Winston Churchill is once reputed to have asserted that the Balkans region was an area that produced more history than it consumed. Since 1945, a chronically history-producing continent has seemingly taken a holiday from it. While there were some minor disruptions during Cold War years, the threat of mutually assured destruction from the nuclear arsenals of the U.S. and the Soviet Union created a sort of stalemate where major wars (aka ‘history’; nobody goes to watch movies or read stories about the intense negotiations regarding the wording of paragraph C of the 6th article of the European Constitution, ‘yawn, zzzzzzzzzzzz’) were not possible. In the West, European institutions were formed to help lessen the rivalry that had led to wars in the past, and these institutions were expanded into Eastern Europe after the fall of communism. Sure, there was the little war in the Balkans in the early 1990’s, and the NATO air campaign against Serbia at the end of that decade. But apart from that, 3 generations of Europeans have grown up without a major war breaking out on their borders that had the potential to be disruptive to the current order. With the United States underwriting the security of Western Europe during the Cold War, and the lack of an established threat in the years following the Cold War, European nations have largely (with the exception of Britain and France) ignored the need for robust military expenditures.
However, with the recent actions of Russia in the Ukraine, history in Europe is beginning to stir from its slumber. While nobody expects a series of miscalculations that will lead to WWIII, it appears at the time of this writing that Russian military vehicles did cross into the Ukraine and several were destroyed, which essentially means that a large European power has again, in the space of a few months, invaded another European state. While Russia seems to be backing off this at the present time, its’ meddling in the Ukraine along with the invasion and annexation of the Crimea, means that Eastern Europe at least has become a more unstable (aka history-producing) place.
What this means for European economies in short run is negative in that the sanctions that they are placing on Russia (and Russia’s retaliatory sanctions) will hurt various sectors of the European economy. Over the long term, it likely means that European nations will need to spend more on defense and build real militaries that are capable of projecting force, instead of what many of them actually have (not to mention any names) which is sort of a perfunctory professional fighting force that may or may not be adequately equipped. These additional necessary expenditures to increase the size of and better equip the various militaries are likely to have a certain drag on the economy that will reduce by some unknowable fraction the potential for economic growth in Europe going forward.
How history plays out is never certain, though. Putin could be forced to back down. The sanctions could result in economic decline in Russia that would cause Putin to be ousted. Or perhaps feeling cornered, he could lash out towards the West. Or perhaps he could recognize that he needs the West for energy exports more than they need him. Or he could increase Russia’s economic linkages with China to replace those with the West. There are many possibilities. That he has acted as he has means that Europeans will never fully trust him, and will likely attempt to develop other sources for the energy (and other products) that they have been getting from Russia. The other result of the situation in the Ukraine is that history has been brought back onto Europe’s radar, which means a different geo-political and defense outlook for Europe going forward