The EU must enable its defence industry to boost capabilities and reduce dependence on US systems

As the EU publishes a new white paper on reforming defence, there are clear priorities to make Europe a stand-alone military power.

Expert comment Published 19 March 2025 Updated 16 April 2025

With the second presidency of Donald Trump, European governments have been forced to urgently rethink their security and defence policies. 

Seismic shifts are underway, with long-held beliefs about debt brakes and fiscal rules being questioned: The German Bundestag approved a previously unimaginable reform of the country’s debt-brake to enable more spending on defence on 18 March.  

A shift towards a ‘Europe-alone’ perspective is taking place, from both EU and non-EU European countries, with steps being taken to recalibrate Europe to become a global power that can defend itself without US support.  

The European Commission published a white paper on European defence on 19 March to help address the many challenges involved – the next step in the ReArm Europe Plan announced by European Commission President von der Leyen, in which she enabled the mobilization of €800 billion for European defence. 

The problems involved in EU defence cooperation are not new. Indeed, the European Commission and experts alike have been trying to improve defence cooperation for several decades with little success. But the context has now drastically changed, opening up new avenues for potential solutions.

Strengthen a European NATO

The White Paper stresses that NATO should remain the organization that ensures the collective defence of Europe. That means EU efforts should be directed towards sustaining NATO and the individual member states’ capability requirements.

It is clear the Trump administration wants to shift the burden within NATO away from the US toward European countries – but this must be done in a coordinated way.

A more in-depth assessment on how to enhance EU and NATO collaboration should be a priority.

Rather than wait for The Hague Summit in June, military planning for an increase of European troops and capabilities can already begin. So too can large scale investments in the critical enablers like transport aircraft and ISTAR capabilities   needed for a transition to European responsibility. With crisis scenarios worryingly realistic – including a bad ending to the Russian war in Ukraine – all this needs to be fast forwarded.

Equally pressing is the need to establish information sharing between NATO and the EU – which is currently not possible, hindering cooperation. A more in-depth assessment on how to enhance EU and NATO collaboration should be a priority, including regular meetings on all levels and intensified cooperation on joint procurement, strategic enablers and intel-sharing.

Assess dependencies on US defence software and capabilities

Various European defence ministries are already reassessing their dependencies on the US. A known issue is that key data points from American weapon systems are automatically sent to the US, crucial software updates depend on US manufacturers, and many weapons systems are sourced from the US. These are problematic dependencies at a time when Europe is considering going it alone.  

Europe also relies on the US for use of their capabilities. This has been oversimplified in the media, to discussions about the US being able to flick a ‘kill switch’ and disable American-made systems – but it raises important questions. 

The F-35 is designed to use US-made weapons…adapting the aircraft to rely on European software and weapons is not realistic in the short-term.

The F-35 5th generation fighter jet is a good example. More European countries have purchased the aircraft since the large-scale invasion of Ukraine began. All rely heavily on the US government and US defence company Lockheed Martin for software updates. 

The F-35 is designed to use US-made weapons. Changing that would require US approval. Adapting the aircraft to rely on European software and weapons is not realistic in the short-term, leading to serious questions about these massive procurement commitments.   

In the military intelligence sphere, databases for targeting and threat detection are usually US controlled, although some countries are creating their own. Depending on the currency of the data systems used, in some cases data is still sent automatically to the US, raising sovereignty concerns. 

Across all these areas, defence ministries need to carefully evaluate the implications of these dependencies at a time when an unpredictable presidency is overturning some fundamental assumptions about the nature of US alliances.

Closing defence capability gaps 

The White Paper names the seven areas in which European defence capabilities gaps need closing. These areas are very broad – ‘air and missile defence’ or ‘ AI, quantum, Cyber and electronic warfare’ – and need to be translated to more specific (but aggregated) demand that can be turned to development and procurement. 

For example, when talking about ‘air and missile defence’, this means combining and integrating different capabilities from close range drone detection to radars, ground-to-air missile systems and air born surveillance. Fine tuning this is crucial. 

Part of the problem that leads to gaps seems to be limited understanding by the European Commission of end-users, namely European armed forces. Rather than defence industry figures, it should be European defence chiefs who are asked to define the enabling capabilities they prioritize when assessing gaps. 

Equally, industries should come up with the best technical, collaborative proposals to meet those needs. The iterative approach taken in the White Paper is better than a highly centralized five-year plan.

Content contd.

To get started, the European Defence Agency – which knows what capability gaps exist in which member states – should be tasked to initiate, enable and support the execution of projects in accordance with earlier capability assessments.

This should align with the needs of member states and be coordinated with NATO, NSAP and OCCAR, and report back to the European Council.   

Creating an enabling environment for defence in Europe

More broadly, the EU needs to address the underlying problems. This involves taking an approach where the European defence industry is a part of a joint defence capacity. Europe should also strive to foster new defence products.

The omnibus package for defence is a positive move that will create a more harmonized regulatory environment for defence.

Loosening EU fiscal rules to allow member states to increase defence expenditure is an easy and vital measure.

But more is needed: a first step is to improve access to financing for innovative dual-use and defence tech start-ups from venture capital. The second is to reassess labour market regulations to address critical labour shortages in defence companies and armed forces, including bottlenecks for recruiting and retaining skilled personnel. Third, the EU’s ESG taxonomy may need to be reversed completely, and actually require that companies deliver when crises require it, thereby strengthening resilience.  

Additionally, many EU and non-EU European allies are operating within a fiscally constrained space: there is too limited public funding to adequately meet the challenges presented by a withdrawal of US military support. Loosening EU fiscal rules to allow member states to increase defence expenditure is an easy and vital measure.

Finally, the EU needs to evolve its approach by learning from the modern battlefield. Ukraine has demonstrated the importance of using cheap technology and scaling quickly. The European defence industry is simply not set up to do this. Room should be created to encourage large scale innovation and start-ups to grow more new European defence tech champions like Helsing and Mistral.

None of this is going to be easy or straightforward. But as European governments come to grips with the reality of an unreliable US administration, taking such steps is essential.