Why ‘neutral’ Austria does not want to be left out of EU rearmament drive

Good morning. News to start: US trade negotiators are demanding the EU make unilateral tariff reductions, officials told the Financial Times, threatening that without concessions the bloc will not progress in negotiations to avoid 20 per cent duties on its products.

Today, Austria’s foreign minister tells our correspondents that neutrality won’t stop Vienna chipping in to Europe’s efforts to drastically scale up its military capabilities. And the Dutch justice minister tells Laura that governments need to be more vigilant about potential corruption related to higher defence spending.

Have a wonderful weekend.

New neutral

Austria’s new foreign minister has thrown her support behind EU efforts to spend more on its own security, telling Mercedes Ruehl and Ben Hall that neutrality does not mean Vienna cannot be an important partner in strengthening the continent’s defence capabilities. 

Context: Russia’s war against Ukraine and US President Donald Trump’s threats to withdraw American protection to Nato allies that don’t spend more on defence have spurred a raft of national and EU-wide initiatives to increase military spending. Austria is one of only four of the EU’s 27 member states that are not in Nato.

Beate Meinl-Reisinger told the FT that Austria was “reworking its security strategy” and wanted to co-operate with its EU partners to shape a European defence union. That includes making use of a new €150bn loans-for-arms fund. 

While reaffirming Austria’s military neutrality, Meinl-Reisinger argued that this status should not be confused with political neutrality. “There is no neutrality inside Europe. We are part of the European security and defence policy, and there you have solidarity,” she said.

Austria has committed to doubling its military spending from 1 per cent to 2 per cent by 2032 — though this is still far less than a 5 per cent target demanded by Trump of European Nato allies.

Austria’s government has said it will remain in the European Sky Shield initiative to develop a continental air and missile defence platform, a pledge that Meinl-Reisinger said was particularly important in light of questions surrounding Trump’s commitment to Nato.

“When I talk to my European counterparts that are members of Nato, if Article Five is once questioned, you cannot go back to normal. Now Europe has to react . . . to strengthen [its] autonomy when it comes to defence capabilities, and we will take part in this,” she said. Austria co-operates with Nato through initiatives such as the alliance’s Partnership for Peace. 

The foreign minister said she had launched citizen forums to foster public dialogue on security, defence, and understanding neutrality domestically. Being militarily neutral means you are able to defend yourself, she added.

“For everybody who argues in favour of neutrality, this person should argue in favour of even investing more in our defence capabilities,” she said.

Chart du jour: Mind the gap

German Chancellor Friedrich Merz yesterday in Lithuania promised to help defend “every inch” of Nato territory. The country’s so-called Suwalki Gap — the only land link between the Baltics and the rest of Europe — is viewed as a critical possible weak point in the event of a Russian attack.

Spending carefully

The Netherlands’ justice minister has urged countries to be more proactive in their fight against corruption in military procurement after his country helped spearhead a landmark investigation into alleged bribery, writes Laura Dubois.

Context: Earlier this month, authorities in the Netherlands, Belgium, Italy, Luxembourg, Spain and the US carried out raids and arrests as part of an investigation into alleged bribery of officials involved in purchasing weapons for Nato allies.

The Netherlands arrested three people, including a former employee of the defence ministry, in the probe, which comes as Europe is investing vast amounts to boost its military. Several other people were arrested in other countries.

“All procurement agencies within the [ministries of defence] need to be very alert,” Dutch justice minister David van Weel told the FT in an interview.

“There is a necessity to spend money fast because we need capabilities. But there’s then always a risk of corruption,” he warned. “We are investing a lot, then you should be careful that you also protect your employees from being vulnerable in this regard.”

He urged countries to “please have your regulations in place, and your checks and balances and your safeguards, to prevent that from happening”.

Van Weel did not say whether there was more to come in the investigation, or which defence contractors had been implicated.

“I can’t interfere with the prosecutor-general’s power now to handle the case,” van Weel said.

What to watch today

1. EU ministers for research and space meet in Brussels.

2. EU chief diplomat Kaja Kallas meets North Macedonian Prime Minister Hristijan Mickoski in Skopje.

Now read these

• Old habits die hard: German Chancellor Friedrich Merz has backed an EU ban on Nord Stream, to quell domestic discussions on resuming Russian imports.

• Engine trouble: Donald Trump’s tariffs have crushed the recovery plan for Germany’s automakers and suppliers that rely on the EU’s biggest car industry.

• Solar promise: An increased focus on ethics and local procurement may dent the allure of cheap Chinese panels and boost Europe’s industry.