Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. I'm Caroline Hepkee, and
Speaker 1: this is Here's Why, where we take one news story
Speaker 1: and explain it in just a few minutes with our
Speaker 1: experts here at Bloomberg. In nineteen eighty nine, the Berlin
Speaker 1: Wall fell and the US became the world's only military superpower. NATO,
Speaker 1: the alliance that was founded forty years earlier on a
Speaker 1: pact of mutual defense, had effectively achieved its aim. But
Speaker 1: now that same alliance faces a new threat from its
Speaker 1: old adversary, and possibly another one from its largest member.
Speaker 1: Russia's invasion of Ukraine has created an inflection point for
Speaker 1: the military alliance. It's something That's been made all the
Speaker 1: more acute by Donald Trump's frequent criticism, both whilst he
Speaker 1: was in office and now that he's running for a
Speaker 1: second I have.
Speaker 2: Been very very direct with Secretary of Staltenberg and members
Speaker 2: of the Alliance in saying that NATO members must finally
Speaker 2: contribute their fair share and meet their financial obligations. NATO
Speaker 2: was busted until I came along. I said, everybody's going
Speaker 2: to pay. They said, well, if we don't pay and
Speaker 2: we're attacked by Russia, will you protect US. I said,
Speaker 2: you didn't pay. You're delinquent. He said, yes, let's say
Speaker 2: that happened. No, I would not protect you. In fact,
Speaker 2: I would encourage them to do whatever the hell they want.
Speaker 1: You got to pay. This summer, advisors for the Republican
Speaker 1: presidential nominee floated the idea of demanding that NATO allah
Speaker 1: Is spend three percent of their GDP on defense, a
Speaker 1: warning shot that signals even more tension if the former
Speaker 1: president does return to the White House. So here's why
Speaker 1: Europe is unprepared to defend itself and why it may
Speaker 1: need to. Joining me now to discuss is Bloomberg's executive editor,
Speaker 1: Flavia Kraus Jackson, who oversees our EMEA and Latin America
Speaker 1: Economics and government coverage. Lavia, thank you so much. How
Speaker 1: much of a concern is it in Europe that a
Speaker 1: Trump administration could pull the US back from its native commitment?
Speaker 3: Short answer is extreme worry. And I think you know,
Speaker 3: is your able to defend itself? Actually we can't. There's
Speaker 3: been chronic underfunding on the defense spending. And you can
Speaker 3: argue that Trump, with his sort of outlandish talk, has
Speaker 3: actually given Europe the proverbial kickup to bottom that it needed.
Speaker 3: And you know, even when you look at someone like
Speaker 3: Jen Staltenberg, the outgoing NATO Secretary General, sort of eccentially
Speaker 3: acknowledges that much. And Rutter, who was a former Dutch
Speaker 3: prime minister who's now incoming known as a Trump whisperer,
Speaker 3: has essentially been saying listen, He's been saying the quiet
Speaker 3: part out loud, folks. We really need to be able
Speaker 3: to do it. I mean, the problem, of course is
Speaker 3: having diagnosed the problem, how do you fix it? Because
Speaker 3: the essential problem here is that you have twenty first
Speaker 3: century wars with twenty century kit and there wasn't really
Speaker 3: an understanding of where the conflict would be. Like hindsight
Speaker 3: being twenty twenty, we all remember President Macran saying that
Speaker 3: NATO was brain dead. We also remember NATO essentially kind
Speaker 3: of putting its focus more in the Middle East with Syria,
Speaker 3: so sort of it didn't almost see coming the conflict
Speaker 3: in Ukraine, even though the writing was kind of on
Speaker 3: the wall terms of Russian expansionism right twousand and eight,
Speaker 3: Georgia twenty fourteen, Annexation of Crimea twenty twenty two, sending
Speaker 3: the jets to Syria. So there's a question of why
Speaker 3: NATO hadn't pivoted in the way it should have.
Speaker 1: And even to me a non defense expert, I can
Speaker 1: see from the data, you know, how few planes, how
Speaker 1: few ships. The comparison between Europe, the US and other
Speaker 1: countries China, for example, it is starkly illustrated. How big
Speaker 1: is Europe's fighting force? Does it have the capability then
Speaker 1: to act without US backing the other? Big big question?
