June 30, 2024: Prominent American politicians are warning their European NATO allies that Europe must assume more responsibility for their own defense. Since the 1950s most European nations have been content with allowing the United States to carry most of the defense load in terms of specialized equipment and combat ready troops as well as warships and combat aircraft. The Americans spend three percent of their GDP on defense each year and European nations agreed to spend two percent. The United States continues to spend three percent but not all of the European nations met their two percent goal. Poland and Finland, which border Russia, did meet the two percent goal but NATO nations further west, like Germany, are only spending 1.5 percent.

Russia is already threatening to inflict some punishment on European nations that support Ukraine and that is inspiring the NATO nations to at least consider trying to up their defense spending and reach the two percent goal. Right now American defense spending exceeds that of Britain, China, France, Germany, India, Russia, Saudi Arabia, and Ukraine. Currently the United States is spending $877 billion a year on defense, which just about exceeds the combined defense spending of every other nation on the planet. Considering this situation, the Americans feel justified in demanding that their European allies meet the two percent of GDP goal they agreed to. The continued fighting in Ukraine has proved to be an incentive to meet the two percent demand.

Russia’s 2022 invasion of Ukraine is another example of Russia reviving the Cold War that ended in 1991 with the collapse of the Soviet Union. Since then Russia has continued to get involved in wars. For example, Russian operations in Syria caused Russian defense spending to increase to $48 billion in 2015. That was 4.2 percent of its 2015 GDP. Military spending declined (to $45 billion, or four percent of GDP) in 2016. Russia was forced to cut defense spending sharply in 2017 and 2018 because of continued low oil prices and economic sanctions imposed because of Russian aggression against Ukraine that began in 2014. As a result in 2017 Russian defense spending fell to about 3.2 percent of GDP and in 2018 it was 2.9 percent of GDP. There it remained until the eve of the Russian attack on Ukraine in 2022.

Low oil prices since 2014 have done serious damage to the Russian economy and Ukraine-related sanctions made it more difficult to cope. To put it all in perspective, note that this lost income means Russia’s GDP dropped from $2.1 trillion to $1.1 trillion in ten years. This was a combination of low oil prices for the major Russian export and the ruble losing about half its value compared to the dollar, which is the currency of international trade, as a result of that and the sanctions. The impact of all this meant Russia dropped from being the sixth largest economy in the world to 14th place. Because the current government has revived the police state over the last decade, the average Russian does not feel free to openly protest. The senior bureaucracy is another matter and the economic experts and heads of the security services are obviously unhappy with the situation, though they are generally safe from a wide scale purge because they have kept the economy and government viable, something their Soviet predecessors could not do. But the government is running out of economic options.

The current mess began back in 2012 when Vladimir Putin, who has been in power since 2000 as president, prime minister and now president again, has sought to deal with years of declining popularity. People were upset about continued corruption and sluggish economic performance. Putin decided to employ an ancient trick; blame all the problems on evil foreigners. It worked, even though in 2012 the urban middle class was largely against him and many rural groups were turning hostile as well. The government had tried taking more action against corruption and more repression of public protests, but what seemed to work best was more propaganda against foreign threats like the NATO anti-missile system designed to deal with missiles launched by Iran, not Russia.

All this did not work out as planned. In a survey, Russians ranked as major problems the economy, health care, corruption, education, unemployment, and crime. In addition most Russians indicated it was dangerous for an individual to openly discuss corruption. A third of Russians said they had paid a bribe at least once. Putin can blame whoever he wants but most Russians just want the economy fixed and that requires cleaning up the corruption. The new Cold War does not seem very relevant to all this.