Enikő Vincze
“Europe needs to spend around 250 billion euros annually on defense investments to ensure it can cope without US support. … This expenditure … would allow Europe to mobilize around 300,000 soldiers to defend itself against Russia” (Study of the Bruegel Research Institute and the Kiel Institute for the World Economy, 02/2025).
“Trump’s proposed peace in Ukraine clearly reveals what interests were behind the almost three-year war and its end. It not only denotes that Trump is an investor, but also that this is about trading the fate of a country and its population on a mercantilist, commercial agenda. … Then, in parallel with the discussions about how to make peace in Ukraine, a ping-pong game is being played between the US and the EU member states regarding the need for the latter to invest 5% of their GDP in the military industry” (interview, BaricadaPacifistă, 11.02.2025).
The European Union of War
The trumpist peace plan for Ukraine, at least as it has begun to be implemented, is being attacked by American Democrats and European liberals because it comes with all the dictatorial and conservative measures that the new American administration is taking. And the far-right forces on both sides of the Atlantic are positively welcoming this plan precisely because it comes from Trump, from whose power they hope to strengthen themselves.
But the trumpist peace plan for Ukraine is also being rejected because it breaks the Western geopolitical taboo that has been accentuated in the last three years, according to which diplomatic relations with Russia cannot be maintained and, as a result, whoever seeks them is, by definition, a Putinist, that is, an aggressor. The consensus of this taboo was that Russia must be forced to allow itself to be weakened through economic sanctions, proxy war, or by being erased from the international cultural and sports agendas. Indeed, the US is now making a radical change, replacing the old actor, who was not invited until now at the negotiating table, with other actors. This is, of course, an act of betrayal on the part of the hegemon who pushed the European Union (EU) into the proxy war in Ukraine. He could not have expected the latter to accept such a thing. What is behind the spectacle of the great exclusion and the ruptures in the transatlantic alliance? How does this conflict relate to other ongoing armed conflicts: for example, in the Middle East, where Trump’s peace promises the ethnic cleansing of 2 million Palestinians, their resettlement in several Arab countries, and the transformation of Gaza into the Riviera of the Middle East? What does Trump’s collaboration with Putin have to do with his great competitor, China, against whom he is waging a fierce trade war? Of course, in this article, I do not intend to discuss all these big questions but only sketch some ideas about the reformation of the European Union in the global order under reconstruction.
In response to the challenge from Trump and as proof of its maturity and independence from the hegemon, a need suddenly rediscovered by European leaders after decades of subordination to its historical and strategic partner across the Atlantic, the EU seems to want to remain in the proxy war in Ukraine into which it was drawn precisely by this partner. At least that is the angry message it sends: it does not accept the peace dictated by Trump, and it will continue to send military aid to Ukraine. The EU is even ascending to a higher stage of creating the enemy against which it is embarking on an unprecedented arms race, animated this time not only by Russophobia or hatred of Russia but also by its new association with the trumpist USA. The core EU countries are taking over, as some say, the fears of Poland and the Baltic States regarding an “unprovoked” Russian attack, somehow supposedly written in Russian blood. In parallel, the Union seems to be ashamed of its pro-peace principles that were the basis for forming the first European economic communities after the Second World War. It is regretful that it has disinvested in its military-industrial complex. It maybe unhappy about buying weapons from American companies and leaving its security in the hands of American military bases in its territories. Coming out crumpled from its own neoliberal economic regime and from the effects of its anti-crisis measures through which it subordinated public investments to the purpose of saving capital, but also from the inability to deliver its social model for the many and in all the member states, the EU is now looking for a new foundation on which to rebuild itself: and this seems to be the Union of War.
Speaking of the proxy war in Ukraine, the plan of the declining American empire to prevent the strengthening of the emerging multipolar world has hit the European Union twice: once when it convinced it to open the way to its independence from Russian gas, and the second time when it convinced it to invest at least 5% of GDP in armaments portrayed as defense spending. The first persuasion resulted in the decline of European economies based on Russian gas, which hit hard the German economy, the economic heart of Europe, leading to a recession felt not only in Germany but in all the countries where German capital has invested in the last 30 years. The second encouragement, against the background of the economic recession, involves the risk of leading, in favor of the military sector, to disinvestment in the European Green Deal that the EU has proclaimed since 2019 as an important stage of its development or in sectors that, in the past, it considered important for its social model. Moreover, after Biden’s USA convinced the European Union to break off trade relations with Russia, Trump’s USA prepares for economic collaborations with Russia. Meanwhile, the EU has repeatedly said it will be increasingly competitive with the US, China and Russia. Several leaders should disappear from the top of the European Commission if one would recognizethe multiple mistakes committed (also) in the geopolitics of the union in the name of European values that it has long ceased to respect, such as peace, the social model, and sustainable development.
