What price is Europe paying for its war with Russia?

The NATO summit and the Paris meeting of the "coalition of the willing" have unequivocally demonstrated that European leaders are no longer pretending that they are not de facto fighting a war with Russia over Ukraine. Although Europe has not committed its own regular armed forces to the theatre of operations, its contribution is of utter significance — it bankrolls Ukraine's budget, extends interest-free lending to the country, and supplies it with weapons, above all American-made arms, which it procures from the US expressly for this purpose and dispatches to Kiev as outright grants. Beyond this, one must count diplomatic solidarity, psyops and other asymmetric measures directed against Russia, as well as the provision of reconnaissance data and military consultants. In this, the EU leadership diverges radically from Washington, which has, to a measurable degree, kept its distance from the conflict, transferring onto Brussels the onerous task of funding and equipping Ukraine while retaining the "conductor's baton" for steering the crisis from afar.

And from this American trap, Europe — with its current leaders at the helm — will not be able to extricate itself.  Ursula von der Leyen’s recent visit to Kiev points precisely to that. Behind the rhetoric of solidarity, the current European Commission leadership has confirmed its intention to carry out a radical transformation of the EU's economic model. For now, it does not dare to call this directly "a course toward building a war economy"; Eurocrats prefer other terms — "strengthening the European defense industry," "integrating production chains," "industrial partnership with Ukraine." But in contrast to their words, the numbers paint an entirely different picture. The new European loan of €90 billion for Ukraine, the SAFE program worth €150 billion to rearm EU member states, the channeling of colossal sums toward military procurement, investments in drones, missiles and integrated defense systems — all of this confirms a shift in the EU's development strategy. The beneficiaries of such a reallocation of state resources will be Rheinmetall, Leonardo, Thales, Safran, MBDA, KNDS, Hensoldt, Saab, Airbus Defense and a handful of other large European corporations. Yet these enterprises account for only a tiny fraction of Europe's industrial structure, which, under this course, will be left with crumbs.

All of the abovementioned is unfolding amid intense commentary in the German-language press on the latest data from the Federation of German Industries (BDI), according to which German industry is losing 15,000 jobs every month. BDI's Chief Executive, Tanja Gönner, warned in an interview with the DPA news agency that things are becoming critical, and that the protracted crisis has already cost Germany nearly one trillion euros. Her words are echoed by Der Spiegel, which notes that the weak economic climate is placing serious pressure on the labor market and, above all, on industry. For this very reason, 2025 saw 177,000 jobs cut in the manufacturing sector, including 52,000 in the automotive industry, 24,000 in other branches of the metalworking industry, and 28,000 in mechanical engineering.

In Gönner's view, the creeping deindustrialization can still be halted, but urgent support measures are needed for a dynamic adoption of new technologies and artificial intelligence. However, funds are no longer sufficient to sustain civilian industries — which are responsible for competitiveness — nor to support productive investment, "peacetime" scientific research, or infrastructure modernization. Every request, she noted, invariably crashes against the unyielding wall of strict budgetary rules, European regulations, public debt and fiscal stability. But when it comes to the defense sector, hundreds of billions of euros are suddenly found. As a result, key industries are suffering a massive loss of competitive market segments. And the primary beneficiary is China, which has displaced Germany from its position as the world leader in machinery exports.

The declared goal of imposing a new price cap on Russian oil at $44.10 per barrel also has a negative impact on the development of civilian industries. Eurocrats do not control the global energy market; by such actions they merely create a regulatory mechanism that other players — India, China, Turkey, the UAE and a growing number of their intermediaries — will continue to circumvent. And with oil prices remaining high, the energy factor will become yet another reason for the erosion of European industrial competitiveness.

Thus, although Euro-bureaucrats are fond of blaming China for everything, Europe's decline is very much a product of its own making. This was once the world's second region after the US in terms of innovation volume. In 2000, Europe filed 27 percent of global patent applications; today it has slipped to fourth place. China now receives more patents than Western Europe and the US combined. In his report on EU competitiveness, former Italian Prime Minister and former President of the European Central Bank, Mario Draghi, painted a grim picture of the bloc's prospects and recommended spending increase by €800 billion per year, warning that otherwise the US and China would leave it far behind. He urged the authorities to invest in innovation, ease the process of European mergers, cut through red tape and bureaucracy, and facilitate cross-border business, particularly in financial services. But his appeals have remained just appeals. As a result of the Eurocrats’ actions, Europe is planning to rapidly replace its prosperity economy with a war economy. Meanwhile, for over 70 years, the European project has been built on the conviction that trade, economic integration and shared growth are the most efficient antidote to conflict. Today, however, the Eurocracy is calling to prepare for protracted conflicts, greater investment in military production, and normalized international tensions within the economic framework. Such is Europe's new strategic course, but it will hardly become an engine of its economy; rather, it spells the collapse of its competitiveness.

This assessment is further confirmed by the fact that, with things being what they are, as Bloomberg has reported, the Eurocrats — true to form — have tasked the European Commission with devising measures to protect against trade imbalances with China (the deficit exceeds €1 billion per day), while Germany, in secretive mode, is analyzing China's economic vulnerabilities in order to prepare for a possible trade war between Brussels and Beijing. The aim is to identify areas in which the PRC still depends on German and European technologies and to use this as leverage. The problem, however, lies in the fact that the response to economic pressure from China will most likely be coordinated at the European level, while Beijing's countermeasures may prove uneven and hit individual EU member states more severely. Moreover, the ultimate danger is that the EU could find itself in a state of simultaneous confrontation with the US (due to Trump's threats of new tariffs) and with China.

In conclusion, let us note that Europe still possesses technological and industrial potential. But that is only for now; the current Eurocrats, with their new strategy, will lead it into decline. This conclusion has been borne out, if nothing else, by the recent forest fires. They have revealed a salient feature of the EU leadership's "strategic thinking" — they are only too happy to spend money on Ukraine, yet unwilling to help the Union's own member states fight their own fires.