Europe’s Dilemma: Paying for War, Cutting Back at Home
By Jaffa Levy
August 30, 2025
Europe finds itself at a crossroads. As the war in Ukraine grinds on into its fourth year, Western capitals are under pressure to sustain the flow of weapons while grappling with rising debt, fragile economies, and restive populations.
The United States, long the primary source of military aid, has begun to recalibrate. Former President Donald Trump, once skeptical of open-ended commitments, now frames European purchases of U.S. arms as a political victory: America’s defense industry remains flush with orders, while European treasuries foot the bill.
A Military Dependence
Despite renewed promises of rearmament, Europe’s militaries remain undersized and ill-equipped after decades of underinvestment. Without American intelligence, missile defense, and munitions, Ukraine’s battlefield position would likely collapse. European leaders know this — and for them, continued access to U.S. hardware is not a luxury but a necessity.
This dependency has created an incentive to keep the war going. By guaranteeing arms orders, Europe can both maintain American engagement and buy itself time to rebuild its own defense industry. Rheinmetall and other firms are scaling up production of shells and vehicles, but the effort will take years to yield a credible deterrent.
Paying the Price at Home
The cost is staggering. Germany has already loosened its constitutional debt brake to finance defense spending. France is preparing a budget that scraps public holidays, freezes welfare indexation, and trims pensions. Across the continent, governments are cutting social programs to make room for military outlays.
For Europe’s working classes, this is a familiar pattern. In France, unions plan a nationwide strike on September 18 to protest austerity measures tied to defense spending. The continent’s labor movements, unlike their fragmented American counterparts, remain capable of mobilizing millions. The potential for wider unrest is growing.
Strategic Risks
The financial mechanics are complex but consequential. When European states buy U.S. weapons through dollar-denominated contracts, they must borrow in euros and convert to dollars, increasing demand for the American currency. That bolsters the dollar’s exchange rate — the opposite of what Washington has often claimed to want — while forcing European governments into deeper debt.
Meanwhile, Russia has signaled it will retaliate directly against European territory if struck by European-supplied missiles. A drone attack on a Russian oil facility earlier this month was followed days later by a mysterious fire in Hamburg, fueling speculation about tit-for-tat strikes. While unconfirmed, the episode underscored Europe’s exposure: by engaging in direct strikes on Russia, it risks retaliatory attacks on its own soil.
The Bigger Picture
What began as Washington’s effort to contain Russia has evolved into something else: a costly arrangement in which Europe sustains U.S. defense corporations, trims its own social spending, and assumes direct risks of escalation.
For now, European leaders remain committed to their course. But the alignment carries long-term risks: mounting debt, widening inequality, and the possibility of mass protest movements that challenge governments’ willingness to sacrifice domestic stability for distant battlefields.
As the war in Ukraine drags into another winter, the question is no longer whether Europe can afford to keep paying. It is whether Europe’s people will allow their governments to keep paying at all.
