European Defence Readiness

Abstract

The preparedness and readiness of Europe is currently being challenged not only by Russia, but since recently also by its long-standing allies. In response to the evolving external security environment, the EU's White Paper on European Defence Readiness 2030 outlines the key defence issues in Europe - including critical capability gaps of forces, challenges of the defence industry such as fragmented defence market and military mobility. Leveraging an empirically validated general equilibrium multi-sector model with ambiguity and risk, this study assesses how prepared is Europe to address protracted conflicts and systemic shocks. Exploring what strategies could enhance European readiness, scenario analysis of a hypothetical total trade war imply that today's existing problems will only be amplified by systemic shocks, if not addressed timely and in a targeted way.