Cold War 2.0 and Defence Readiness

d'Artis Kancs

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: Europe is raising defence commitments under conditions of geoeconomic fragmentation, but fiscal commitments do not automatically become usable capability. This paper asks how non-kinetic geoeconomic shocks affect the capacity of European countries to convert defence resources into readiness-enabling capability. It develops a readiness-enabling index for European countries that combines four components: macroeconomic capacity, sectoral resilience, defence-industrial capability, and logistics and sustainment. The index is calculated at country level and reported through disclosure-controlled regional aggregates. It is a diagnostic measurement framework, not an estimate of classified operational readiness, combat effectiveness, military power, or causal battlefield outcomes. The results show that readiness-enabling capacity is uneven across Europe. Stronger aggregate profiles remain constrained by certified surge conversion, while countries on the eastern and south-eastern flank face more binding logistics, replenishment, air-defence, ammunition, infrastructure, and production-depth constraints. Across scenarios, losses are largest when geoeconomic fragmentation, supply-chain disruption, and reduced external support occur simultaneously. The paper contributes to defence economics by modelling readiness as an economic-industrial conversion problem under stress and by showing that binding constraints differ across countries, making uniform spending targets insufficient guides to preparedness.

Keywords: defence economics; defence readiness; geoeconomic fragmentation; defence-industrial base; military logistics; supply-chain resilience; NATO burden sharing; Europe. (search for similar items in EconPapers)
JEL-codes: F51 F52 H56 L64 O25 R11 (search for similar items in EconPapers)
Date: 2026-01-05
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Persistent link: https://EconPapers.repec.org/RePEc:eei:rpaper:eeri_rp_2026_05

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