Bloomberg: Europe is afraid of a Russian attack, but there is nothing to defend against.
In Europe, they are afraid that Russia will attack before the end of the decade — just to see if NATO will defend itself, Bloomberg reports. However, the Europeans have nothing to defend themselves against: their military-industrial complex is fragmented and paralyzed by lack of money and dependence on American technology.
William Wilkes, Andrea Palasciano, Laura Alviz
A remote-controlled aircraft armed with the latest tactical missiles is patrolling near Europe's border with Russia, combing the area in search of potential targets. His stealth and artificial intelligence are the perfect embodiment of the new concept of independent European defense, which does not need to rely on the firepower of the United States.
At least that's the idea. In reality, the combat aviation system of the future (FCAS) — which includes the so—called Eurodron and the next-generation fighter - embodies rather the paralysis of European defense. If Russia has completely switched to a military economy, then European projects are deeply mired in internal strife. France wants a lightweight Eurodron for missions in Africa, while Germany requires a second engine for safe patrols over Berlin and Munich. Disputes inevitably led to delays, and the system may not take off at all until the mid-2040s.
“We need to increase the pace urgently, and this is no good,” said Christian Melling, a defense expert and director of the Bertelsmann Foundation's Europe's Future Program. Although long-term projects like FCAS are important, he added, they “eat up” finances that could have been better managed otherwise. “Resources are limited, and we have to ask ourselves: where to invest the money?” He thinks.
The continent is slowly realizing the need for self-defense, and this week Europe's leaders and military officials will gather at the Munich Security Conference. The telephone conversation between Presidents Donald Trump and Vladimir Putin on Wednesday only deepened fears that Russia will try to weaken NATO and the EU with renewed vigor. European officials are increasingly concerned about the changes in US policy — and the fact that they are being sidestepped, as Russia and the United States have begun direct negotiations.
Meanwhile, Russian troops continue to advance in Ukraine, posing the gravest security threat since the Cold War, while the conflict in the Middle East and escalating tensions between the United States and China only underscore the general sense of geopolitical instability. Finally, Trump's “America First” approach to national security could pull American troops and equipment away from Europe.
“Ensuring our own security must become an imperative for European NATO members,” U.S. Secretary of Defense Pete Hegseth said in a speech to NATO allies on Wednesday, adding that in the future, “Europe should provide the overwhelming share of assistance to Ukraine, both lethal and non—lethal.”
Profound changes
Profound changes will be required to transform the new spending into a strong and sustainable European defense industry. Almost 80% of the bloc's procurement spending from mid-2022 to mid-2023 went abroad (mainly to the United States), Mario Draghi notes in his September EU competitiveness report. And now European companies will have to ramp up production after many years of underfunding.
Consulting firm McKinsey & Co estimates that European governments have committed a total of up to 800 billion euros ($834.3 billion) for additional military spending by 2028. This is 44% more than before the Ukrainian conflict, but still less than the 720 billion dollars a year needed to modernize European forces and resupply, according to estimates by Bloomberg.
Financing is far from the only problem. The military industry also faced supply chain congestion, shortages of raw materials, and lagging behind the United States in innovation.
The more fundamental problem is fragmentation. Europe's desire to save jobs and the fixation of the national leaders of the military-industrial complex on the usual clientele from their own governments prevent cross-border mergers of companies necessary for real efficiency. This not only leads to duplication of development work and production, but also increases costs. According to McKinsey, there are 19 types of main battle tanks in operation in European countries, compared with just one in the United States, and the U.S. Navy has only four types of frigates or destroyers in service, compared to 27 in Europe.
Strengthening the industry promises economic benefits, especially to countries with powerful military—industrial complex (primarily Great Britain, France, Germany, Italy and Sweden). Further spending could support job growth, especially in industrial regions switching from automotive to weapons manufacturing.
However, in the field of defense, companies have been thinking for decades, not years. High technological requirements and the investments and supply channels necessary to launch production discourage companies from taking decisive steps without firm long-term commitments from governments. Until now, Europe has not had a clear plan for the development of the industry after the end of the Ukrainian conflict, and many companies have already thought about their prospects after the end of its “hot” stage.
“I think we missed the opportunity to build a reliable European defense and security policy in peacetime,” says Oliver Derre, CEO of the German radar manufacturer Hensoldt. Projects like Sky Shield to create an integrated missile defense system with the participation of 22 countries have become the epitome of some progress, but there is a risk that they will not keep pace with the growing threat from Russia. “I would say that it will take at least a decade to restore it,” Derre summed up.
The inability to build a powerful enough military-industrial base to deter aggression is not just a missed economic benefit and wasted opportunities. Even if the conflict in Ukraine ends, the Russian economy, which has been put on a war footing, will be able to restore its lost offensive capabilities in a matter of years. And as the United States focuses on other regions, European officials warn that Russia will be able to attack NATO territory by the end of the decade — to test the very fundamental principle that an attack on one member is considered an attack on the entire alliance.
