USA Withdrawing from Europe: business strategy behind the move

Americans are conveying to the Europeans that they intend to downsize their military presence in the European theatre in not so many words as such. Now USA demands that Europe should take most of the defence burden and fend for themselves. My analysis:

Donald Trump is sometimes blunt and sometimes not straightforward when it comes to the question of transatlantic relation. During Trump 1.0 presidency, Trump was vocal in Brussels on May 25, 2017 where he coerced the fellow members of NATO alliance to increase the defence expenditure by at-least 2% of the GDP of each member. He had also bemoaned the fact that “massive amount of money was owed“by them to USA, which is footing the defence bill.

In Trump 2.0 he is going somewhat gung-ho as he is demanding that the EU defence budget be around 5% of the GDP. He hinted that if European members fail there could be possible re-thinking of stationing of US troops in European soil.

In the midst of the Ukraine war, with perfect timing, he has called for Europe to re-arm a sure sign that US role in European Security Architecture is on the way out.  Even though frantic cries are heard from weaker European nations, European Union as a whole realized the unfolding situation and is now trying to cough out a defence budget of US$ 850 Billion to be spent by 20

Now let me turn to Trump business strategy behind the move:

1. Trump’s intention is honourable. He seeks to lessen the military burden   of protecting others and use the saved funds to improve infra-structure within America where roads, railways and canals need long delayed overhaul.

2. The key understanding is that the allocated EU budget cannot be entirely spent within Europe. Because Military industrial complex (MIC) there is not much developed to the level of efficiency and efficacy in USA. More than 60,000 companies are in MIC in America. The corresponding figure for EU is 2,765 firms. Defence budget for USA is USD 841 Billion while EU spends only USD 316 Billion.

3. In terms of Turnover, America returns a massive USD 830 Billion dwarfing EU at USD 316 Billion. A salient feature is the related percentage. America exports account for 40% of the global output whereas EU clobbers up one –third of the global output.

4. That said, EU is in a precarious position balancing her needs for defence products and the proposed budgeted expenditure. In point of fact, EU has to import major part of her defence needs from abroad. Russia is out of question. Therefore the main source is America. Since European soldiers are well trained in handling US armaments the logical conclusion is for EU to source the deficit wants from America and America alone.

Hurrah! Trump! The deal maker. His business strategy of hitting two fruits with one stone is just perfect: his defence exports grows his infra-structure get spruced!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist