HomeGlobal Defence UpdatesEurope needs a new defense-industrial playbook to stay relevant

Europe needs a new defense-industrial playbook to stay relevant


Europe is in a decisive historical phase, as its security order is being reshaped by Russia’s invasion of Ukraine. Whatever will be at the end of these tectonic shifts, it must be secured militarily. And if Moscow’s war of aggression has shown one thing, it is that a functioning defense industry is central to this.

A truly geostrategic defense industrial sector is needed that must meet three challenges in the next decade:

  • Ukraine must be integrated into the West, including its defense-industrial ecosystem.
  • Europeans have recognized that industrial capacity to produce and supply military goods is an essential part of deterrence and defense. At the same time, technology is evolving, which means European contractors must be able to produce for quality and quantity at the same time.
  • A relationship with the United States must be forged that ensures a functioning defense while allowing both sides to protect their industrial interests. Such an arrangement should give Europeans room to maneuver to shape their own industrial and technological base.

By all accounts, this should be a historical moment for the European Union. Its policy and legal instruments as well as negotiating power are needed now. But the bloc’s defense schemes like PESCO and the European Defence Fund have yet to make a real difference in producing capabilities.

At the same time, there simply won’t be a better EU defense governance architecture in the foreseeable future. The European Commission seems to realize its limitations in shaping a sector that has been traditionally linked to national interests, where member states’ individual investment strategies have much greater influence on the sector’s overall health than directions from Brussels.

NATO is unlikely to be of much help. The Western military alliance does not control and understand the defense industry and technology beyond the receiving end. Its newfound interest in defense companies or innovation schemes like DIANA do not change this.

For the EU to be able to storm-proof its defense industries for future crises, it needs a new operational program. At its center should be the further development of geopolitical and geoeconomic considerations of the commission and the most important member states.

The bloc must find a new balance between economy and security: EU-bound policies are based on the economic liberal assumption that there is a market for everything. This ideology has been true for defense only to a very limited extent — political influence is created here — as there are few demanders (governments) and a dwindling number of suppliers (defense contractors). The desired consolidation of suppliers has shown its undesired effects even before the war, with the unhealthy dynamics of local monopolies threatening an even greater dependence on global suppliers.

But local security of supply, at the risk of inefficient slack, has its own value in times of war and in the context of competition with China. A healthy pool of defense contractors means that economic vagaries cannot pose a risk to functioning deterrence.

As for the role of non-EU countries, especially the United States, in this equation, there is no use in ranting: American companies will have a stronger presence in the European market, in part because Europe’s political fragmentation has made itself so weak. Likewise, other countries and their industries are already — and should be — an integral part of our arms sector, including Britain and Turkey.

Moreover, in the reorganization of Europe’s security, it is not only the EU member states that are important. The Balkans and Moldova show that political vulnerabilities never go unused in the calculus of Russian meddling. Even if these states are unimportant in terms of the arms industry, their integration is an important building block of the security policy firewall against Moscow and perhaps also Beijing. It makes the future ecosystem more heterogeneous and at the same time more political, which brings diplomatic conflicts that must be carefully managed.

Ultimately, EU decision-makers need a new vision for reconciling the themes of economy and security on the one side and opening themselves up for expansion and decentralization in the field of armaments production on the other.

Without the right narrative, reform will get lost in bureaucratic minutiae.

A pan-European lighthouse defense project with strong political backing, to which nations contribute modules in accordance with their own industrial benefits, would do wonders in creating such a narrative.

Christian Mölling leads the Center for Security and Defense at the German Council on Foreign Relations think tank.

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