After huge delays and only after serious pressure from both the and the balance of forces on the European continent on a basic reason for the war in Ukraine, European countries have decided that it is in their interest to re -arrange and increase the production of weapons and equipment. Their calculations, however, could prove to be unacceptable according to developments, as the uncertainty in markets in view of the meeting show -.
The European Defense Sector is expanding at a record rate
The European governments, as well as the institutions, in 2022 and with a Russian invasion of Ukraine, were caught as a sleep and have gradually forced to completely change the logic of European security. This pivot has now begun to bear fruit, as according to a Financial Times report, Europe’s defensive sector breaks record. Arms factories have been expanding at an unprecedented pace for decades.
According to the FT report that collected satellite data, the weapon plants increase the space that occupy three times faster than in peace time, and have now added more than 7 million square meters of new industrial space from 2022 onwards. This results from examining the data in 150 locations associated with 37 defense companies.
European effort and risks
To do this, European countries have agreed to increase the cost of defense within NATO (5% of GDP at Donald Trump’s own demand), and have promoted additional European funding with programs such as Rearm, as well as national re -equipment plans with billions of euros. Most funds are either in the form of loans or in the form of aid, and they are quite derived from cuts in other areas, such as for example in the welfare state.
These decisions were taken by the assumption that “the US may no longer be with us, but at least not against us” and that for this reason, Europe and European countries should be ready to defend themselves and Ukraine against Russia.
However, as Russia’s open war against Ukraine has been about 3.5 years, there is a European re -equipment on which the re -equipment of Europe, as well as the overgrowth of the weapons, ammunition and equipment industry.
Nervousness in markets and shares of European companies
And the only news that on Friday, Donald Trump and Vladimir Putin will meet in Alaska and possibly seal some agreement on Ukraine, without Ukraine, but without Europeans, is already causing a decline in the shares of major European companies. For example in the last five days, Rheinmetall’s share fell by 13%. In total, the Pan -European Stoxx 600 index, the French CAC 40 and the German DAX retreated, while the British FTSE 100 rose.
Experts point out that the Stoxx 600 index was closed with a gross result, but the defense and aerospace companies had a negative impact, including Rheinmetall and Renk, who retreated in the midst of visuals that a peacekeeping agreement in Ukraine could reduce demand for military equipment.
Specifically for Rheinmetall, the results showed lower than expected sales and operating income revenue, as well as a slowdown in order influx.
Tremp – Putin meeting is of crucial importance
Analyzes on what could be changed if the crisis in Ukraine is settled, but also in the way it will be settled vary.
Experts estimate that if European and Ukrainian concerns about the future of Ukraine are taken into account, but also on European security as a whole, it is highly likely to have negative consequences for the European Defense Industry, which has “lit machines” much slower than the US.
On the other hand, there is an assessment that irrespective of short -term and medium -term profit, increased production and investment in the European weapons industry will continue to serve EU security needs in an uncertain geopolitical planet as they will act as guarantees.
In any case, the Trump-Putin meeting in Alaska, which will be in vain for Europeans, places those who are missing from the table on the menu and that it comes out of it, is sure to have an impact on the calculations of European countries.
