Can Europe’s arms business problem US market dominance? – DW – 03/12/2025 | EUROtoday

For years, the subject of European protection spending barely registered in most EU capitals. Now it’s a main concern.

From the EU’s announcement of €150 billion ($163.5 billion) value of loans to spend on weapons, to Germany’s possible subsequent chief, Friedrich Merz, channelling his interior Mario Draghi and vowing to do “whatever it takes” to bolster Europe’s protection, there was a dramatic sea change of late, nonetheless.

The shift comes amid renewed fears over Russian aggression in Eastern Europe and doubts over US commitments to NATO and the transatlantic alliance.

Yet knowledge launched this week by the Stockholm International Peace Research Institute (SIPRI) laid naked how difficult it will likely be for Europe to go it alone.

Almost two-thirds of arms imported by European members of NATO from 2020-2024 got here from the US, a major hike on the 52% the US accounted for from 2015-2019.

Over 90% of the arms imports in Norway, Sweden, Italy and the Netherlands got here from the US, whereas the UK determine was over 80%. From 2015-2019, lower than 10% of German arms imports got here from the US however the determine was 70% for the interval from 2020-2024.

Tim Lawrenson, an affiliate fellow on the International Institute for Strategic Studies, says the US has been the principle army energy and safety guarantor for European international locations ever since NATO was based 76 years in the past, including that Europe was “content to be dependent on NATO” and trusted that the US would stand by its commitments.

“Recent developments have raised serious questions in European minds about whether this now needs to change,” he instructed DW.

Time and cash wanted to shut the hole

Guntram Wolff, a protection specialist on the Brussels-based suppose tank Bruegel, says there’s a diploma of interdependence between US and European protection corporations that isn’t mirrored within the figures.

“So many products are truly NATO products built with components from many allies,” he instructed DW, pointing to the instance of the Lockheed Martin F-35 fighter jet — a US product constructed with elements and help from a number of European NATO international locations.

However, European protection corporations have been particularly weak in relation to the supply of so-called strategic enablers similar to satellites.

“If you talk about tanks and these kinds of things, the gap between the US and EU is probably not so big,” he mentioned. “However for the strategic enablers, a lot comes from the US such as transport helicopters or satellite communications. We are very dependent on the infrastructure as well as on the products.”

Tim Lawrenson thinks European nations making an attempt to shut the hole between the quantity produced in Europe and the quantity imported from the US entails “significant cost and time to expand Europe’s defence industrial capacity for existing products as well as developing new products, in particular to replace capabilities that are currently largely provided by the US.”

It additionally raises the query of whether or not European governments ought to merely purchase from wherever they’ll to handle gaps as shortly as attainable, or whether or not they need to prioritize a “Made in Europe” strategy, to bolster the European protection business.

The query then is extra one in all time than functionality. “In three years, it’s going to be very difficult for Europe to be ready on its own,” mentioned Wolff, including that “in five years, it’s a different ball game.”

Lawrenson argues that in “normal times” it might take “two, three years for complex products,” however in additional pressured instances, “those timescales may be shortened somewhat, but not by much.”

France and Germany have clashed over whether or not or not EU protection loans might be spent on gear from exterior the bloc, together with from European NATO members such because the UK or Norway which aren’t within the EU.

EU Commission President Ursula von der Leyen has mentioned that the loans needs to be spent inside Europe, together with from the likes of UK, however not exterior the continent. “These loans should finance purchases from European producers, to help boost our own defense industry,” she instructed the European Parliament.

Germany to play a significant function

Although Europe’s collective protection and aerospace sector is smaller than that of the US, it’s no minnow. In 2023, it accounted for a turnover of €290.4 billion ($316 billion) in comparison with $829 billion in the US.

There is appreciable optimism that Europe has the commercial know-how and functionality to construct a world-class protection sector, notably if European authorities spending pledges are fulfilled.

Germany is especially key. The plan of Friedrich Merz has been broadly obtained as probably transformative and consultants imagine Europe’s largest economic system is well-placed to fulfill the demand. The protection sector pivot might even assist drag the nation out of its de-industrialization malaise.

Wolff believes a rising protection business might “offer attractive salaries and will attract workers from other sectors, including from the car industry.”

Hans Christoph Atzpodien, common supervisor of the German Federal Association of the Security and Defense Industry, agrees, saying that the {qualifications} of automobile business staff will usually meet the necessities of defence corporations. However he cautions that retraining and safety clearance necessities might decelerate the method.

“The timelines for issuing these authorizations are currently nowhere near fast enough to enable a rapid transition of the relevant personnel,” he instructed DW.

European cooperation is vital

Tim Lawrenson thinks German motion on the protection spending difficulty might propel Europe’s different massive gamers — France and the UK — to do likewise.

“If Germany went ahead with a big budget increase, it would act as a strong catalyst for the other two countries to do more. In a sense, they’d almost feel obliged to make those hard decisions.”

That raises the long-standing query of whether or not Europe’s governments and protection corporations can come collectively for the continent’s collective good.

Lawrenson believes that cooperation in improvement and even in procurement within the protection sector is “really hard.”

“European countries find it easier to procure alone, and the US Foreign Military Sales system makes it quick and easy to buy from them. We need to find a way to convince countries to buy European, whether alone or jointly, even if it’s not a collaboratively developed product,” mentioned Lawrenson.

Atzpodien agrees, and mentioned he’s “convinced” that it will likely be attainable to equip Europe’s armed forces. This, nonetheless, would rely much less on the businesses and extra on their clients, particularly nationwide governments. “They must develop the political will to really harmonize their needs in order to achieve larger quantities.”

Edited by: Uwe Hessler