European Defense – A New Hope?
Europe’s defense will resemble less a monolithic army of Mordor and more the free peoples of Middle-earth: Sovereign nations with differentiated strategies and weapons, tailored to their needs.
The 2020s began with a bang for Europe. Politicians were quick to call out that this was a “turning point” (Zeitenwende) in European history and geopolitics. After it had just gone through the deadliest pandemic since the Spanish Flu, suddenly there is “War in Europe.” Germany, which was unwilling to spend even just 2% of its GDP for its defense for more than three decades, suddenly wanted to invest 100 billion Euros into its own defense.
What weapons will that money buy? If you look at the modern defense industry the answer is American ones. Among the ten largest defense companies in the world, only one is European (BAE Systems, UK). Lockheed Martin, America’s largest defense company, has 2.5 times more revenue than BAE Systems, five times more than Airbus Defense (the largest EU defense company), and ten times the revenue of Rheinmetall, Germany’s largest defense company.1
The Attempt at European Sovereignty
In the late 1960s and 1970s, the world looked quite different: In 1961, France introduced the Mirage III, one of the first operational delta-wing fighter aircraft capable of reaching Mach 2.2. In 1969, the British Hawker Siddeley Harrier entered service, the first operational vertical/short takeoff and landing (V/STOL) jet fighter. The dynamic British and French defense industries thrived.2
It was a major concern for the British and the French to assert their sovereignty through building up their own nuclear deterrence and strengthening their national defense industry. The British built their own nuclear strike force of V Bombers, designed and produced by three British companies: Vickers-Armstrongs, Avro, and Handley Page.
The French and British insisted on developing their own nukes despite initial opposition from the Kennedy administration3 and in 1966, President Charles de Gaulle withdrew France from NATO’s integrated military command structure to preserve French sovereignty over its military decisions. President de Gaulle wanted to build a strong and independent France and Europe, emancipated from US influence as a third power in the Cold War.4
Europe’s Defense Disaster
Europe's defense strategy has proven ineffective. Decades of defense budget cuts, an over-dependence on American military resources, and mostly failed efforts at coordinated European defense have left the continent's defense capabilities in a precarious state.5
The British Navy is a shadow of its former self in terms of numbers and class of ships. Around 1947-50, the UK navy had 10 aircraft carriers, 3 cruisers, 49 destroyers, 150 frigates, and 77 submarines.6 Today, it has 2 aircraft carriers, 6 destroyers, 12 frigates, and 10 submarines.7
Germany is struggling to produce combat-ready equipment. The Polish Ministry of Defense bought South Korean tanks, howitzers, and fighter jets in 2022 over German counterparts because the SK equipment integrated better with existing equipment and was more reliable.8 In the Ukraine war, eight Leopard 2 tanks were destroyed in a single day of fighting. Spare parts were missing to keep the tanks operational, only a "very small number" of German-delivered Leopard tanks were still operational in 2024, and German tanks failed for similar reasons in previous wars.
In 2012, reports surfaced that the assault rifle of the German armed forces (Bundeswehr), the Heckler & Koch (H&K) G36, became unreliable in prolonged firefights.9 Efforts to replace the G36 began in 2017. Germany canceled an initial contract for the Haenel MK 556 in 2020 due to patent infringement concerns and selected the H&K G95A1 in 2021. Deployment was planned to start in 2024. However, Der Spiegel obtained a classified report claiming that the new rifle was found to be “inaccurate” for battle if loaded with combat munition.10 Germany will not have a functioning assault rifle 12 years after it became clear that its soldiers are risking their lives with unreliable equipment.1112
If it is true that “building an independent European defense force would take 10–15 years (if we would start now and go all in) and would cost a hell of a lot of money (more than the famous 2%)”13, then the best way forward is not some sort of coordinated action. The urgency that Europe faces to get its act together doesn’t allow the luxury of 10-15 years. The preferred path of protracted negotiation and European parliamentary discussions is not going to cut it.
Domestic Production Exceptionalism
It’s worth considering the exceptions to the status quo before thinking about building Europe’s New Defense. The only European countries that stayed vigilant on defense were either former Soviet states or countries outside of NATO. In 2023, the three EU countries with highest relative spending on defense are Poland at 3.8%, Greece at 3.2%, and Finland at 2.4% of their respective GDP.14 Sweden’s SAAB is only 25% smaller than Rheinmetall but from a country with a population of only a little over 10 million people.
We will look at the examples of Sweden and Israel, two countries that pursued a national defense strategy.
