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The West’s new arms race: Selling peace to buy war

Military spending is rising faster than at any time since the Cold War, but the retreat from diplomacy and foreign aid will come with a price.

By TIM ROSS in London

^{Illustrations by Nicolás Ortega for POLITICO}

In 1958, British Prime Minister Harold Macmillan observed that “jaw, jaw is better than war, war.” Talking, he meant, is preferable to fighting. 

Macmillan knew the realities of both diplomacy and military action: He was seriously wounded as a soldier in World War I, and as prime minister, he had to grapple with the nuclear threats of the Cold War, including most critically the Cuban missile crisis.

John F. Kennedy, the U.S. president during that near-catastrophic episode of atomic brinkmanship, also understood the value of diplomatic channels, as well as the brutality of conflict: He severely injured his back serving in the U.S. Navy in 1943.

Andrew Mitchell, a former Cabinet minister in the British government, worries that the wisdom of leaders like Kennedy and Macmillan gained from war has faded from memory just when it is most needed. 

“The world has forgotten the lessons of the first World War, when millions of people were slaughtered and our grandfathers’ generation said we can’t allow this to happen again,” he said.

One school of academic theory holds that era-defining wars recur roughly every 85 years, as generations lose sight of their forebears’ hard-won experience. That would mean we should expect another one anytime now.

And yet, as Mitchell sees it, even as evidence mounts that the world is headed in the wrong direction, governments have lost sight of the value of “jaw-jaw.”

The erosion of diplomatic instinct is showing up not just in rhetoric but in budgets. The industrialized West is rapidly scaling back investment in soft power — slashing foreign aid and shrinking diplomatic networks — even as it diverts resources to defense. 

At no point since the end of the Cold War has military spending surged as fast as it did in 2024, when it rose 9.4 percent to reach the highest global total ever recorded by the Stockholm International Peace Research Institute.

By contrast, a separate report from the Paris-based Organization for Economic Cooperation and Development found a 9 percent drop in official development assistance that same year among the world’s richest donors. The OECD forecast cuts of at least another 9 percent and potentially as much as 17 percent this year. 

“For the first time in nearly 30 years, France, Germany, the United Kingdom, and the United States all cut their ODA in 2024,” the OECD said in its study. “If they proceed with announced cuts in 2025, it will be the first time in history that all four have cut ODA simultaneously for two consecutive years.” 

Diplomatic corps are also shrinking, with U.S. President Donald Trump setting the tone by slashing jobs in the U.S. State Department. 

Global figures are hard to come by, and anyway go out of date quickly; one of the most extensive surveys is based on data from 2023. But authorities in the Netherlands, the United Kingdom, and the European Union’s headquarters are among those who have warned that their diplomatic staff face cuts. 

Analysts fear that as industrialized economies turn their backs on aid and diplomacy to build up their armies, hostile and unreliable states like Russia, China and Turkey will step in to fill the gaps in these influence networks, turning once friendly nations in Africa and Asia against the West. 

And that, they warn, risks making the world a far more dangerous place. If the geopolitical priorities of governments operate like a market, the trend is clear: Many leaders have decided it’s time to sell peace and buy war. 

Selling peace, buying war

Military spending is climbing worldwide. The Chinese defense budget, second only to that of the U.S., grew 7 percent between 2023 and 2024, according to SIPRI. Russia’s military expenditure ballooned by 38 percent.

Spurred in part by fears among European countries that Trump might abandon their alliance, NATO members agreed in June to a new target of spending 5 percent of gross domestic product on defense and security infrastructure by 2035. The U.S. president — cast in the role of “daddy” — was happy enough that his junior partners across the Atlantic would be paying their way. 

In reality, the race to rearm pre-dates Trump’s return to the White House. The war in Ukraine made military buildup an urgent priority for anxious Northern and Eastern European states living in the shadow of President Vladimir Putin’s Russia. According to SIPRI, military spending in Europe rocketed 17 percent in 2024, reaching $693 billion — before Trump returned to office and demanded that NATO up its game. Since 2015, defense budgets in Europe have expanded by 83 percent.

One argument for prioritizing defense over funding aid or diplomacy is that military muscle is a powerful deterrent against would-be attackers. As European Commission President Ursula von der Leyen put it when she announced her plan to rearm Europe in March: “This is the moment for peace through strength.”

Some of von der Leyen’s critics argue that an arms race inevitably leads to war — but history does not bear that out, according to Greg Kennedy, professor of strategic foreign policy at King’s College London. “Arms don’t kill. Governments kill,” he said. “The problem is there are governments out there that are willing to use military power and to kill people to get their objective.” 

Ideally a strong military would go hand in hand with so-called soft power in the form of robust diplomatic and foreign aid networks, Kennedy added. But if Europe has to choose, it should rebuild its depleted hard power first, he said. The risk to peace lies in how the West’s adversaries — like China — might respond to a new arms race. 

