Does Europe need to declare a 'wartime economy'?

The interchangeable terms "war economy" or "wartime economy" bring to mind dramatic measures from dark days gone by: Governments reconfiguring their entire economic systems and industrial output to prioritize production for the war effort.

EU Commissioner Thierry Breton started invoking the concept regularly in early March as he sought — and continues to seek — a rapid ramp-up in EU government orders for and manufacturing of ammunition and weapons, both to supply Ukraine and refill their own stockpiles.

The commissioner has just toured more than a dozen weapons-manufacturing facilities throughout the bloc where he would have heard complaints about the lack of long-term contracts being signed. Despite multiple EU decisions to boost funding and lower barriers for joint procurement, the effort is moving far too slowly, he thinks.

"The delays are not in line with our immediate needs," Breton said in a May 3 press conference. "There is therefore — and I say this clearly — the necessity to push the industrial base and move it to a 'wartime economy', if you permit me to put it in those terms."

Permission not granted?

But it doesn't seem Breton consulted all member states — if any — as to whether they would actually "permit [him] to put it in those terms" if they had a choice. 

Germany may be among the most sensitive to the concept. As Berlin's ambassador to Poland, Thomas Bagger knows a thing or two about being pressed for weapons supplies. He finds Breton's tactic unproductive. "You will not have a positive response to the term 'war economy' in Germany," Bagger said tersely at the Lennart Meri Conference in Tallinn, Estonia earlier this month. "It is not the right way to mobilize the effort."

That reaction is wholly unsurprising, explains Edward Lucas with the Center for European Policy Analysis (CEPA), who tells DW he would completely ban the phrase. "It means very different things in different countries," he notes.

"A real 'war economy' is where men with guns come and take over your factory and make it produce more guns. I don't think anyone's actually suggesting that" in Europe, Lucas says, although he emphasizes that Russia has already taken such steps.

"In Germany it has echoes of the Nazi control of the economy with the colossal suffering and abuse of the slave laborers," Lucas told DW in Tallinn. "It's a bit like if you said, 'we need to get this up to a plantation tempo' in the United States. That would immediately not be a sign of productivity but be a sign of the darkest period in American history! I don't think you solve this with slogans. You solve this by actually getting round the table and taking difficult financial regulatory decisions that create the outcome you want."

Ramping up rhetoric, not industry

Another analyst, Ben Tallis with the German Council on Foreign Relations (DGAP), notes that French President Emmanuel Macron has also spoken of a "war economy" without taking the dramatic actions it entails. "This would have a lot of implications," Tallis says, "a lot of state control over the economy and state guidance over the economy. It would probably mean rationing of different kinds, which would send a very interesting signal to European populations, one I don't think the current generation of politicians in Western Europe is willing to send."

But it is necessary to send a signal of urgency if the EU — and NATO — want the weapons-manufacturing machinery turned up. It's understandable why some EU officials are trying out the term, says Nathalie Tocci, who runs the Italian Institute of International Affairs. They need to bridge a huge gap in threat perception across Europe, "persuading those member states that are very far from the front line, that rather than spending funds [on domestic issues] in — whatever, Calabria — they've got to spend them on the defense industry to send weapons to Ukraine." Tocci says some people already support that, "but it just takes time to make that argument compelling for everyone."

Estonian Defense Minister Hanno Pevkur says no one needs to explicitly invoke a "war economy" in his country, which has already given more than one percent of its GDP in assistance to Ukraine. "We don't have to state [it] specially," he tells DW. "We see the threat and we are saying that everyone in Europe has to come to the reality that Russia is an existential threat."

Save it for later?

While supporting that goal, military historian Slawomir Debski, director of the Polish Institute of International Affairs (PISM), doesn't think the framing of  a "war economy" is necessary — at least "not yet" — and tells DW he suspects politicians themselves don't really know what they mean when they say it. "In 1942, the United States was capable to produce big ships in 14 days [instead of two years]," he explained. "That's the kind of prioritization of a war economy. So we are not there and there is no need to introduce this kind of regime into our own economy."

Ben Tallis suggests that instead of just throwing out the term, politicians should start to explain the thinking behind a "war economy." "Ukraine is fighting for all of our freedom and I don't think that message has fully got through in parts of Western Europe," he told DW in Tallinn.

"They are stopping us from getting attacked. If we see it like that, then this should really be our conflict and for us to win." He argues that people should normalize that logic and accept they are in a serious conflict they have to win. "I think it is right to start preparing the minds of people for that."

But Germany's Ambassador Bagger isn't sold on the idea. "What is important is that we don't take these differing perceptions of 'existential threat' as a fundamental question mark that says the others still don't get it," he argued.

"My point is: We do get it. But you do have to understand that history and geography are immensely powerful teachers and they have taught us different lessons."

Edited by: Andreas Illmer