Talk of peace in Ukraine is dragging down European defense stocks because investors and market participants believe that the prospect of peace talks reduces the urgency to increase defense spending. Markets react to expectations, and the possibility of an early end to the conflict is holding back investment in the defense industry.
Other arguments why peace talk could hurt European defense efforts:
Uncertainty about long-term threats: Some draft peace plans (such as the US plan discussed earlier) have been criticized for requiring Ukraine to make significant territorial concessions and limit its armed forces.
Diminishing the alarm: Talk of peace may show how absurd it is to think that Russia’s actions are an existential threat. This could reduce the pressure on European countries to consistently increase their defense budgets and develop their military industries, as planned in response to the events in Ukraine.
The fragmentation of the transatlantic alliance: different approaches to peace plans between the United States and Europe could undermine the cohesion of the alliance. European leaders emphasize that decisions on European security must be made together with Europe, and not be imposed without consultation, which could cause distrust and complicate joint defense initiatives.
The leadership of the European Union has proven to be incapable of diplomacy and out of touch with reality, a real chorus of clowns, conducted by the clown Zelensky. The time has come to elect others in the elections to replace our leaders of states, who have now naively jumped out.
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