These days, we have been told that the excessive arming of the European Union is the only possible and normal response to the danger of being attacked by Russia. The assumption that this danger is an imminent, unprovoked reality, as well as the military measures on its account, exponentially increases the possibility of fulfilling the prophecy of an extended war in Europe. We have returned to the hot moments of the new Cold War, in which mutual security considerations in relations between the great powers increase the risk of the outbreak of military confrontations.
European plans to ensure the financing of the military industry in financialized capitalism
The moment of the new wave of arming launched in reaction to the trumpist peace plan in Ukraine occurs in the context of the orientation of the European Commission (EC) policies towards increasing Europe’s competitiveness vis-à-vis the USA and China (according to the need identified in the Draghi Report), towards strengthening the European Capital Markets and creating the new Investment Union, but also towards reducing public debt and public deficit in the EU member states.
The competitiveness of the European Union requires new investments, so the member states are called upon to create favorable conditions (to reduce risks) for institutional investors expected to invest their money (most often gathered from an extensive portfolio of investors) in competitive sectors. In this context, the new Savings and Investments Union (SIU) launch is being prepared in March of this year. This is also dedicated to mobilizing investments in the military industry, among other things, by attracting the population’s savings to such investments. Hence, the European Commission’s concern is for reforming the pension system, that is, strengthening the private pension system as a source for institutional investors from whom the economy is expected to be strengthened. Moreover, the EC calls on states to do even more deregulation in favor of investors, which endangers the weak EU rules on environmental protection and social concerns. The SIU further develops and unifies in a way the Capital Markets Union and the European Banking Union. This means less regulation of the transnational circulation of financial capital through financial markets.
Another source identified by the European Commission for financing the military industry is the assumption of new common debts, based on the model of loans made during the pandemic and the creation of the NextGenerationEU funds and its main instrument called The Recovery and Resilience Facility (in Romania, the National Recovery and Resilience Program). To finance these programs, the European Commission has borrowed on the capital markets by issuing bonds on behalf of the European Union, money from which it has allocated grants and given loans to the Member States in a total amount of 359 and 291 billion euros, respectively. These sources also finance the RePowerEU plan dedicated to reducing the dependence of EU states on Russian fossil fuels. So far, of the investors who have bought the bonds issued by the European Commission, 42% are asset management companies, and 15% are pension and insurance funds.
Both the Investment Union and the debt plans on the capital markets, among others for armaments, result in the even greater financialization of various economic sectors, including the military industry. Private capital investments, supported by partnerships with public administrations (that offer state aid, subsidies, risk reduction measures, etc.), will be directed to sectors that generate more profit, which does not mean, therefore, investments in public goods such as housing, school education, and healthcare. The opening of the military-industrial complex to capital markets increases its financialization, and the financialization of this sector increases the appetite for investments in this area.
Last week, as a reaction to the first high-level discussions between the US and Russia about ending the war in Ukraine without the EU and Ukraine being invited, the European Commission, through the head of European diplomacy, Kaja Kallas, declared that they are considering a record military support for Ukraine. This would initially mean a minimum package of 6 billion euros, with Ukraine’s military assistance exceeding 10 billion euros. EU member states must say what additional weapons they can provide Ukraine from their stocks, possibly contributing military equipment or funds. This scheme would require each country to contribute proportionally to its national income. (Agerpres, 19.02.2025, after Politico.eu).
All of the above is happening while representatives of EU member states are expected to impose fiscal consolidation measures in their countries, measures that, in turn, in the absence of market price controls, result in austerity, reduced consumer power, and economic recession. To ensure investment plans in militarization in the context in which the European Commission has reimposed the fiscal rules set out in the old Stability Pact, the EC President has stated that she wants to activate an emergency clause that would allow governments greater room for maneuver so that military spending is not counted within the limits of their strictly controlled budget deficit.
