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The Governance and Funding of European Rearmament

Author

Listed:
  • Guntram Wolff
  • Armin Steinbach
  • Jeromin Zettelmeyer

Abstract

Gaps in European military equipment are substantial compared to Russia s military build-up. The European defence market is fragmented and weakened by home bias in procurement, low order numbers and technological gaps. With the US now retreating from its role as Europe s guardian, greater European cooperation will be essential to close technological gaps and reduce rearmament costs. Procurement will need to be pooled to reduce market fragmentation and avoid that additional demand for defence goods will mainly drive up prices. Better-integrated defence markets would both increase competition and facilitate entry of new defence technology firms. The combination of integrated markets and scaled-up procurement could halve unit costs. This article discusses how this could be achieved either by scaling instruments in the current institutional framework or by creating a new intergovernmental institution, the European Defence Mechanism.

Suggested Citation

  • Guntram Wolff & Armin Steinbach & Jeromin Zettelmeyer, 2025. "The Governance and Funding of European Rearmament," ULB Institutional Repository 2013/393996, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/393996
    Note: SCOPUS: ar.j
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    References listed on IDEAS

    as
    1. Armin Steinbach & Guntram B. Wolff, 2024. "Financing European air defence through European Union debt," Bruegel Policy Brief node_10289, Bruegel.
    2. Wolff, Guntram B. & Burilkov, Alexandr & Bushnell, Katelyn & Kharitonov Ivan, 2024. "Fit for war in decades: Europe's and Germany's slow rearmament vis-à-vis Russia," Kiel Reports 1, Kiel Institute for the World Economy.
    3. Lucio Pench, 2025. "Dilemmas for the EU in deficit-financing of defence expenditure and maintenance of fiscal discipline," Bruegel Working Papers node_10780, Bruegel.
    4. Carril, Rodrigo & Duggan, Mark, 2020. "The impact of industry consolidation on government procurement: Evidence from Department of Defense contracting," Journal of Public Economics, Elsevier, vol. 184(C).
    5. Mark Harrison, 1990. "A volume index of the total munitions output of the United Kingdom, 1939-1944," Economic History Review, Economic History Society, vol. 43(4), pages 657-666, November.
    6. Burilkov, Alexandr & Wolff, Guntram B., 2025. "Defending Europe without the US: First estimates of what is needed," Kiel Policy Briefs 183, Kiel Institute for the World Economy.
    7. Lafond, François & Greenwald, Diana & Farmer, J. Doyne, 2022. "Can Stimulating Demand Drive Costs Down? World War II as a Natural Experiment," The Journal of Economic History, Cambridge University Press, vol. 82(3), pages 727-764, September.
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    2. Quinet, Alain & Jaravel, Xavier & Schularick, Moritz & Zettelmeyer, Jeromin, 2025. "Economic principles for European rearmament," Kiel Policy Briefs 195, Kiel Institute for the World Economy.
    3. Burilkov, Alex & Bushnell, Katelyn & Mejino-López, Juan & Morgan, Thomas & Wolff, Guntram B., 2025. "Fit for war by 2030? European rearmament efforts vis-à-vis Russia," Kiel Reports 3, Kiel Institute for the World Economy.
    4. Roel Beetsma & Marco Buti & Francesco Nicoli, 2025. "EU Defense Union: Short-Term Feasibility and Long-Term Coherence," EconPol Forum, CESifo, vol. 26(03), pages 22-28, July.
    5. Alexandr Burilkov & Katelyn Bushnell & Juan Majino-Lopez & Thomas Morgan & Guntram Wolff, 2025. "Bruegel-Kiel Report - Fit for War by 2030? European Rearmament Efforts vis-à-vis Russia," Working Papers ECARES 2025-10, ULB -- Universite Libre de Bruxelles.
    6. Quinet, Alain & Jaravel, Xavier & Schularick, Moritz & Zettelmeyer, Jeromin, 2025. "Ökonomische Leitlinien für die europäische Aufrüstung [Economic principles for European rearmament]," Kiel Policy Briefs 195, Kiel Institute for the World Economy.

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    More about this item

    JEL classification:

    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements

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