Speaker 3: It simply can't, right, I mean, and you're sort of
Speaker 3: scraping the barrel right now. Twenty three out of the
Speaker 3: thirty two members are hitting the two percent target. Even
Speaker 3: if they were to up this to three point five,
Speaker 3: it still wouldn't be enough. You can't conjure an army
Speaker 3: out of nothing. And it's not just about the numbers.
Speaker 3: It's also about the quality of the kit, the training.
Speaker 3: If it's been basically left to gather rust. You're now
Speaker 3: in a situation where you've got the check initiative, you're
Speaker 3: having to revive old Slovak factories. In the meantime, you
Speaker 3: have Putin, who's turned his economy into a war economy,
Speaker 3: pumping the money. So Europe simply isn't able to keep
Speaker 3: up with that, And the most important point is is
Speaker 3: you as willing to keep its commitment because as we
Speaker 3: well know, there could be a change of God. Trump
Speaker 3: is the worst case scenario for Zelenski. But I don't
Speaker 3: I think we should assume that things are going to
Speaker 3: be that much better under a Harris administration, especially when
Speaker 3: you see it to a degree what some might say
Speaker 3: the double standard. I mean, if you have a crisis
Speaker 3: in Israel with Hamas and Hizbola, you're essentially giving a
Speaker 3: carte blanche to NITAYAHUO. No matter how tense that relationship is,
Speaker 3: it's still the more important relationship. It's still seen as
Speaker 3: much more vital to the US, and the US simply
Speaker 3: cannot sort of be the world's policeman of fighting two
Speaker 3: conflicts and potentially even a third one in Taiwan.
Speaker 1: The head of the UK's Armed Forces has talked about
Speaker 1: the need to be ready for a major direct conflict
Speaker 1: by twenty twenty seven. This's got a lot of eyeballs.
Speaker 1: You know that it was so soon, you know, a
Speaker 1: major war increasingly likely for Europe.
Speaker 3: Yeah, absolutely, twenty twenty seven is the sort of the
Speaker 3: day that everyone has in mind in terms of when
Speaker 3: potentially China decides that's when it's going to go for it, right,
Speaker 3: So that data is sort of out there in the ether.
Speaker 3: But you know, there was also the words of a
Speaker 3: General Sir Patrick earlier this summer that kind of revives
Speaker 3: question about UK conscription. Right, if you think back, it
Speaker 3: was in the Great Wars that there was a conscription
Speaker 3: and some of his words were slightly misinterpreted, but he
Speaker 3: essentially reintroduced the topic of like how fit is the UK,
Speaker 3: especially sort of post Brexit. Right, you have France, it's
Speaker 3: the nuclear power, you have the UK. You have Germany
Speaker 3: for all sorts of reasons that we know well is
Speaker 3: an economic power, but not a military one in spite
Speaker 3: of having committed one hundred billion. That's a very long
Speaker 3: term concept. So when you're looking at the numbers, what
Speaker 3: could France and the UK can draw between themselves in
Speaker 3: terms of men and within a month you're looking at
Speaker 3: maybe twenty thousand for France and about thirty twenty thousand
Speaker 3: for the UK. That simply isn't very much, especially when
Speaker 3: you sort of compare that to the terrible figures and casualties.
Speaker 3: You know, thirty one thousand Ukrainian casualties, so when you're
Speaker 3: playing the sort of the numbers game, you can see
Speaker 3: how in Russia can play the long game and wait
Speaker 3: it out.
Speaker 1: That was, of course, General Sir Patrick Sanders who made
Speaker 1: that comment around conscription in the UK, and you only
Speaker 1: have to look at the newspaper coverage at the time
Speaker 1: of those comments that understand the gap between public understanding
Speaker 1: and this kind of reporting and what the military and
Speaker 1: what the defense industry is kind of thinking about. My
Speaker 1: thanks to Bloomberg's executive editor Flavia kraus Jackson for joining
Speaker 1: us for more explanations like this one from our team
Speaker 1: of two thousand, seven hundred journalists and analysts around the world.
Speaker 1: Search for Quick Take on the Bloomberg website and the
Speaker 1: Bloomberg Business app. I'm Caroline Hepger. This is Here's Why,
Speaker 1: and we'll be back next week with more. Thanks for listening.