High Representative for Foreign Affairs and Security Policy and Vice-President of the European Commission Kaja Kallas and European Commissioner for Defense and Space Andrius Kubilius present the white paper on the future of European defence, in Brussels, Belgium, on March 19.Yves Herman/Reuters
The European Union has a dream: Fortress Europe. The plan is to make the EU largely self-sufficient in weapons and replace the United States as the dominant power in NATO. Decoupling from the U.S. is already under way, as Donald Trump treats the EU as an annoyance at best or even a “foe,” as he called it. It can be done, but not easily, quickly or cheaply.
EU leaders are in a low-grade panic to get moving on the project, knowing that it is years late and that Emmanuel Macron, to their indignation, was right: In 2017, shortly after he and Mr. Trump were first elected, the French President warned about “the gradual and inevitable disengagement by the United States” and pushed for “Europe’s autonomous operating capabilities, in complement with NATO.”
No one took him seriously. Mr. Trump lost the next U.S. election, and his successor, Joe Biden, cozied up to the EU and NATO. Mr. Macron looked like an alarmist. Then came Russia’s full-scale invasion of Ukraine and the re-election of Mr. Trump. The EU’s calculus changed virtually overnight, and the bloc is now scrambling to fund its ReArm Europe project.
Theoretically, the money is there. The EU is rich. Four of the members of the G7, the club of wealthy countries, are European. Some EU countries, notably Germany, have low debt-to-GDP ratios and borrowing costs, allowing them to spend lavishly without busting the bank or gutting their social welfare systems (at least not yet). Germany scrapped its constitutional “debt brake” this week to allow virtually unlimited defence spending. At the same time, the EU is launching a €150-billion ($232-billion) defence fund that will provide procurement loans to member states. The fund could be levered up to trigger as much as €800-billion ($1.2-trillion) of spending over the next four years, the EU has said.
If money is not the problem, capacity, expertise and extensive, hard-to-break ties to the United States are.
The U.S. spent decades during and after the Cold War selling weapons to Europe. The sales of everything from fighter jets to air-defence missiles bought the United States geostrategic influence, prestige and intelligence-gathering capabilities. It also made fortunes for its big-name contractors, among them Boeing, Lockheed Martin and General Dynamics. U.S. spending also kept NATO alive. Even today, after several drawdowns, there are some 80,000 American military personnel scattered among 38 bases across Europe. That’s more men and women in uniform than in the entire Canadian Armed Forces.
Despite Mr. Trump’s warnings during his first term that he might yank the U.S. out of NATO, European spending on American military products climbed – there was little effort to ramp up the homegrown defence industry. Data from the Stockholm International Peace Research Institute show that 64 per cent of arms imported by Europe’s NATO members between 2020 and 2024 came from the U.S., up from 52 per cent between 2015 and 2020.
American-made combat aircraft and helicopters, which are generally more lethal than European models, were – and are – especially popular among European military buyers. Less so ships and submarines. European buyers were also attracted to the U.S. economies of scale. Since the U.S. weapons industry is three times larger than all of Europe’s, it can pump out huge volumes of many products, plus the spare parts to keep them going, quickly and at fairly good prices. Beats waiting for years, or a decade, for a European helicopter that is still on the drawing board.
So Europe has a dilemma: rearm quickly with U.S. weapons or wait longer, and pay more, for European equivalents. Canada has something of the same problem. Should it buy all 88 of the Lockheed Martin F-35s it agreed to purchase in 2023 or cancel most of the order (it is legally committed to buy only the first 16) and go with, say, the Saab Gripen fighter jet, which would require tooling up a factory on Canadian soil, as Saab is allowing foreign buyers to build the plane under licence.
It appears that Europe is going with the pay more, wait longer option, and doing so is the right strategy. The United States can no longer be considered a reliable partner, given Mr. Trump’s tariff rampage and disinterest in or dislike of all things European and NATO.
Buying American fighter jets loaded with 25 million lines of software code that has to be updated by Lockheed Martin seems like a crazy risk – what if Mr. Trump were to wake up in a bad mood one day and decide to punish Europe in some way? Relying on Elon Musk’s Starlink for satellite communications for the military or other government services seems equally risky. Europe needs its own secure, reliable defence and communications systems.
The good news is that Europe’s attempt to go it alone for key weapons will present ample opportunities for investors as defence contractors seek funding and their order books fill up. Shares of Germany’s Rheinmetall, maker of the Leopard 2 main battle tank, are up more than 160 per cent in the past year. Tech startups could proliferate. Exports of European military products could surge. Europe, by playing the waiting game for its own products, had just better pray that Russia, having destroyed Ukraine, does not have similar ambitions for Eastern Europe in the next few years.