What would Monnet do?

Luis Garicano and Guy Verhofstadt*

Having met many Ukrainians during these sad years of war, and visited Kyiv, Bucha and Lviv early in 2022, we deeply admire their courage in fighting against all odds, and their belief in the cause of freedom that so many on our side of the world take for granted.

Ukrainians face the prospect of a false peace that would forcibly partition their country. This arrangement would leave them weak and vulnerable, in wait for Putin's next attack. In a bitter twist, the US wants to force them to pay “compensation.”

Also for Europe, the prospect is catastrophic. After last weekend, NATO’s Article 5 does not seem to be worth the paper it is written on. On the current trajectory, the Baltics and even Poland, could fall to Putin next. It is hard to know where this ends – but we do have some 20th century experiences to help us imagine.

The truth of the matter is that, despite the many ‘wake-up calls’, east of the Oder, voters do not prefer defense to pensions and social spending, at least until war is on their doorstep (ie. the Scandinavians, Poland, and the Baltics). Part of the reason is demographics – the infernal political economy of our aging populations in which increasing social expenditure consumes ever larger shares of our budgets. Part of the reason is our current no-growth equilibrium – where every budgetary battle is a zero-sum war between interest groups

So what can Europe do? We should look to Jean Monnet for inspiration. June 1940, as Hitler entered Paris, Monnet drafted an extraordinary proposal: the complete merger of France and Britain into a single Franco-British Union.

The British War Cabinet – no traditional home for francophilia – announced:

“France and Great Britain shall no longer be two nations, but one Franco-British Union. The constitution of the Union will provide for joint organs of defence, foreign, financial and economic policies. Every citizen of France will enjoy immediately citizenship of Great Britain, every British subject will become a citizen of France”

De Gaulle and Churchill were ready to sign when the surrender came. The juncture in history now is of similar importance. We need the same bravery from our leaders.

Today’s equivalent would be signing an EU accession treaty for Ukraine the day an armistice is concluded. Not promises of future negotiations, but immediate membership. The treaty needs only state two things: Ukraine becomes a member state, and the EU's mutual defense clause (Article 42.7) applies immediately after the armistice is concluded. While this clause mirrors NATO's Article 5 – making an attack on one an attack on all – it is crafted to respect member states' different security traditions (“this shall not prejudice the specific character of the security and defence policy of certain Member States”).

EU accession is usually a tortuous affair. Pages and pages of legal documents must be drafted. The entering country must change its laws and gobble up the ensemble of existing EU laws known in Brussels jargon as the ‘EU acquis’. This is for later.

Now, does that mean Ukraine will have joined the EU? Yes. Does that mean Ukraine will enjoy all the other rights member states of the EU have? No. It will (unfortunately) be important to exempt Ukraine from access to the EU agricultural policy or to the freedom of movement enjoyed by other states. Doing so would sadly be unpalatable for certain other EU members. But our accession treaty should announce an appendix fleshing out the details of Ukrainian membership. This appendix would take some years to negotiate. The period would also be used to reform the way the EU works. For letting Ukraine into the EU requires reducing reforms such as reducing the scope for unanimity in foreign affairs to avoid paralysis.

The second element draws directly from Monnet's experience as Roosevelt's advisor. Monnet helped convince America to become “the great arsenal of democracy,” launching a massive arms production program that both stimulated the US economy and armed the Allies. John Maynard Keynes later estimated this coordination shortened the war by a year.

According to a just released Kiel Policy Brief, Europe needs an additional €250bn per year to defend itself without the US. In the medium term, this is a structural increase in spending, and hence cannot be debt-funded. But in the short run, speed and political reality dictate that we should fund the initial spending through debt.

Using Article 122 - the same legal basis as NextGenerationEU - Europe should issue €400 billion in bonds for rearmament. The current security threat clearly qualifies as the kind of “severe difficulty” and “exceptional circumstances” the treaty envisions. This should be combined with repurposing €90 billion in unallocated NextGen funds and new allocations from the next seven-year budget.

Some of this money should not go to Europe but Ukraine. As we previously wrote on this blog based on Pieter’s trip to Kyiv:

“Overall, the biggest limit on [Ukrainian] production right now is orders, not capacity. Ukrainian drone firms supposedly have the capacity for $10 billion in orders every year, and currently receive around half that (this same 50% utilization figure also applies to the wider Ukrainian defense industry). Given that compared with Ukraine the EU is fiscally unconstrained but has run out of armaments capacity, this gap is very frustrating to Ukrainians.”

The other portion of this one-off increase would be spent primarily on American weapons. Right now, Trump wants to remake America into an industrial superpower. Europe can use this ambition to maintain the alliance, while simultaneously addressing its defense needs. America should become, once again, our arsenal. Trump would announce, on conclusion of the deal, that he is satisfied the EU is fulfilling its commitments to NATO and the US is ready to recommit to NATO. And we get a few years to get our defense in order.

The critics would ask: why Europe should accept Trump’s request to bribe him? It is not clear Europe has a choice. All the signs imply that without America, a European defeat against Russia is extraordinarily possible (for why, see this piece). Europe must play for time.

There is a fear that dropping Europe is an objective, not an instrument – part of the ‘owning the libs’ agenda (which Tyler Cowen describes well in this piece). He might prefer humiliating us rather than getting a deal for America. We must assume otherwise – coming with loot and peace will be very attractive.

Even without immediate access to some of the EU’s provisions, accession would be extraordinarily meaningful. Long-term economic growth in Ukraine, including in defense tech, faces two major hurdles: poor integration with European markets and declining trust in institutions. Any form of EU accession would be an extremely large step towards remedying those.

Ukraine has much to offer Europe too. It has Europe’s largest and most experienced military by a significant margin, and cheap and plentiful defense production.

Most importantly, Ukraine’s desire to be part of a free Europe is at the heart of Putin’s campaign to crush it. Thanks to our ability to grant Ukrainians their wish, Europe can choose to turn the war into a victory.

*My co-author on this piece, Guy Verhofstadt, is a Belgian liberal and European federalist politician. He is a former prime minister of Belgium. He was a member of the European Parliament from Belgium from 2009 until 2024.