PRAGUE (AP) — European nations boosted their defenses in response to the annexation of the Crimea Peninsula in 2014 and Russia’s full-scale invasion of Ukraine in 2022, a London-based think tank said Friday, but much remains to be done for them to be ready to face threats from Russia.
That’s the conclusion of a report released by the International Institute for Strategic Studies released as it opened a three-day gathering in the Czech capital to discuss European and transatlantic military capabilities.
“NATO has not just significantly increased its ambitions regarding its deterrence and war-fighting posture, but European members have sought to address critical capability and readiness shortfalls,” the report said.
“Unsurprisingly, however, after decades of neglect and underinvestment, much remains to be done and progress has been mixed."
It was released as European leaders, including NATO Secretary-General Mark Rutte, were reassessing their trans-Atlantic relations in Budapest, Hungary in the hope that Donald Trump’s second U.S. presidency will avoid the strife of his first administration and maintain a strong common stance on Russia.
During his election campaign, Trump threatened actions that could have groundbreaking consequences for nations across Europe, from a trade war with the EU to a withdrawal of NATO commitments and a fundamental shift of support for Ukraine in its war with Russia.
During his first 2017-2021 term, Trump pushed NATO's European members to spend more on defense, up to and beyond 2% of gross domestic product, and to be less reliant on U.S. military cover.
In that respect, some progress has been made, with 2024 defense spending by NATO’s European members states 50% higher than it was 10 years ago, the report said.
But problems remain, the IISS said, naming a lack of stability in public financing that “ultimately limits (the defense) industry’s ability to invest with confidence.”
Moreover, “regulatory hurdles and application of environmental, social and governance standards will continue to act as barriers to investment,” it said.
Europe’s defense industry managed to increase output of some products after 2022, especially those with high demand from Ukraine, such as air defense and artillery. But European countries also donated their own weapons to Ukraine, including F-16 fighter jets, and “remain dependent on the U.S. for some important aspects of their military capability,” looking also to Brazil, Israel and South Korea to meet their needs due to a lack of their production capacity.
Competition with civilian industries for raw materials and skilled professionals makes things harder for the defense industry, the report said.
It also warned that many European armies don’t have enough military personnel. A lesson learned from Russia’s war against Ukraine is “that countries need significant troops to engage with and defeat enemy attack, but also enough forces to regenerate after combat attrition."
By that standard, “key European armed forces remain under-strength.”
Europeans have a long way to go to renovate their defense capabilities, the report said.
“Forces, budgets and defense-industrial capacities were reduced because of political decisions by governments. These same governments now need to rediscover the ‘muscle memory’ of defense and security, ensuring sustained policy attention and investment to meet the new strategic realities in Europe.”
FILE - In this photo provided by Ukraine's 24th Mechanised Brigade press service, servicemen of the 24th Mechanised Brigade install anti-tank landmines and non explosive obstacles along the front line near Chasiv Yar town in Donetsk region, Ukraine, Wednesday Oct. 30, 2024. (Oleg Petrasiuk/Ukrainian 24th Mechanised Brigade via AP, File)
FILE - A Ukrainian serviceman of the Bugskiy Gard unit prepares a 120mm mortar before firing towards Russian positions on the front line, in the Kherson region, Ukraine, Sunday, Nov. 3, 2024. (AP Photo/Marko Ivkov, File)
FILE - A serviceman of the 13th Brigade of the National Guard of Ukraine fires Giatsint-B gun towards Russian positions near Kharkiv, Ukraine, Wednesday, Nov. 6, 2024. (AP Photo/Efrem Lukatsky, File)
HONG KONG (AP) — European markets opened higher on Friday while Asian shares ended mixed after the Federal Reserve cut interest rates again to ease pressure on the U.S. economy.
Germany’s DAX slipped 0.1% to 19,362,32. In Paris, the CAC 40 edged 0.1% lower to 7,417.13. Britain’s FTSE 100 also fell 0.1%, to 8,132.48.
The futures for the S&P 500 and the Dow Jones Industrial Average were virtually unchanged.
Markets in Hong Kong and Shanghai fell as investors awaited much-anticipated steps by Beijing to rev up the slowing Chinese economy following a meeting of the legislature’s Standing Committee.
“If Beijing delivers, we might see a powerful rally ripple through the region as investors gear up for a fresh surge in market momentum,” Stephen Innes of SPI Asset Management said in a commentary.
Officials announced a 6 trillion yuan ($839 billion), three-year plan to help local governments refinance their many trillions of debt that has ballooned during the COVID-19 pandemic and a collapse of the property market.
Hong Kong's Hang Seng erased early gains, falling 1.1% to 20,728.19. The Shanghai Composite index dropped 0.5% to 3,452.30.
Japan's Nikkei 225 index gained 0.3% to 39,500.37.
Shares in Japanese automaker Nissan Motor Corp. plummeted 6% on Friday after the company on Thursday announced that it will dismiss 9,000 workers and slash its global production capacity by 20% due to falling sales and rising costs and inventory.
In South Korea, the Kospi shed 0.1% to 2,561.15, while Australia’s S&P/ASX 200 gained 0.8% to 8,295.10.
On Thursday, the S&P 500 climbed 0.7%, adding to its surge from the day before following Donald Trump’s presidential victory. The Dow Jones Industrial Average was virtually unchanged, while the Nasdaq composite rallied 1.5%.
The Fed’s announcement that it was easing its main interest rate by a quarter of a percentage point caused few ripples in the market because even the precise size of it was so well anticipated by investors.
The central bank began easing rates in September and indicated more cuts were likely to come, as it focuses more on keeping the job market humming after helping get inflation nearly down to its 2% target. What’s less certain in the minds of investors now is how much Trump’s victory may upset the Fed’s plans.
Trump is pushing for tariffs and other policies that economists say could drive inflation higher, along with the economy’s growth. Traders have already begun paring forecasts for how many cuts to rates the Fed will deliver next year because of that. While lower rates can boost the economy, they can also give inflation more fuel.
For now, Fed Chair Jerome Powell said, nothing is changing. “In the near term, the election will have no effects” on interest-rate policy, he said.
At this point, Powell said it’s still not clear what the policies will be after Trump returns to the White House.
“We don’t guess, we don’t speculate and we don’t assume,” he said.
The yield on the 10-year Treasury bond eased to 4.33% from 4.44% late Wednesday.
A report on Thursday showed slightly more U.S. workers applied for unemployment benefits, though the number remains relatively low. A separate report suggested U.S. workers improved their productivity during the summer, which can help keep a lid on inflation, but not by quite as much as economists expected.
In other dealings early Friday, U.S. benchmark crude oil lost 89 cents to $71.47 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the international standard, gave up 88 cents to $74.75 per barrel.
The dollar fell to 152.61 Japanese yen from 152.94 yen. The euro slipped to $1.0770 from $1.0804.
People stand in front of an electronic stock board showing Japan's Nikkei index at a securities firm Friday, Nov. 8, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Friday, Nov. 8, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
A person walks in front of an electronic stock board showing Tokyo Stock Price index at a securities firm Friday, Nov. 8, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
A person walks in front of an electronic stock board showing Japan's Nikkei index at a securities firm Friday, Nov. 8, 2024, in Tokyo. (AP Photo/Eugene Hoshiko)
