Europe is re-imagining its entire security architecture and defense capacity amid doubts over both Russia and the US. Yet it still buys a huge amount of US equipment. Can its own companies catch up?
For many years, discussions about European defense spending were hardly noticeable in most EU capitals. Today, however, it has become a major issue.
The European Union’s pledge of €150 billion (\$163.5 billion) in loans for arms spending, along with Germany’s prospective new leader, Friedrich Merz, adopting a stance reminiscent of former ECB chief Mario Draghi by declaring he will stop at nothing to strengthen Europe’s military capabilities, illustrates this shift.
There has been a significant shift.
This follows increased concerns regarding Russia’s hostile actions in Eastern Europe.
concerns about America’s dedication to NATO and the transatlantic partnership.
However, data published this week by the Stockholm International Peace Research Institute (SIPRI) revealed just how difficult it will be for Europe to act independently.
Nearly sixty-seven percent of the weapons acquired by European NATO member countries between 2020 and 2024 were supplied by the United States, marking an increase from the 52% share the U.S. had from 2015 to 2019.
More than 90% of the weapons imported by Norway, Sweden, Italy, and the Netherlands originated from the United States, whereas the percentage for the UK exceeded 80%. Between 2015 and 2019, fewer than 10% of Germany’s weapon acquisitions were sourced from the U.S., yet this number surged to 70% during the timeframe spanning from 2020 to 2024.
Tim Lawrenson, an associate fellow at the International Institute for Strategic Studies, points out that the United States has been the primary military force and security provider for European nations since NATO’s establishment 76 years ago. Europe remained comfortable relying on NATO and believed firmly in America’s dedication to its pledges.
He stated that recent events have prompted significant doubts among Europeans regarding whether this should now be altered.
Resources required to bridge the divide
Guntram Wolff, a defense expert from the Brussels-based research institute Bruegel, suggests that there exists a level of interconnectedness between U.S. and European defense firms that isn’t evident in the statistics.
“There are numerous items that genuinely qualify as NATO products because they utilize components sourced from multiple allied nations,” he explained, citing the instance of the Lockheed Martin F-35 fighter jet — an American-made aircraft developed with contributions and support from various European NATO member states.
Nonetheless, European defense firms were particularly susceptible regarding the supply of what are known as strategic enablers like satellites.
“If discussions include topics like tanks, the disparity between the U.S. and Europe might not be significant,” he stated. “Nevertheless, when it comes to strategic enablers, much originates from the United States, including transport helicopters or satellite communication systems. Our reliance extends both to their infrastructural capabilities and their technological offerings.”
Tim Lawrenson believes that European countries aiming to reduce the disparity between domestically produced defense items in Europe versus those imported from the U.S. face substantial expenses and delays. Expanding Europe’s capability to produce current goods along with innovating new ones, particularly to fill gaps now predominantly covered by American technology, requires considerable effort and time.
This situation also prompts the inquiry into whether European governments ought to purchase from whichever source is available to swiftly fill the gaps, or if they should adopt a “Produced in Europe” strategy to strengthen the continent’s defense sector.
The issue at hand revolves more around timing rather than capability. As Wolff stated, “Within three years, it will be quite challenging for Europe to manage independently.” He further noted that “by the five-year mark, the situation will look considerably different.”
Lawrenson contends that during regular periods, it would require “two, three years for complex products,” whereas in more urgent situations, “these timelines might get compressed slightly, though only marginally so.”
France and Germany
There has been disagreement about whether EU defense funds can be used for purchasing equipment from non-EU countries, including European NATO allies like the UK or Norway, which are not part of the union.
The EU Commission President Ursula von der Leyen stated that the loans ought to be utilized within Europe, which may include funds from countries like the UK, but must not go towards activities outside the continent. She emphasized during her address to the European Parliament, “These loans should support buying from European manufacturers, thereby strengthening our domestic defense sector.”
Germany will have a significant part to play
Even though Europe’s combined defense and aerospace industry is not as large as that of the United States, it still holds significant weight. In 2023, this sector generated revenues totaling €290.4 billion ($316 billion), whereas the U.S. market amounted to $829 billion.
Many believe that Europe possesses the industrial expertise and capacity to develop a top-tier defense industry.
especially if the promised government expenditures by European authorities are realized.
Germany holds particular significance. Friedrich Merz’s strategy has been broadly recognized for its potential to bring about significant change, with specialists considering the nation’s largest economy ideally positioned to fulfill this requirement. This shift towards strengthening the defense sector might also assist in propelling the country forward.
due to its economic downturn from deindustrialization.
Wolff thinks that an expanding defense sector could provide “compelling wages” and draw employees away from other industries, such as automotive manufacturing.
Hans Christoph Atzpodien, who leads the German Federal Association of the Security and Defense Industry, concurs with this view. He notes that employees from the automotive sector frequently possess skills that align well with those needed in defense firms. Nevertheless, he warns that additional training and obtaining necessary security clearances could potentially delay such transitions.
“The current timelines for issuing these authorizations are far too slow to facilitate a quick shift of the pertinent staff,” he stated.
European cooperation is key
Tim Lawrenson thinks
The German stance on the matter of defense expenditures
Could encourage other major European countries like France and the UK to follow suit.
If Germany proceeds with a substantial expansion of its budget,
It would serve as a powerful motivator for the other two nations to take further action. Essentially, they might feel compelled to make those difficult choices.”
This brings up the enduring query of whether European governments and defense firms can collaborate for the benefit of the entire continent.
Lawrenson feels that collaboration in both development and procurement within the defense industry is extremely challenging.
“European nations often find it simpler to purchase equipment independently, and the U.S. Foreign Military Sales system allows for swift and straightforward acquisitions from these countries. We must devise a strategy to encourage nations to opt for European products, either individually or collectively, regardless of whether they are part of a collaborative development project,” stated Lawrenson.
Atzpodien concurs and stated he is “confident” that European military forces can be properly equipped. Nonetheless, this outcome would rely more heavily on the customer side—specifically, national governments—than on the companies themselves. He emphasized that these nations must cultivate the political determination to genuinely align their requirements so as to secure higher production volumes.
Edited by: Uwe Hessler
Author: Arthur Sullivan
