker 3: carte blanche to NITAYAHUO. No matter how tense that relationship is, 88 00:05:17,560 --> 00:05:20,320 Speaker 3: it's still the more important relationship. It's still seen as 89 00:05:20,400 --> 00:05:23,159 Speaker 3: much more vital to the US, and the US simply 90 00:05:23,279 --> 00:05:26,400 Speaker 3: cannot sort of be the world's policeman of fighting two 91 00:05:26,440 --> 00:05:28,960 Speaker 3: conflicts and potentially even a third one in Taiwan. 92 00:05:29,240 --> 00:05:32,320 Speaker 1: The head of the UK's Armed Forces has talked about 93 00:05:32,360 --> 00:05:34,839 Speaker 1: the need to be ready for a major direct conflict 94 00:05:34,839 --> 00:05:37,680 Speaker 1: by twenty twenty seven. This's got a lot of eyeballs. 95 00:05:38,120 --> 00:05:40,840 Speaker 1: You know that it was so soon, you know, a 96 00:05:40,920 --> 00:05:43,560 Speaker 1: major war increasingly likely for Europe. 97 00:05:43,839 --> 00:05:46,280 Speaker 3: Yeah, absolutely, twenty twenty seven is the sort of the 98 00:05:46,360 --> 00:05:48,400 Speaker 3: day that everyone has in mind in terms of when 99 00:05:48,440 --> 00:05:52,159 Speaker 3: potentially China decides that's when it's going to go for it, right, 100 00:05:52,320 --> 00:05:54,800 Speaker 3: So that data is sort of out there in the ether. 101 00:05:54,920 --> 00:05:56,600 Speaker 3: But you know, there was also the words of a 102 00:05:56,680 --> 00:05:59,960 Speaker 3: General Sir Patrick earlier this summer that kind of revives 103 00:06:00,120 --> 00:06:03,400 Speaker 3: question about UK conscription. Right, if you think back, it 104 00:06:03,440 --> 00:06:05,440 Speaker 3: was in the Great Wars that there was a conscription 105 00:06:05,680 --> 00:06:08,000 Speaker 3: and some of his words were slightly misinterpreted, but he 106 00:06:08,120 --> 00:06:12,640 Speaker 3: essentially reintroduced the topic of like how fit is the UK, 107 00:06:13,200 --> 00:06:15,640 Speaker 3: especially sort of post Brexit. Right, you have France, it's 108 00:06:15,640 --> 00:06:18,599 Speaker 3: the nuclear power, you have the UK. You have Germany 109 00:06:18,680 --> 00:06:21,480 Speaker 3: for all sorts of reasons that we know well is 110 00:06:21,480 --> 00:06:24,240 Speaker 3: an economic power, but not a military one in spite 111 00:06:24,279 --> 00:06:26,360 Speaker 3: of having committed one hundred billion. That's a very long 112 00:06:26,440 --> 00:06:29,640 Speaker 3: term concept. So when you're looking at the numbers, what 113 00:06:29,800 --> 00:06:32,320 Speaker 3: could France and the UK can draw between themselves in 114 00:06:32,440 --> 00:06:35,159 Speaker 3: terms of men and within a month you're looking at 115 00:06:35,160 --> 00:06:38,880 Speaker 3: maybe twenty thousand for France and about thirty twenty thousand 116 00:06:38,880 --> 00:06:41,560 Speaker 3: for the UK. That simply isn't very much, especially when 117 00:06:41,600 --> 00:06:45,680 Speaker 3: you sort of compare that to the terrible figures and casualties. 118 00:06:45,720 --> 00:06:49,280 Speaker 3: You know, thirty one thousand Ukrainian casualties, so when you're 119 00:06:49,320 --> 00:06:52,120 Speaker 3: playing the sort of the numbers game, you can see 120 00:06:52,200 --> 00:06:56,120 Speaker 3: how in Russia can play the long game and wait 121 00:06:56,160 --> 00:06:56,520 Speaker 3: it out. 122 00:06:56,800 --> 00:06:59,520 Speaker 1: That was, of course, General Sir Patrick Sanders who made 123 00:06:59,560 --> 00:07:03,160 Speaker 1: that comment around conscription in the UK, and you only 124 00:07:03,200 --> 00:07:05,839 Speaker 1: have to look at the newspaper coverage at the time 125 00:07:05,920 --> 00:07:10,240 Speaker 1: of those comments that understand the gap between public understanding 126 00:07:10,400 --> 00:07:12,960 Speaker 1: and this kind of reporting and what the military and 127 00:07:13,000 --> 00:07:15,600 Speaker 1: what the defense industry is kind of thinking about. My 128 00:07:15,680 --> 00:07:19,280 Speaker 1: thanks to Bloomberg's executive editor Flavia kraus Jackson for joining 129 00:07:19,320 --> 00:07:23,120 Speaker 1: us for more explanations like this one from our team 130 00:07:23,240 --> 00:07:26,560 Speaker 1: of two thousand, seven hundred journalists and analysts around the world. 131 00:07:26,880 --> 00:07:29,720 Speaker 1: Search for Quick Take on the Bloomberg website and the 132 00:07:29,720 --> 00:07:35,000 Speaker 1: Bloomberg Business app. I'm Caroline Hepger. This is Here's Why, 133 00:07:35,240 --> 00:07:38,160 Speaker 1: and we'll be back next week with more. Thanks for listening.