Consider the example of the Gripen Fighter Plane. During the Cold War, Sweden faced the constant threat of a Russian invasion due to their proximity. However, with the vastness of Swedish territory, Russia could have launched an attack from multiple points, making a single airbase for fighter jets insufficient. In response, Sweden developed the Gripen, a fighter jet that could be operated from a snow-covered landing strip of only 500m (1,600ft) such that it could be deployed from various points within the country. In case of attack, they would not have been able to dispatch a team of technicians and ground staff in time, so they designed the Gripen to be able to be prepared and rearmed for takeoff within 10-20 minutes by just five technicians and conscripts and with very little maintenance over the years.15
In the case of Israel, we will consider the Merkava tanks. During the 1982 Lebanon War, Israel faced an estimated 30,000 Syrian fighters, anti-tank missiles batteries, and 400 tanks, mainly T-62s, and an additional 18,000 fighters from the Palestine Liberation Organization. Despite Israel’s overwhelming force – 60,000 troops and 800 tanks (¼ were Merkava tanks), heavily supported by aircraft, attack helicopters, artillery, and missile boats – it faced difficult terrain, Guerilla tactics, and resistance in Palestinian refugee camps. Yet, the IDF advanced quickly: By June 7 (one day after the invasion), they were north of Sidon. Two days later, they reached the southern approaches of Beirut.16 The key feature of the Merkava tanks was its design to minimize crew loss in the event of a hit. Its front armor was impervious to the anti-tank weapons of the time, a vital feature for Israel, whose relatively small military required reducing crew casualties to preserve its fighting strength.
These differentiated national defense strategies would have made it much harder to conquer the continent in one stroke. Differentiated national defense strategies hedge against collective delusions and weaknesses in defense strategies.17
However, national defense strategies require adapted weapons systems, which European nation-states cannot simply procure off the shelf from American defense companies.
New Defense for Europe
If European nation-states cannot buy weapons adapted to their local needs from American defense companies, and European defense primes were straightjacketed into European joint ventures18, the only option for nation states to procure these weapons is from small nimble startups selling to individual nation-states initially.
The advantages for nation-states and founders alike would be that nimble startups can start with a small market, understand their customer better than anyone else, and can build and deliver weapons much faster.
Competing on a European level for a small startup is almost an immediate death sentence, as they would likely drown in EU bureaucracy. Even the best European defense companies might want to start by taking over a small national market before expanding across the rest of the continent. To have a chance of survival, startups need to lean into national defense, as they must take over a small market quickly. Nation-states can move much faster than EU bodies, making national markets better for business.
Unfortunately, a word of caution for founders is due: EU countries are likely too skewed in their procurement towards established incumbents despite their massive shortcomings. If a founder of such a nimble startup wants to have a shot at surviving, they need to be 10x better and/or 10x cheaper in areas where incumbents cannot compete in order to overcome this bias and resistance.
Thankfully, this is a high but not insurmountable barrier because of technology. The drop in cost of new defense hardware is the biggest change that enables new defense startups to start small and have a real chance at winning bids. But it takes a shift in mentality to understand that this is the case.
And founders need to build with the conviction that the market will be there.
If we get our act together, New Defense for Europe will be built by small nimble startups that are much more attune to the needs of their local markets. They will use technology to offer products that were impossible in the old paradigm.
Europe’s defense will look less like a monolithic army of Mordor and more like the free peoples of Middle-earth—sovereign nations with differentiated strategies and weapons, tailored to their own needs, ready to defend and, when necessary, unite against common threats.
If any of the above speaks to you, drop me a line.
I would like to thank John Strider, Sam Huang, and Armin Sommer for their feedback on versions of this essay.
French Aerospace exports increased dramatically, going from 10% of all exports in 1955 to 40% by 1962. French defense success wasn’t inevitable: After 1945, the French state wished to go back to a largely autonomous and reactive army despite its small and largely outdated defense industry. The socialists wanted to downsize the army, De Gaulle wanted to build up defense capacity. After de Gaulles returned to office in 1958, he and his predecessors build “national specialities, industrial concentration and clarity, technological capacity and long term research policy and programs” and began the “golden age of the French military-industrial complex”: French defense material exports rose from 8% of national industrial exports in 1960 to 31% by 1990. Source: https://www.foi.se/rest-api/report/FOI-R--1573--SE.
Even in 1962, US Secretary of Defense McNamara said in his No Cities speech: "In particular, relatively weak national nuclear forces with enemy cities as their targets are not likely to be sufficient to perform even the function of deterrence. (...) Meanwhile, the creation of a single additional national nuclear force encourages the proliferation of nuclear power with all its attendant dangers." Both countries became nuclear powers anyway.
