There is considerable divergence concerning defence capabilities and budgets within the EU (see Figure 1). After the Russian annexation of Crimea in early 2014, the Baltic States announced a rapid increase in their defence budgets. Taken together, their expenditures are expected to reach more than €2 billion in 2020. The three Baltic States are on the road to reaching NATO’s 2 % defence-spending target soon. Currently, only five Member States have already met it: Estonia, Greece, France, Poland and the UK. Even though defence spending has increased across the EU since 2014, national budgets have not converged. This is due to the fact that EU Member States have different economic growth rates and face security threats particular to their geopolitical position. At the EU’s most eastern external border, Russian aggression is a major threat and alignment with NATO of prime importance. The southern Member States are more concerned about terrorism and security challenges emerging from the Middle East and North Africa.
Moreover, the equipment of the armed forces as well as priorities for capability development and defence research differ. While France has approximately 200 000 soldiers at its command, Estonia’s military personnel number only 6 000 in peacetime. Having said this, the Baltic States are leading in information technology, digitisation and research on cyber security. PESCO is supposed to make the most of the respective strengths of each participating EU Member State, especially regarding the niche capabilities of smaller Member States.