Capitalism and Wars
The Marxist thinkers and revolutionaries of the early 20th century, Rosa Luxemburg (1913) and Lenin (1916) demonstrate as clearly as possible that wars are inherent elements of the capitalist system. Luxemburg, speaking of militarism, shows that already in the period of colonialism, militarism was a means by which the destruction of local economies and their integration into capitalist production chains was sought; and then, throughout its entire history, capitalism needed militarism to create another source of capital accumulation through the production of armaments. In turn, Lenin, denouncing the First World War as an imperialist war waged between the great powers for the re-division of the planet, showed that imperialism is not just a set of policies, but a new stage in the development of capitalism, one characterized by the concentration of capital in fewer and fewer hands and the formation of a financial oligarchy, resulting in increasingly intense rivalries between empires manifested in new and new wars.
The doctrines of American presidents from Truman (1947) onwards (inspired by the interventionism of the Monroe Doctrine of the 19th century) justified the US to intervene militarily in various regions of the world to combat authoritarian regimes and involve the US in proxy or direct wars, created profitable opportunities for arms-producing companies. The accumulation of capital for the US military industry and the political and economic hegemony of the US went hand in hand, regardless of the stakes of the particular wars. The incentives of the wars in Vietnam and Korea, or the interventions in Greece and Turkey from 1947 to 1975, were linked to the American ambition during the Cold War to reduce the sphere of influence of communism and the Soviet Union. American interventions in the 1950s in Iran and Guatemala supported authoritarian governments to get rid of pro-Soviet governments. In the 1960s, the US supported military governments in Indonesia and Brazil to fight leftist political movements. From the 1970s onwards, interventions against governments unfriendly to the US in many other countries in Latin America, Africa, and the Middle East followed. Military wars fought after the end of the Cold War in the Middle East and Central Asia were supported by the US government as wars against terrorism. The American interventions in West Asia and North Africa after 2010 sustained local uprisings against state presidents (information source, here). All these military actions were profitable for arms companies, the first five leading firms in the world being from the USA: Lockheed Martin Corporation, Raytheon Technologies, Boeing Corporation, Northrop Grumman Corporation, and General Dynamics Corporation.
The above examples of militarism also show us that, since the end of World War II, the capitalist global order has been marked by continuous wars. The principles of hyper-globalization since 1990, above all, the free movement of capital and free economic exchanges, promised to guarantee the peaceful coexistence of countries. But this was a false promise not only because wars continued to be waged in many parts of the world but also because this globalization created peaceful avenues for the expansion of capitalism into previously non-capitalist territories subordinated to the interests of the great powers. The latter were means to spatially fix (Harvey, 2001) the problems of capital in advanced capitalist countries by investing in (semi)peripheral countries with cheap labor force released from the destruction of local economies. This happened after 1990, also in the case of the countries of Eastern and South-Eastern Europe (I wrote about this in the article on EUfication or the process of Eastward enlargement of the European Union, and in the article on the advancement of capitalism in Romania and the reproduction of its semi-peripheral status). Dismantling the socialist system, the Soviet Union, the Warsaw Pact, and the Council for Mutual Economic Assistance, or the declaration of the end of the Cold War did not mean the end, only the transformation of imperialist practices. Since 1990, these have been carried out in Eastern Europe through enforced privatizations in all economic sectors and support programs for structural reforms. Finally, the changes related to the accession of the former socialist countries to NATO were added to all these processes, NATO’s Eastward expansion being an issue that ultimately provoked Russia’s attack on Ukraine in 2014 and the escalation of this war since February 2022.
Cannibal Capitalism and Disaster Capitalism: Postwar Reconstruction as a Profitable Investment
All the wars mentioned above denote the cannibalistic character of capitalism (Fraser, 2022), that is, of the institutionalized social order, which, under the influence of the profit economy, consumes all its non-economic conditions, from reproductive labor, through nature and racialized populations, to political and public power. Thus, this system creates continuous economic crises combined with the crisis of social reproduction, the climate crisis, and political crises. Exhausting the peaceful measures by which it tries to solve these crises, but always in favor of capital, capitalism resorts to wars. The war of cannibal capitalism is not a matter of policy decisions; at most, it concerns the decision on which war to wage and where; it is a systemic phenomenon inherent to capitalism.
Wars are not just a means to conquer new territories, or an end in themselves that supports the accumulation of capital through the production of weapons, but are a disaster produced by the capitalist system (Klein, 2007) that also calculates profitability with regard to post-war reconstruction. This is also the case with the war in Ukraine. From the very first moment of “pacification,” Trump announced that in exchange for the military and humanitarian aid provided to Ukraine for almost three years, the US wanted to receive control over the rare minerals in this country worth 500 billion dollars. I read an initial reaction from Zelensky to this claim, which stated that it is understandable that those who helped more should receive more, but then, quickly returning to European and NATO circles, he refused to accept this condition of ensuring the security of Ukraine by the US against Russia.
