-At NATO summit after NATO summit, European leaders get a clear public message from Washington — increase spending on defense.
In private, there’s another message that’s just as clear — make sure a lot of that extra spending goes on U.S. weapons.
“We must develop a genuinely European defense technological and industrial base in all interested countries, and deploy fully sovereign equipment at European level,” French President Emmanuel Macron said at the GLOBSEC conference in Bratislava last month.
The decades of cajoling from Washington are paying off. Although most EU countries aren’t yet meeting NATO’s target of spending 2 percent of GDP on defense, the alliance has seen eight years of steady spending increases. In 2022, spending by European countries was up by 13 percent to $345 billion — almost a third higher than a decade ago — much of it a reaction to Russia’s full-scale invasion of Ukraine.
Now the question is how that money will be spent.
The U.S. wants to ensure that European countries — which already spend about half of their defense purchasing on American kit — don’t make a radical switch to spending more of that money at home.
Some European leaders are hoping that’s exactly what happens, but it’s an open question whether the Continent’s defense industry can make that happen.
“Traditionally, there was a suspicion about a change in Europe’s defense capabilities which dates back more than 25 years,” said Max Bergmann, director of the Europe, Russia, Eurasia Program at the Washington-based Center for Strategic and International Studies. “What direction would the EU go, would it mean the EU would decouple from NATO, what would the impact be on U.S. defense industrial policy?”
The current tensions in Brussels are over whether new EU-wide defense policy should be limited to EU companies — a position driven by Macron and Internal Market Commissioner Thierry Breton, a Frenchman. That confirms suspicions stateside about European protectionism when it comes to allowing U.S. companies to compete for EU contracts.
“Our plan is to directly support, with EU money, the effort to ramp up our defense industry, and this for Ukraine and for our own security,” Breton said last month.
But there’s an uncomfortable fact for the backers of European strategic autonomy: When it comes to arms, Europe still depends on the U.S.
While European companies have deep expertise in defense — building everything from France’s Rafale fighter to Germany’s Leopard tank and Poland’s man-portable Piorun air-defense system — the scale of the U.S. arms industry, as well as its technological innovation, makes it attractive for European weapons buyers.
The most common big-ticket item is Lockheed Martin’s F-35 Joint Strike Fighter, at a cost of $80 million a pop. There is also an immediate surge in demand for off-the-shelf items like shoulder-fired missiles and artillery shells.
“Following Russia’s invasion of Ukraine, European states want to import more arms, faster,” said a report by the Stockholm International Peace Research Institute (SIPRI).
The war in Ukraine has underscored the dominance of the U.S. defense industry.
A host of European countries are buying Javelin anti-tank missiles produced by Raytheon and Lockheed Martin; Poland this year signed a $1.4 billion deal to buy 116 M1A1 Abrams tanks, as well as another $10 billion agreement to buy High Mobility Artillery Rocket Systems produced by Lockheed Martin; Slovakia is buying F-16 fighters, while Romania is in talks to buy F-35s.
Those deals are raising fears in Europe over whether they can wean themselves off of U.S. defense suppliers. In one example, France and Germany worry about Spain’s intentions as it kicks the tires on F-35s while also being a partner in developing the European Future Combat Air System jet fighter.
But the need to restock weapons depots and continue shipping materiel to Ukraine is urgent, and after decades of contraction, the Continent’s defense industry is having a difficult time adjusting.
“Our European allies and partners, they’ve never experienced anything like this,” said a senior U.S. Defense Department official, referring to the spasm of spending brought on by Russia’s invasion. The official was granted anonymity to discuss the situation. “They don’t yet have the defense production authorities they need [to move quickly] and they’ve really been looking to us to try to get a handle on how they can increase production, and I think they’re learning a lot from us.”
To help Europe get there, the United States has expanded the number of bilateral security supply arrangements it has with foreign partners since the Russian invasion, signing new agreements with Latvia, Denmark, Japan and Israel since October. These allow countries to more quickly and easily sell and trade defense-related goods and services.
The Biden administration also signed an administrative arrangement with the European Union in late April to establish working groups on supply-chain issues, while giving both sides a seat at the table in internal meetings at the European Defence Agency and the Pentagon.
But there are limits to how far and how fast both sides are able and willing to go.
In the near term, capacity issues and political will means the rhetorical sea change in EU military spending is unlikely to make a huge dent in U.S. military industrial policy.
While the past 18 months have seen a huge spike in defense budgets — Germany announced a special debt-financed fund worth €100 billion after the Russian invasion of Ukraine; Poland’s defense expenditure is set to reach 4 percent of GDP this year — EU-wide projects are facing significant headwinds. European companies say they need longer lead times and long-term contracts to make needed investments.
“You need that visibility and certainty to make those investments. We’re in a chicken game between governments and industry — who are the first ones that are putting the money on the table,” said Lucie Béraud-Sudreau, director of the military expenditure and arms production program at SIPRI.
Ultimately, the global defense boom means that there should be plenty of military spending to go around, at least in the short term as countries rush to prove their worth to their NATO and EU allies and the Russian threat remains acute.