Few serious politicians in Europe, the U.K. or the U.S. dispute the need for military investment in today’s era of instability and conflict. The question, when government budgets are squeezed, is how to pay for it. 

Here, again, Trump’s second term has set the tone. Within days of taking office, the U.S. president froze billions of dollars in foreign aid. And in February he announced he would be cutting 90 percent of the U.S. Agency for International Development’s contracts. The move — billed as part of Trump’s war on “woke” — devastated humanitarian nongovernmental organizations, many of which relied on American funding to carry out work in some of the poorest parts of the world.

According to one estimate, Trump’s aid cuts alone could cause 14 million premature deaths over the next five years, one-third of them children. That’s a decision that Trump’s critics say won’t be forgotten in places like sub-Saharan Africa, even before cuts from other major donors like Germany and the U.K. take effect.

In London, British leader Keir Starmer and his team had prepared for the whirlwind of Trump’s return by devising a strategy aimed at appealing to the American leader’s self-interest, rather than values they weren’t sure he shared. 

As Starmer got ready to visit the White House, he and his team came up with a plan to flatter Trump with the unprecedented honor of a second state visit to the U.K. Looking to head off a sharp break between the U.S. and Ukraine, Starmer also sought to show the U.K. was taking Trump seriously on the need for Europe (including Britain) to pay for its own defenses. 

On the eve of his trip to Washington in February, Starmer announced he would raise defense spending — as Trump had demanded allies must — and that he would pay for it in part by cutting the U.K.’s budget for foreign aid from 0.5 percent of gross national income to 0.3 percent. 

For a center-left leader like Starmer, whose Labour predecessors Gordon Brown and Tony Blair had championed the moral obligation to spend big on foreign development, it was a wrenching shift of gear. 

“That is not an announcement that I am happy to make,” he explained. “However, the realities of our dangerous new era mean that the defense and national security of our country must always come first.”

The U.S. government welcomed Starmer’s move as “a strong step from an enduring partner.”

But Starmer returned home to political revolt. His international aid minister Anneliese Dodds quit, warning Starmer his decision would “remove food and health care from desperate people — deeply harming the U.K.’s reputation.” 

She lamented that Britain appeared to be “following in President Trump’s slipstream of cuts to USAID.” 

Easy targets 

In the months that followed, other major European governments made similar calculations, some citing the U.K. as a sign that times had changed. For cash-poor governments in the era of Trumpian nationalism, foreign aid is an easy target for savings.

The U.K. was once a world leader in foreign aid and a beacon for humanitarian agencies, enshrining in law its commitment to spend 0.7 percent of gross national income on ODA, according to Mitchell, the former Cabinet minister responsible for the policy. “But now Britain is being cited in Germany as, ‘Well, the Brits are cutting their development money, we can do the same.’” 

In Sweden, the defense budget is due to rise by 18 percent between 2025 and 2026, in what the government hailed as a “historic” investment plan. “The prevailing security situation is more serious than it has been in several decades,” Sweden’s ministry of defense said, “and Russia constitutes a multi-dimensional threat.” 

But Sweden’s international development cooperation budget, which was worth around €4.5 billion last year, will fall to €4 billion by 2026. 

In debt-ridden France, plans were announced earlier this year to slash the ODA budget by around one-third, though its spending decisions have been derailed by a spiraling political crisis that has so far prevented it from passing a budget. Money for defense was due to rise dramatically, despite the overall squeeze on France’s public finances. 

In Finland, which shares an 800-mile border with Putin’s Russia, the development budget also fell, while defense spending escaped cuts. 

The country’s Development Minister Ville Tavio, from the far-right populist Finns Party, says the cuts provided a chance to rethink aid altogether. Instead of funding humanitarian programs, he wants to give private businesses opportunities to invest to create jobs in poorer countries. That, he believes, will help prevent young people from heading to Europe as illegal migrants. 

“If they don’t have jobs, the countries will become unstable, and the young people will radicalize. Some of them will start trying to get to Europe,” he said. “It’s a complete win-win if we can help the developing countries to industrialize and create those jobs they need.”

Not all countries are cutting back. Ireland plans to increase its ODA budget, while Denmark has pledged to keep spending 0.7 percent of its gross national income on foreign aid even as it boosts investment in defense.

But Ireland has enjoyed enviable economic growth in recent years and Denmark will pay for its spending priorities by raising the retirement age to 70. In any case, these are not giant economies that can sustain Europe’s reputation as a soft power superpower on their own. 

Staff cuts

The retreat from foreign aid is only part of a broader withdrawal from diplomacy itself. Some wealthy Western nations have trimmed their diplomatic corps, even closing embassies and bureaus. 

