We estimate a Bayesian panel SVAR on annual data for 17 European economies over five decades. Defense news shocks are identified by maximizing the forecast error variance of military spending over five years, subject to orthogonality to contemporaneous expenditure. Extending medium-run restrictions to a panel VAR, we show these shocks systematically raise consumption, investment, employment, and output, with multipliers above unity, but also raise income inequality. Gains are primarily supply-