Appropriate military strength requirements

What is a satisfactory or even ideal level of a nation's "defence" strength?

Let's ignore for a while the inclination of many people to mistake intervention-readiness with defence.
There are - according to my long-time observation - different aspirations concerning defence and security. 

The most extreme demands complete dominance in a quest for perfect security, but aside from the problem that the latter is unachievable, there's also the correct saying that perfect security for one is perfect insecurity for others.
We don't need Kant's categorical imperative to understand that being able to defeat (or at least hurt badly) everybody else is hardly a reasonable metric for "defence". In fact, the quest for such dominance may carry the seeds for future war (and war losses, costs) in itself, as others will feel compelled to increase their military power in order to meet at least relatively moderate defence requirements. This in turn can be misunderstood as offensive preparations (and can indeed morph into them) and provoke 'hawks' to promote offensive action in order to achieve something that's usually not really achievable.
The spending required to seek dominance is also ruinous.
Complete dominance isn't even a sensible means to achieve the end of security for a single country. It's for the same systemic problems no sensible means for an alliance.

Two Power Standard
There's a great choice of only slightly less ambitious goals; the Royal navy's two-power standard was such an example. They wanted to have a fleet equal to the fleets of the second and third most powerful fleets combined. It was defined with a couple serious other fleets in mind.
The British were not able to maintain this standard for long; the first true challenge to this standard succeeded by exceeding the UK's economic abilities and the British settled for a much less ambitious parity with the strongest other navy soon thereafter.*

Reality isn't simple enough
More sensible approaches take into account additional information, such as logistics, geography, or the difference between offensive and defensive potential. It wouldn't make much sense for the Europeans to be concerned about the Indian army's strength, for example. China does not need to worry about Israeli nukes. Austria doesn't need to worry about Turkish amphibious capabilities even thought they add to the Turkish military spending. Vietnam doesn't need to fear German tanks.

Political relations - at least the stable ones - influence the sensible demand for military strength as well. Allied forces can be added to yours, neutral ones don't add to your needs and only unfriendly ones are of real concern.
So basically Europe is overly militarized because of little threats, but let's move on the theory track some more.

Not simple at all
Let's assume you've got a sum of unfriendly forces potential of 100 that could be brought to bear against you. Would you need to have a military strength of 101 or 100? 
Or maybe you need less than 100 because said sum cannot ever be realised since some of the unfriendly powers don't like each other or at least would not co-operate? Maybe there's a potential of 100, but the maximum reasonable expectation of realised threat is rather at 60? So we should discuss a strength level of 61, 60 or less, right?

Reality vs. perception
Is military strength the correct metric at all? Do the potential aggressors ask god about our exact real military strength and get an answer? Is the answer correct or a lie?
Or maybe they don't know our correct military strength and what matters is rather their estimate of our military strength? Or rather the emotional impression done instead of a more cool-headed estimate?
What about the inaccuracy of our estimates or impressions about our and their strengths?
There's no doubt a great deal of uncertainty. The problem of uncertainty is that we should not choose the safe route and estimate our strength cautiously while readily believing every hype about theirs. Assume we did; we would need to strive for great military strength, which would lead to similar consequences as the 'complete dominance' approach.

Pyrrhic 'victories'
But maybe we don't need this anyway. Maybe we do not really need to be superior. 
Sounds silly, right? That's because the discourse on such matters has gone silly itself long ago.
Almost everybody is aware of the phenomenon of Pyrrhic victories and generally disappointing 'victories'. Sometimes a fight wasn't worth it even though you're recognized as 'winner'. Maybe the expectation of such a disappointment is a just as effective deterrent as the expectation of defeat?

At times, even less might suffice. Even the expectation of a resounding victory may be an insufficient motivation for aggression. Keep in mind there are third parties. Hitler would likely not have attacked Poland the way he did if he had known what mess this would entail. Hussein would not have attacked Kuwait either if he had understood the third party reactions in advance.

International Law (and culture) as cost-saver
An international framework of rules, norms and expectations may indeed enhance national or collective security far beyond what your military strength can achieve on its own. All those miniature countries such as Monaco, Andorra or Brunei would not exist any more without this effect.

Reliance on third parties is unreliable of course (despite the aforementioned long-term survivor states). Even formal, treaty-bound allies are at times unreliable and may not act quite as expected when it gets bloody [cough] Italy [/cough].

You might also get caught in a situation in which you ought to defend an ally against attack from a power which you didn't initially consider unfriendly at all.

In the end there's a great deal of fuzziness and uncertainty. It's apparently impossible to determine the exact military strength needed to meet a specific ambition or requirement. Well, it's at least impossible without god-like omniscience, and I won't be reassured by certain politician's pretensions that they've got a direct phone line to god.

We can tell whether certain ambitions are wrong in principle or not. These are not affected by the complexity, fuzziness and uncertainty. Someone who claims that his country needs to dominate the world militarily as a requirement for its national defence isn't speaking about mere defence and national security at all; he (rarely she) is rather speaking about infantile power fantasies.

Practical application on the EU
Europe is in a beneficial geographic situation thanks to the Mediterranean Sea. Right now most of the Southern Med countries have little military power and Israel is still considered to be no threat to Europe. Yet even if there were credible threats on the other side of the Med, all we would need to have is the ability to keep them at a distance or repel them. An ability to return the favour and invade them, occupy them, and force extreme demands on them is not required for European defence. The South is relatively nice and cheap defence-wise.
The Western direction is no issue as long as we're allied with the only powers there, the northern direction is basically barren land and water from where no threat originates. 
The Eastern direction only points at Russia, which is much weaker than it used to be. Again, we don't need to be able to capture Moscow - we don't even need to be able to bombard it. I suppose we only need to be able to keep whoever rules there convinced that attacking us is a stupid idea.

And military strength alone - even if great - is not enough to do so. You also need to be convincing about its use even against minor aggressions. This is - yet again - an Estonia-related topic. One of the present European deterrence challenges is to teach Russians that EU Europeans truly considers Estonians as some of themselves. That might some day be worth more than a thousand of gold-plated military aircraft. To be frank; this would require that the average EU citizen learns about the existence of Estonia in the first place.


*: Please note that today, even a theoretically much more ambitious five-power standard applied to the USN would allow the USN to dismantle itself so very much that the naval community and many anglophone milbloggers would not only cry foul, but likely even talk about revolt.

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