The EU’s Defence Dilemma

The EU’s Defence Dilemma

By Klara Winiarczyk

As the world enters a new era of re-militarisation, the European Union faces a crucial decision:
adapt or fall behind. The continent’s security now hinges on its ability to strengthen defence
capabilities, a reality that European officials are beginning to acknowledge. But unlocking the EU’s
military potential requires overcoming bureaucratic inertia and political hesitation. While Europe
has long been an economic powerhouse and a champion of social welfare, its defence industry
remains a weak link—one that could be further exposed in the light of Trump’s second term in
office. The European reliance on the US security umbrella, the post-Cold War expansion of NATO,
and decades of political complacency have lulled the bloc into a false sense of stability. That
illusion is now fading.

To catch up, the EU must fast-track military production—a process that typically takes years—
within the next 12 to 24 months. European Commission President Ursula von der Leyen’s “Buy
European” initiative signals a shift, pushing EU capitals to source at least 50% of their defence
equipment from European firms by 2030 and 60% by 2035. The question remains: can the bloc
make it happen in time?

The Road to Strategic Autonomy

One of the EU’s biggest challenges is its inability to define a common threat. Each Member State
prioritises its own national security concerns, making it difficult to build consensus on military
objectives. Without a unified vision, persuading governments to ramp up military production will
be an uphill battle. However, Brussels is taking steps in the right direction. The appointment of
Andrius Kubilius as the EU’s first-ever Commissioner for Defence is a clear signal that security is
climbing higher on the European agenda.

Further momentum comes from the Draghi Report, presented in September 2024, which stresses
the defence sector’s role in driving economic growth and innovation. Many of today’s everyday
technologies—GPS, seat belts, LIDAR—originated from military research. The European Defence
Industrial Strategy (EDIS), introduced in mid-2024, reinforces this approach by pushing for
stronger collaboration among EU nations.

Building a robust European defence industry isn’t just about protecting the continent—it’s also
about supporting NATO. With Trump openly threatening to scale back US involvement, Europe
has little choice but to step up. If the eight remaining EU countries raise their defence spending to
the required 2% of GDP, the continent could make a real impact. Under EDIS, the EU has set
ambitious targets: at least 40% of defence acquisitions must be done collaboratively, 50% of
defence budgets should be directed to European manufacturers, and 35% of the market value
should come from intra-EU trade. The goal is clear—reduce reliance on non-EU suppliers and
build a more self-sufficient defence sector.

But the challenge is steep. Washington’s “Buy American” policy signals growing fears that a
militarily independent Europe could weaken US influence. Trump’s first term saw the Pentagon
push US diplomats to promote American arms sales aggressively. The US benefits immensely
from this arrangement—when European allies buy American weapons through the Foreign Military
Sales programme, the cost per unit for the US military decreases. In essence, Europe helps
subsidise American defence spending.

Al and the Future of Warfare

Beyond traditional military spending, the battle for technological supremacy is heating up. The US has led the way in integrating artificial intelligence into warfare, with companies like Palantir and Anduril securing major Pentagon contracts. Palantir, known for its advanced data analytics, and Anduril, which specialises in autonomous drones and submarines, highlight the growing role of Al-driven defence technology. If Europe fails to keep pace, it risks becoming irrelevant on the modern battlefield.

Currently, European defence spending is inadequate. In 2023, the US and China accounted for half of global military expenditure. Europe, if serious about its ambitions, must boost its investment. Non-EU suppliers still provide 48% of the continent’s defence needs. with 34% coming from the US alone. To reduce dependence, the European Investment Bank (EIB) is considering increasing its €45 billion lending plan -provided lagging Member States boost their defence budgets. Some have even floated the idea of EU defence bonds, a proposal backed by France and Estonia but resisted by Germany.

The European Defence Sector: Where Does It Stand?

The defence tech sector is booming, fuelled by Al and automation. Investors are pouring money into start-ups developing battlefield software, drones, and robotics. But there’s concern that this surge will fade once the war in Ukraine ends. While defence tech seems like a hot sector, many venture capital firms remain hesitant due to ethical concerns about dual-use technologies.

Regional investment patterns are also diverging. In Eastern Europe, particularly in the Baltics and Poland, there’s a clear push for homegrown weapons manufacturing. Elsewhere, hesitation lingers. Josh Wolfe of Lux Capital predicts a shift from new weapons development to the maintenance of existing military systems. However, discussions at the Munich Security Conference 2025 suggest that Trump’s hardline stance on Europe could push Brussels towards full strategic autonomy.

France, Germany, Italy, and Poland lead European defence spending, with Poland emerging as the most aggressive in ramping up its military budget. A potential game-changer? Joint ventures with Ukrainian defence firms to scale up weapons production. The goal is to make Ukraine a formidable military force- one that can stand strong even if US support wavers.

Germany, the UK, and France account for 87% of total European defence tech investments.
Across NATO, spending on defence technology has quadrupled since 2018. European start-ups have raised €3 billion in venture capital – 1.8% of all European VC funding – a figure that has tripled since 2022. But if Europe truly wants to compete, it must eliminate bureaucratic bottlenecks that slow down its military expansion. Historically, the EU has faced three major roadblocks: lack of funding, US resistance to a stronger European military, and concerns over national sovereignty.

Looking ahead, several defence trends will shape global military capabilities: Al, information technology, and blockchain, cognitive superiority and real-time communication systems, energy efficiency in weapons manufacturing, the coexistence of analogue and digital systems, boosting demand for maintenance, quantum technology, biotechnology and human enhancement, including human-machine collaboration.