Whatever happens to the rare minerals, the principle of postwar reconstruction is clear, as formulated by Scott Bessent, U.S. Treasury Secretary: “Ukraine is endowed with natural resources and other national assets that can drive its postwar economic growth, but only if its government and people are armed with sufficient capital, expertise, and the right incentives. The terms of our partnership propose that revenue received by the government of Ukraine from natural resources, infrastructure, and other assets is allocated to a fund focused on the long-term reconstruction and development of Ukraine where the US will have economic and governance rights in those future investments. This structure and relationship bring the high standards of transparency, accountability, corporate governance, and legal frameworks necessary to attract the robust private investment for postwar growth in Ukraine” (Financial Times, 22.02.2025). Trump’s warnings that the US is withdrawing from the war and leaving the European Union to bear the costs of Ukraine’s reconstruction were poetic jokes. The US will not withdraw from this process, and obviously, EU member states also want to benefit from it economically and financially. Just as the sale of arms by some states to other states brings profit to private arms companies and not to governments or society, so does the diplomacy of states participating in post-war reconstruction, which creates investment opportunities for private companies in their countries. Thus, in the case of wars, public policy is put twice at the service of private capital and individual profits.
The private sector’s preparations for the reconstruction of Ukraine have not only begun now. President Zelensky met with Larry Fink, CEO of BlackRock, one of the world’s largest investment and asset management companies, in September 2022. In November of the same year, the Ukrainian Ministry of Economy and BlackRock Financial Markets Advisory signed a memorandum confirming the plan (President of Ukraine, 28.12.2022). In January 2024, it was announced that the Reconstruction Bank of Ukraine had been established in Kyiv with the help of BlackRock and JPMorgan Chase. It has already committed $500 million in investments, with the plan to launch in mid-2025 with a catalyst capital of nearly $1 billion (Reuters, 17.01.2024). The catalyst capital is intended to attract other venture capital funds into investments that promise to be de-risked over time. BlackRock is well aware that the investment potential in Ukraine is significant due to its large consumer market, extremely cheap labor force, strategic geographic location, and abundant natural resources. Another example of investment in Ukraine is the International Finance Corporation’s $2 billion Economic Resilience Action Program for Ukraine’s Private Sector and its $30 million investment in the Capital Growth Fund. This initial commitment helped attract global investors, culminating in $350 million by February 2024, primarily supporting technology- and export-oriented SMEs in Ukraine and Moldova (Centre for Strategic and International Studies, 14.06.2024).
Romania has also been involved in the planning process for the reconstruction of Ukraine. For example, in December 2023, the Romanian think tank New Strategy Center organized a conference in Bucharest on this topic under the patronage of the Romanian Government. At that time, it was estimated that $400 billion would be needed to reconstruct Ukraine. Today, we see that much more money is required. Romanian companies expected opportunities to create a logistics hub in the Brăila-Galați area, and the Romanian state hoped to attract foreign investment and start extracting gas from the Black Sea as soon as possible through the Deep Neptun project, transforming Romania into the largest gas producer in Europe.
From the American side, from the perspective of the bellicose Democrats, the stakes of the war in Ukraine were the economic weakening and political isolation of Russia. From the perspective of the apparently pacifist Republicans, it is the massive participation of the US and American corporations in the post-war reconstruction of Ukraine. Because post-war reconstruction is not an act of charity, just as the Marshall Plan after World War II was not. And, of course, supporting the war through military aid is not an act of charity, either from the US or from the EU. In capitalism, both are an investment, and the goal is to be as profitable as possible. Among other things, the conditions for the profitability of wars and post-war reconstruction are created by the states that provoke, carry out, and end wars, which serve the interests of capital in peacetime and wartime. That is why, through wars and post-war reconstructions, the class struggle is latently manifested, won each time by the capitalist class, which today is formed by the owners of companies on Wall Street, in the industrial-military complex, and Silicon Valley. Financialized and militarized techno-capitalism destroys life, nature, and society at the maximum, being pushed to the heights of destructive profitability by inhuman faces like Trump, Putin, von der Leyen, Kallas, and others.
24.02.2025