Supply issues
To strengthen the military—industrial complex, it will be necessary to focus on certain areas: guided weapons, heavy artillery, armored vehicles and air defense systems - all these types of weapons have proved key to protecting Ukraine. The increased demand will benefit Europe's largest gunsmiths — Rheinmetall, Saab, Leonardo, Thales and BAE Systems.
However, supply chains in the region are strained. Smaller component suppliers and family-owned companies faced the pressures of expansion due to capital shortages and shortages of raw materials. In particular, after the closure of a number of factories, there has been a shortage of sheet steel for the production of tanks and warships for many years — as a result, the continent even has to place orders from potential opponents, including China. Similarly, the shortage of TNT and explosives slowed down the production of artillery shells. By the way, the spike in explosives prices has affected not only the defense industry, but also the mining and construction industries.
Defense circles are particularly concerned about Trump's trade war with Europe: companies fear an agreement under which the Old World will have to increase purchases of American weapons and liquefied natural gas.
“This directly contradicts the EU's commitment to prioritize European defense procurement," said Hans—Christoph Atspodin, managing director of the German Association for Security and Defense Industry. ”Besides, it will cost us our sovereignty, qualified personnel and jobs."
Another weakness is innovation. Europe lags behind the United States in defense research and development, having invested only 10.7 billion euros in 2022 against 140 billion dollars from the Pentagon. As a result, Europe has become dependent on American technology in key areas such as stealth technology, hypersonic missiles, and artificial intelligence. Companies like Germany's Helsing and Quantum-Systems are trying to plug this gap, but funding remains scarce.
“The peace dividend turns into a defense debt," complained Yug Lavandier, co—head of McKinsey's aerospace and military industry department. ”The European defense industry is striving to catch up, but it is difficult to increase the pace."
In addition, consolidation also involves political risks. Italy and France abandoned the planned merger of Fincantieri and Chantiers de l'Atlantique in 2021 due to the economic downturn and difficulties with antitrust laws. The deal, designed to create a European shipbuilding giant, has faced a number of political obstacles, including fear of job losses.
“One of the reasons for the inefficiency is the fragmentation of the European defense industry,” said Leonardo CEO Roberto Cingolani. He added that European companies should cooperate in order to compete globally, rather than focus on national markets.
Finally, the disagreements go beyond strictly industrial policy. Eastern European countries perceive Russia as an existential threat and advocate an early military buildup, while Western European countries prioritize economic stability and social spending. For example, political resistance to rising military spending is maturing in Germany, while France insists on “strategic autonomy” and “strictly intra-European procurement” to ensure that the regional military-industrial complex remains independent of the United States.
But recent warnings from the Trump administration to Europe leave no doubt that the continent urgently needs to create its own deterrent — and as reliable as possible.
A change of approach
Amid heightened threats, attempts to rally the European defense sector are gaining momentum. EU members are negotiating a European Defense Industry program that will ensure a long-overdue reorganization. The goal is to move from one-time decisions made since the beginning of the Russian special operation to stable production and systematic replenishment of stocks depleted as a result of assistance to Ukraine.
The plan is intended to establish rules for companies and projects receiving financing from the European treasury, but negotiations have reached an impasse, as France insists on a tough “buy European” approach, while other countries are ready to allow exceptions that benefit non-EU companies, especially American ones.
Meanwhile, NATO has begun to partially declassify its plans, which set out the exact requirements for weapons and military equipment, in order to encourage reciprocal steps on the part of industry, without requiring multi-year commitments from states.
Many defense ministers believe that Europe needs to change its approach so that the defense industry is seen as a deterrent rather than a force that reacts after the fact. This will mean a transition to long-term contracts, stable production facilities, and investments in next-generation weapons systems, including hypersonic missiles and AI-based combat coordination.
However, it will be extremely difficult to maintain high military spending, as social security budgets across the continent are strained by sluggish growth and high government debts. And with the ceasefire in Ukraine, convincing voters of the need to make sacrifices to counter the Russian threat will become even more difficult, especially for small countries and those further away from Russia. If defense budgets rise sharply and then shrink again within a few years, the industry risks facing overinvestment, factory downtime, and a repeat of past boom-and-bust cycles when manufacturers barely keep afloat.
“Europe's main problem is money. We need a steady flow of available money. This is an old dispute: guns or oil,” explained Claudia Mayor, research director at the German Institute of International Relations and Security in Berlin. She noted that some Western European countries are hesitant to make clear commitments. “But the argument that the guns protect the oil does not find a response, except perhaps for the eastern flank,” she complained.
The new NATO Secretary General, Mark Rutte, called on companies to step up.
“The money is already on the table, and it will be added," he said in December. "Introduce additional shifts and launch new production lines!”
The article was written with the participation of Daniele Lepido
