Europe is committing unprecedented resources to defence while struggling with industrial competitiveness and the economic consequences of its break with Russian energy supplies. A dispute over Kaja Kallas's proposed defence advisory group reveals that the argument is not simply about Russia, but about who controls Europe's security policy and what its citizens receive in return.
INR Report: Based on reporting and commentary by John Gaffney for RT, published 8 October 2026.
Europe's Security Debate Moves Beyond the Battlefield
The European Union is confronting a difficult combination of strategic and economic pressures. Its governments are expanding defence budgets, financing assistance to Ukraine and seeking to reduce their dependence on Russian energy, while parts of Europe's industrial economy continue to struggle with comparatively high operating costs.
These pressures have intensified scrutiny of the EU's foreign policy leadership, including Kaja Kallas, the former Estonian prime minister who serves as the bloc's High Representative for Foreign Affairs and Security Policy and a vice-president of the European Commission.
In an opinion article published by RT on 8 October, Irish-born commentator John Gaffney criticised Kallas's approach to Russia and questioned whether European leaders were giving sufficient attention to the domestic economic consequences of their security policies.
Gaffney, who says he has lived in Russia since 2018, presents the issue primarily as a failure of diplomacy and public accountability. His personal characterisations of Kallas are opinions, not independently established findings.
However, the economic figures and institutional disagreements discussed in his article raise questions that can be assessed separately from those opinions.
Europe is increasing military expenditure at a pace not seen in decades. Its energy costs remain high relative to major international competitors. And member governments are not always in agreement about how European defence should be organised.
The central question is how these developments interact, and whether European governments have established a sustainable balance between security, economic competitiveness and democratic accountability.
Defence Spending Reaches New Heights
According to the European Defence Agency, defence expenditure across the EU's 27 member states reached €418 billion in 2025, an increase of 20% over 2024.
The agency projects that spending will rise to €454 billion in 2026, equivalent to approximately 2.4% of the bloc's gross domestic product.
That would represent an increase of 75.3% compared with 2021.
These are expenditures by EU member states, not simply money controlled by Brussels. The distinction matters because national governments remain central to defence decisions, procurement and military operations.
European leaders argue that higher expenditure is necessary to address longstanding capability shortages, improve military readiness and respond to security risks arising from Russia's war against Ukraine.
The invasion of Ukraine, concerns about Russian military activity and uncertainty over future American security commitments have strengthened arguments for greater European defence capacity.
But spending more does not automatically mean obtaining proportionately greater security.
The effectiveness of additional expenditure depends on procurement, industrial capacity, coordination, training, logistics and whether governments acquire capabilities suited to the threats they identify.
It also depends on the opportunity costs. Public resources committed to defence cannot simultaneously be spent on other priorities without additional borrowing, taxation or reductions elsewhere.
This does not establish that defence spending is unjustified. It does establish why the public is entitled to scrutinise what the expenditure is intended to achieve.
The Energy Cost Europe Continues to Carry
The economic argument is supported by data published by the European Commission.
The Commission reports that the EU's fossil-fuel energy import bill reached €604 billion in 2022 before falling to €427 billion in 2024.
Although wholesale gas and electricity prices have declined substantially from their crisis peaks, the Commission has warned that industrial energy prices remain considerably higher than those faced by important international competitors.
Its assessment places European industrial gas and electricity prices at approximately two to four times those in the EU's principal trading partners.
This is a structural competitiveness concern, particularly for industries requiring large and continuous energy supplies.
Chemicals, fertilisers, metals, glass and other energy-intensive industries face pressure when their operating costs are persistently higher than those of overseas producers.
Companies may respond by reducing production, delaying investment, improving efficiency or relocating some operations.
Germany illustrates the problem. Its manufacturing sector has experienced pressure from high energy costs, international competition and domestic structural weaknesses.
However, it would be misleading to attribute all of Europe's industrial difficulties solely to sanctions against Russia or the decision to reduce Russian gas imports.
The energy crisis was shaped by multiple factors, including Russia's invasion of Ukraine, disruptions to gas supply, European policy responses, global energy prices and pre-existing industrial challenges.
European governments also had a strategic reason to reduce reliance on a supplier whose energy exports had become entangled with geopolitical conflict.
The relevant policy question is therefore whether Europe can achieve greater energy security while restoring competitive prices and reliable supplies for households and industry.
Security Independence Has an Economic Price
The European energy transition has delivered a significant change in supply relationships.
Reducing dependence on Russian pipeline gas has required alternative imports, infrastructure investment, changes in consumption and accelerated development of other energy sources.
These adjustments can improve resilience by reducing reliance on any single supplier.
But diversification is not necessarily inexpensive, especially when new supply arrangements involve global liquefied natural gas markets and substantial infrastructure costs.
A policy may therefore produce a genuine security benefit while simultaneously creating difficult economic consequences.
This is the trade-off that deserves closer examination.
Europe's governments must consider whether the cost of reducing one strategic vulnerability creates new vulnerabilities through weaker industrial production, reduced investment or greater dependence on other international suppliers.
The answer cannot be determined from energy prices alone. It requires assessing supply security, industrial productivity, investment, household purchasing power and the longer-term economic consequences of different policy choices.