Europe’s US defense dependence has gotten worse. A 2023 SIPRI report found that arms imports by states in Europe were 94% higher in 2019–23 than in 2014–18, with Ukraine receiving 23% of Europe’s arms imports and the US responsible for 39% of Ukrainian arms imports in 2019–23, followed by Germany (14%) and Poland (13%). A total of 55% of European arms imports came from the US in 2019–23, compared with 35% in 2014–18. The next largest suppliers to the region were Germany and France, which accounted for 6.4% and 4.6% of European arms imports respectively. The same report found that arms exports are dominated by the US with 42% of global arms exports in 2019-23, 8 percentage points more than its 34% in 2014-18. France, Germany, Italy, the UK, and Spain combined exported only 27.3% with France alone supplying 11%. Source: https://www.sipri.org/publications/2024/sipri-fact-sheets/trends-international-arms-transfers-2023.
In 2015, Germany reported that only eight percent of German soldiers trusted the gun and that the observed hit rate drops to a mere 8% when the temperature increases by 30 °C (86 °F) or more due to receiver deformation. The Bundeswehr required 90%. Attempts to sue Heckler and Koch failed because the Bundeswehr procurement did not specify its requirements clearly enough.
In 2022, H&K approached the German procurement office and got permission to test the weapons with specialized civil munitions instead of combat munitions, with more pauses between shots, and not under conditions of extreme heat or cold. Germany will likely not be able to sue H&K successfully, again.
The quote is from Jana Puglierin, head of the Berlin office of the European Council on Foreign Relations, writing to a reporter. https://slate.com/news-and-politics/2024/02/trump-nato-comments-europe-nato-defense-russia.html.
Consider how effective Hitler’s Blitzkrieg was in rolling over most Central European countries. France was overwhelmed by the German force and invaded entirely within six weeks. No surprise given their previous approach to defense: “The French aerospace industry collapsed after WWI, going from a workforce of 200,000 to 5,000 in 1919” and only 15,000 in 1930 with very little productive output in between. In 1936, the French government nationalized 39 armament factories and 28 aerospace companies under the ideological motto that the “merchants of cannons” should not be able to get excessively wealthy and concentrated in the greater Paris area, making them easy target for German bombardment. “They were closely controlled and scrutinized.” It wasn’t before 1938 that the nationalization produced higher productivity than the defense industry before the nationalization, despite massive investments and restructuring. Despite France’s buildup of industrial capacity and serious government investments between 1936 and 39, it wasn’t sufficient. Their military strategy was defensive, planes were only used for intelligence gathering, and the navy used for protecting commercial ships.
Contrast this with the UK. Despite the UK’s initial surprise and unpreparedness, the UK was fortunate to be separated from Germany by the English Channel and quickly involved the entire population and built up industrial defense capacity. The Royal Navy’s control of the seas mostly prevented large-scale amphibious assaults and a strong air defense prevented the Luftwaffe from gaining air superiority necessary for invasion in the Battle of Britain. https://www.foi.se/rest-api/report/FOI-R--1573--SE, p. 12.
After the End of the Cold War, the UK and Germany cut military spending almost immediately while President Francois Mitterand did not want to “lower the guard”. But with the election of Chirac in 1995, France cut its military budgets and suspended compulsory military service. From the early 90s onwards, primarily France, Germany, and the UK tried to consolidate the industry through joint ventures (Matra Marconi Space, Eurocopter, Thomson Marconi Sonar, Matra BAe Dynamics) which had “not resulted in the deeper industrial integration envisioned by governments”. And “industrial restructuring – centred on France, UK, and Germany – has been difficult due to different national traditions and different capitalistic structures.” Cf. Ibid, p. 21.
What are your thoughts on a common defense procurement market for Europe?
Interesting article. I agree that the Europeans have made grave mistakes in their defense strategies. This parallels similar mistakes in their energy strategies, which makes their vulnerability to Russia even worse.
I would think the best option for them would be to copy the Polish example. I do not know all the details, but as I understand it, Poland made licensing agreements with South Korean military contractors that enable them to build South Korean tanks and AFVs on Polish soil. I don’t think South Korean designs have been tested in combat, but the South Koreans are some of the best manufacturers in the world.
This strategy would enable Europeans to skip the lengthy procurement, design and testing phase and get right into production. I am sure that the South Koreans would be happy to train the necessary skilled labor, so all the European governments would need to do is provide the capital.
I don’t see a better option.