Again, Trump’s America provides the most dramatic example. In July, the U.S. State Department fired more than 1,300 employees, among them foreign service officers and civil servants. In the eyes of European officials watching from afar, Trump’s administration just doesn’t seem to care about nurturing established relations with the rest of the world. 

According to the American Foreign Service Association’s ambassador tracker, 85 out of 195 American ambassador roles were vacant as of Oct. 23. Part of this reflects confirmation delays in the U.S. Senate, but nine months in office, the administration had not even nominated candidates for more than 60 of the empty posts. 

The result is a system stretched to the breaking point, with some of the most senior officials doing more than one job. Marco Rubio, the secretary of state, is still doubling up as Trump’s national security adviser (and he’s also been tapped to head the national archives).

With key posts left open, Trump has turned to loyalists. Instead of drawing on America’s once-deep pool of diplomatic expertise, the president sent his friend Steve Witkoff, a lawyer and real estate investor, to negotiate personally with Putin and to act as his envoy to the Middle East. 

In Brussels, EU officials have been aghast at Witkoff’s lack of understanding of the complexities of the Russia-Ukraine war. One senior European official who requested anonymity to speak candidly about diplomatic matters said they have zero confidence that Witkoff can even relay messages between Moscow and Washington reliably and accurately. 

That’s partly why European leaders are so keen to speak directly to Trump, as often and with as many of them present as they can, the senior European official said.

And while Washington’s diplomatic corps is hollowed out in plain sight, other governments in the West follow Trump’s lead, only more quietly.

British diplomats face staff cuts of 15 percent to 25 percent. The Netherlands is reducing its foreign missions budget by 10 percent (while boosting defense) and plans to close at least five embassies and consulates, with more likely to follow. 

Even the EU’s flagship foreign department — the European External Action Service, led by the former Prime Minister of Estonia Kaja Kallas, a Russia hawk — is reducing its network of overseas offices. The changes, which POLITICO revealed in May, are expected to result in 10 EU delegations being downsized and 100 to 150 local staff losing their jobs. 

“European diplomacy is taking a back seat to priorities such as border control and defense, which are getting increased budget allocations,” one EU official said. The person insisted the EU is not “cutting diplomacy” — but “the resources are going elsewhere.”

Privately, diplomats and other officials in Europe confess they are deeply concerned by the trend of reducing diplomatic capacity while military budgets soar. 

“We should all be worried about this,” one said. 

Jaw-jaw or war-war?

Mitchell, the former British Cabinet minister, warned that the accelerating shift from aid to arms risks ending in catastrophe.

“At a time when you really need the international system … you’ve got the massive resurgence of narrow nationalism, in a way that some people argue you haven’t really seen since before 1914,” he said. 

Mitchell, who was the U.K.’s international development minister until his Conservative Party lost power last year, said cutting aid to pay for defense was “a terrible, terrible mistake.” He argued that soft power is much cheaper, and often more effective, than hard power on its own. “Development is so often the other side of the coin to defense,” Mitchell said. It helps prevent wars, end fighting and rebuild nations afterward. 

Many ambassadors, officials, diplomats and analysts interviewed for this article agree. The pragmatic purpose of diplomatic networks and development programs is to build alliances that can be relied on in times of trouble.

“Any soldier will tell you that responding to international crises or international threats, isn’t just about military responses,” said Kim Darroch, who served as British ambassador to the U.S. and as the U.K.’s national security adviser. “It’s about diplomacy as well, and it’s about having an integrated strategy that takes in both your international strategy and your military response, as needed.”

Hadja Lahbib, the European commissioner responsible for the EU’s vast humanitarian aid program, argues it’s a “totally” false economy to cut aid to finance military budgets. “We have now 300 million people depending on humanitarian aid. We have more and more war,” she told POLITICO. 

The whole multilateral aid system is “shaking” as a result of political attacks and funding cuts, she said. The danger is that if it fails, it will trigger fresh instability and mass migration. “The link is quite vicious but if we are not helping people where they are, they are going to move — it’s obvious — to find a way to survive,” Lahbib said. “Desperate people are more [willing] to be violent because they just want to save their lives, to save their family.”

Countries that cut their outreach programs also face paying a political price for the long term. When a wealthy government closes its embassy or reduces aid to a country needing help, that relationship suffers, potentially permanently, according to Cyprien Fabre, a policy specialist who studies peace and instability at the OECD. 

“Countries remember who stayed and who left,” he said. 

Vacating the field clears space for rivals to come in. Turkey increased its diplomatic presence in Africa from 12 embassies in 2002 to 44 in 2022, Fabre said. Russia and China are also taking advantage as Europe retreats from the continent. “The global bellicose narrative sees big guns and big red buttons as the only features of power,” Fabre said. 

Politicians tend to see the “soft” in “soft power,” he added. “You realize it’s not soft when you lose it.” 

Nicholas Vinocur contributed to this report.