Nicolae Ciuca spent a lifetime on the battlefield before being voted in as prime minister of Romania four months ago.
Yet even he did not imagine the need to spend millions of dollars for emergency production of iodide pills to help block radiation poisoning in case of a nuclear blast, or to raise military spending 25 per cent in a single year.
“We never thought we’d need to go back to the Cold War and consider potassium iodide again,” Ciuca, a retired general, said through a translator at Victoria Palace, the government’s headquarters in Bucharest. “We never expected this kind of war in the 21st century.”
Across the EU and Britain, Russia’s assault on Ukraine is reshaping spending priorities and forcing governments to prepare for threats thought to have been long buried — from a flood of European refugees to the possible use of chemical, biological and even nuclear weapons by a Russian leader who may feel backed into a corner.
The result is a sudden reshuffling of budgets as military spending, essentials like agriculture and energy and humanitarian assistance are shoved to the front of the line, with other pressing needs like education and social services likely to be downgraded.
The most significant shift is in military spending. Germany’s turnabout is the most dramatic, with Chancellor Olaf Scholz’s promise to raise spending above 2 per cent of the country’s economic output, a level not reached in more than three decades.
The pledge included an immediate injection of €100 billion ($113 billion) into the country’s notoriously threadbare armed forces. As Scholz put it in his speech last month, “We need planes that fly, ships that sail and soldiers who are optimally equipped.”
The commitment is a watershed moment for a country that has sought to leave behind an aggressive military stance that contributed to two devastating world wars.
A wartime mindset has also spread to sectors aside from defence. With prices soaring for oil, animal feed and fertiliser, Ireland introduced a “wartime tillage” programme last week to amp up grain production and created a National Fodder and Food Security Committee to manage threats to the food supply.
Farmers will be paid up to €400 for every additional 100-acre block that is planted with a cereal crop like barley, oats or wheat. Planting additional protein crops like peas and beans will earn a €300 subsidy.
“The illegal attack on Ukraine has put our supply chains under enormous pressure,” Charlie McConalogue, the agriculture minister, said in announcing the $13.2 million package.
Russia is the world’s largest supplier of wheat and with Ukraine accounts for nearly a quarter of total global exports.
Spain has been running down its supplies of corn, sunflower oil and some other produce that also come from Russia and Ukraine.
“We’ve got stock available, but we need to make purchases in third countries,” Luis Planas, the agriculture minister, told a parliamentary committee.
Planas has asked the European Commission to ease some rules on Latin American farm imports, like genetically modified corn for animal feed from Argentina, to offset the lack of supply.
Extraordinarily high energy prices have also put intense pressure on governments to cut excise taxes or approve subsidies to ease the burden on families that cannot afford to heat every room in their home or fill their car’s gas tank.
Ireland reduced gasoline taxes and approved an energy credit and a lump-sum payment for lower-income households. Germany announced tax breaks and a $330-per-person energy subsidy, which will end up costing the treasury $17.5 billion.
In Spain, the government agreed last week to defray the cost of gasoline in response to several days of strikes by truckers and fishermen, which left supermarkets without fresh supplies of some of their most basic items.
And in Britain, a cut in fuel taxes and support for poorer households will cost $3.2 billion.
The outlook is a change from October, when Rishi Sunak, Britain’s chancellor of the Exchequer, announced a budget for what he called an “economy fit for a new age of optimism,” with large increases in education, health and job training. - The New York Times
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