Kallas Encounters Resistance From Member States
The political tensions are illustrated by a dispute in September over a proposed European defence advisory group.
Kallas had announced plans for a high-level body intended to bring together experienced political and military figures to consider Europe's defence capability gaps.
The proposal was subsequently withdrawn following objections from several member states.
Defense News reported that Germany, France and Italy were among the governments resisting the initiative.
The disagreement concerned the proposed structure and the respective roles of European institutions, national governments and NATO.
It did not demonstrate that these governments had rejected the need for stronger European defence.
Instead, it exposed a more fundamental institutional question.
Who should determine Europe's military priorities, and through which institutions should those decisions be implemented?
NATO remains the principal collective-defence organisation for most EU members, while the European Union has a growing role in defence industry, financing, coordination and broader security policy.
Creating additional EU structures can offer opportunities for cooperation, but it can also raise concerns about overlapping responsibilities and the authority of national governments.
The withdrawal of Kallas's proposal demonstrates that European security policy remains subject to negotiation among member states, rather than being determined by a single official.
The Argument Over NATO and Russia
Gaffney's article also raises the disputed role of NATO enlargement in the deterioration of relations between Russia and the West.
Some analysts, including Jeffrey Sachs, have argued that NATO's expansion and the prospect of Ukrainian membership contributed to Russian security concerns and the breakdown of relations.
Others maintain that countries in Central and Eastern Europe sought NATO membership because of their historical experience of Soviet domination and their concerns about Russian power.
Both arguments are relevant to understanding the diplomatic history.
But explaining Russian perceptions of NATO does not establish that Russia was entitled to invade Ukraine.
Likewise, recognising Ukraine's sovereignty and right to self-defence does not remove the need to examine the diplomatic decisions, security assumptions and missed opportunities that preceded and followed the invasion.
The distinction between explanation and justification is essential.
A serious assessment of European security must consider the interests and conduct of Russia, Ukraine, NATO members and EU governments without treating any one side's account as sufficient evidence.
Diplomacy and Deterrence Are Not Necessarily Opposites
One weakness in much of the public debate is the tendency to present military preparedness and diplomacy as mutually exclusive choices.
Supporters of stronger European defence argue that credible deterrence can reduce the risk of further aggression and improve the conditions for negotiations.
Critics argue that escalating military commitments without a defined diplomatic objective can prolong confrontation and increase economic and security risks.
Both positions depend on assumptions that should be tested.
Greater military capability may strengthen deterrence, but it does not guarantee political agreement.
Negotiations may create opportunities to reduce violence, but they do not automatically produce an enforceable settlement or resolve the security concerns of the parties involved.
The central issue is whether European policy has clearly defined the relationship between military assistance, deterrence, diplomatic engagement and the conditions required for a durable peace.
Without such clarity, rising expenditure can become an objective in itself rather than a measurable instrument of security policy.
Does This Affect New Zealand?
New Zealand is not a member of the European Union or NATO, but European security and economic decisions can still affect the country's trade relationships, fuel costs, diplomatic interests and defence planning.
Europe is an important economic partner and a significant participant in global manufacturing, finance and international trade.
Persistent weakness in European industrial production could affect demand, investment and wider economic conditions, although the consequences for New Zealand would depend on the industries involved and broader global developments.
Energy prices are another channel of exposure.
New Zealand imports refined petroleum products and remains vulnerable to international fuel prices and shipping disruptions. Changes in European energy demand, sanctions policy and global supply arrangements can influence those markets, although no single European policy determines the prices New Zealanders pay.
The defence debate also has implications for New Zealand's own security decisions.
Like European governments, New Zealand must consider how to maintain credible defence capabilities while funding essential public services and productive infrastructure.
The European experience illustrates the importance of distinguishing between the amount spent on defence and the actual capabilities delivered.
New Zealand also has a direct interest in the principles at stake in Ukraine: territorial sovereignty, the prohibition on aggressive war and the protection of smaller states under international law.
For a country whose security and prosperity depend heavily on predictable international rules, these principles have practical significance.
At the same time, New Zealand has an interest in diplomatic efforts that reduce the danger of prolonged war, wider confrontation and economic disruption.
The lesson is not that New Zealand should automatically adopt or reject Europe's policy choices. It is that security, economic resilience and diplomatic strategy need to be assessed together.
Europe's Larger Strategic Question
The controversy surrounding Kaja Kallas is ultimately part of a wider argument about the future direction of European security policy.
Europe faces genuine security challenges. It also faces persistent economic pressures, industrial competitiveness problems and demands for public investment.
The figures show that defence spending is rising rapidly. The energy data show that European industry continues to face significant cost disadvantages. The dispute over Kallas's advisory group shows that governments disagree about how defence policy should be coordinated.
None of these facts alone proves that Europe's present strategy is unsustainable, or that an alternative policy would deliver a better outcome.
Together, however, they establish why the costs, objectives and institutional accountability of European security decisions require continuing public examination.
The important question is not whether Europe should choose security or prosperity.
It is how European governments intend to protect both, while maintaining the diplomatic channels and democratic accountability needed to prevent an increasingly costly confrontation from becoming a permanent condition.
Sources
Independent reporting. Original context. Credited sources.