“Europeans must stop doing defence individually”.

Can Europeans rebuild the European Defence, Technological and Industrial Base (EDTIB), and if so, why, what, how, and when? Defence financing and the standardisation of European requirements are the two key change elements.  Europeans have a choice: greater synergy and coherence across the EDTIB can now be planned and delivered or the rushed consequence of external shock.  

The demand for increased European defence investment is at a time when threats to Europeans whilst serious are not deemed sufficiently dangerous by leaders of already indebted states to profoundly alter the balance between social security and national security.  Strategy and politics cannot thus be separated so far greater “overall coherence” and synergy of requirements across the European defence effort will be vital if defence ministers are to convince parliaments of the value of “directed investments”.

Why?

There have been two profound challenges over the past four years to European assumptions about European defence.  First, Russia’s invasion of Ukraine. Second, President Trump’s ‘re-balancing’ of the Transatlantic Relationship.  Both demarches have led to a re-evaluation of European defence commitments most evident at the 2025 NATO Hague Summit where European Allies agreed to increase ‘defence’ investment to 5% GDP of which 3.5% would be spent on core military requirements and 1.5% on enhanced resilience and infrastructure recovery.

What? 

A new Allied force based on but bigger than the Allied Reaction Force must be fielded no later than 2035 that can act as both deterrence by denial in the face of Russian aggression and a First Responder. The character of war is also changing fast, driven by the US-Chinese ‘arms’ race to apply Artificial General Intelligence (AGI) to warfare.  Europeans must thus conceive a new EDTIB that will drive synergy between clients, platform builders and systems generators and integrators across Europe and beyond.  New research, development and manufacturing hubs will need to forge new partnerships between the European state, prime defence contractors and SMEs in the tech sector. New and resilient supply chains will also need to be established to ensure secure supply and re-supply.  

How?

To realise the step change in European defence agreed at The Hague the EDTIB will need to be rebuilt, re-organised and galvanised to deliver sufficient military capability at appropriate capacity to underpin European deterrence and defence within the ‘new’ US-lite Alliance.  Such a transformation will also require “a fundamental change in defence financing”. European states must also end the duplicative production of tanks, aircraft, ships etc, end the protectionist conflation between defence and industrial policy, and ‘buy off the shelf” from Third Parties when better and vital assets can be delivered quicker and more competitively.  

Current programmes, such as the EU’s €150bn Security Action for Europe (SAFE) are not enough to drive the needed change and also fuel defence cost inflation.  The lack of defence urgency on the part of several European states also makes it unlikely the prime defence contractors will get the lucrative, stable contracts from the public purse that would change their business models and thus scale up businesses quickly.

Courses of action

Innovative defence financing: Such is the tension between social security and national security that only external private sector financing is likely to realise the necessary change. There are already financial instruments such as Eurobonds.  A new Defence, Security and Resilience Bank will offer European states the “best loans” over the longest period at the lowest interest rates guaranteed by the states themselves that is needed to re-capitalise all aspects of the European defence effort.

A strategic public-private partnership: Only markedly increased funding will forge a new strategic public-private partnership that will enable defence contractors to mitigate risk and build ‘cradle to grave’ partnerships with the state across collaborative research and development, drive extended production runs that reduce unit costs, accelerate fielding of defence equipment, and ensure constant in-life upgrades.

Lessons from Ukraine: End user requirements must be established early in equipment development, with innovation as much about the pragmatic application of cutting-edge systems on mid-tech platforms, as about hi-tech warfare across multiple high-end domains.  NATO is already doing a lot of work to promote standardisation and improved coherence but must also do more to promote a “best practice” business model to turn contracts around far more quickly, particularly for SMEs.  This will ensure “rapid technology sourcing” which is vital given the ever-accelerating cycle of technological change, and the growing defence applications of “dual tech”.   

NATO must be at the forefront of efforts to transform the EDTIB through new partnerships and new financing because in the absence of both the US and UK the EU can only deliver part of the defence, technological and industrial solutions the defence of Europeans so manifestly needs.  Any such change will require that most elusive of all European requirements “political will”.  Only political will can realise the ultimate defence relationship – affordability and capability.

When? Now. 

Julian Lindley-French