Uffe Ellemann-Jensen: European nations must co-operate to match the challenge posed by China

All over Europe, budgets are being pared as an age of austerity dawns, and defence expenditure is proving to be the easiest of targets.

These cuts are coming at a time when European efforts to shoulder a fair share of the Western defence burden have been cast in doubt - not least in Afghanistan, where most European countries have limited their participation by insisting on "caveats" that usually serve to keep their troops far from the most dangerous zones.

Defence cuts are also happening at a time when Europe has been overtaken by Asia in terms of total defence spending. Western Europe's long-held position as the world's most important concentration of military power after the United States and Russia appears to be over.

The US faces no serious challenge (not yet, at least) as the world's dominant military power. After all, the US spends almost as much on its armed forces as the rest of the world combined. However, the picture is changing with the rapid growth of China's military expenditure. The official growth rate of China's military expenditure has increased substantially - 15 per cent per year over the last decade - and there is much hidden military spending. Growing anxiety among China's neighbours, particularly India, has led to big increases in defence spending by other Asian powers.

Cuts in European defence spending, moreover, are starting to cause serious tensions within the Atlantic alliance. Nato is often described as a construction with two pillars and an architrave symbolising the common values that form the basis of the alliance. But even during the Cold War, Americans often pointed out that the European pillar was lacking.

This debate may heat up again, now that the US, no less than Europe, is faced with grave budgetary problems. Indeed, in a time of austerity, US politicians might find it difficult to understand Europe's willingness to cut defence budgets that already total far less than Nato's official 2 per cent-of-GDP target.

Europe's problem is not only a lack of military spending, but also poor effectiveness when it comes to the purpose of that spending: the use of force when and where necessary. Europe's capability of deploying combat forces is simply too small relative to the number of men and women in uniform.

European military effectiveness is also curbed by different procurement policies, as those countries that produce hardware prefer to keep orders at home. This is true of weaponry as well as logistical capabilities, where, despite immense efforts over the years to get more out of the shrinking funds, there is still great potential for integration and standardisation. If Europeans want their ambitions to be taken seriously, they must find ways to deal with the decline in Europe's military power.Its leaders will have to tell their constituents that there are limits to how much military budgets can be cut.

Europeans may have to embrace new modes of co-operation - such as Britain and France have - among their national armed forces to put them to effective use.

Otherwise, not only will Europe's global political ambitions become untenable, but its allies on the other side of the Atlantic will lose patience with Europeans' refusal to shoulder their share of the security burden.

• Uffe Ellemann-Jensen is the former foreign minister of Denmark