By
Rob Murray
This essay is part of the report “Transatlantic horizons: A collaborative US-EU policy agenda for 2025 and beyond,” which outlines an agenda for common action for the next US administration and European Commission.
The bottom line
By 2029, defense cooperation between the United States and the European Union (EU) must solidify the backbone of a resilient transatlantic alliance capable of securing global stability and upholding democratic values. Success will depend on addressing three intertwined issues: securing adequate funding, streamlining acquisition processes, and transforming defense manufacturing. These challenges present opportunities for innovation, collaboration, and growth, with the United States and Europe playing critical roles in building strategic resilience. Moreover, integrating the defense policies of the United States, the EU, and NATO allies with broader national security strategies will be essential to tackle evolving threats that are not purely military but encompass economic, technological, and political dimensions. Ensuring that these defense efforts align with overarching national security goals will create a more unified and effective transatlantic response.
State of play
The US-EU defense partnership stands at a pivotal moment. The ongoing conflict in Ukraine has exposed both strengths and significant gaps in funding, preparedness, and production. NATO’s 2 percent of GDP defense-spending target, long considered a benchmark, is increasingly viewed as a floor rather than a ceiling considering modern warfare’s demands. Europe’s collective defense spending in 2024 is expected to reach approximately $380 billion (€350 billion). However, this expenditure must be utilized more effectively to maximize its impact. Adjusted for purchasing power parity, Europe and the United States’ real defense spending levels have only just returned to those seen two decades ago despite substantial nominal increases. In comparison, according to the SIPRI Military Expenditure Database, Russia’s 2023 defense budget was $109 billion.
Momentum for change is building, particularly around addressing inefficiencies in defense acquisition and procurement processes. The establishment of an EU defense commissioner represents a step forward. The commissioner’s role, supported by European Commission President Ursula von der Leyen, should be to streamline procurement, ensure better value for the money, and create shared economic benefits through European jobs. While political resistance is inevitable, the potential benefits of a more integrated and responsive defense market are immense.
The United States has a crucial role in supporting these European initiatives. Active US engagement in shaping and supporting EU procurement reforms should be seen as part of a broader commitment to developing a shared transatlantic defense strategy. This strategy should focus on creating a procurement environment where efficiency, transparency, and innovation are prioritized. By working together to adopt and refine best practices, both sides can ensure that procurement processes are aligned and mutually beneficial, avoiding any perception of one side guiding the other. The US Replicator program—an initiative aimed at rapidly scaling the production of autonomous, affordable defense systems to maintain technological and operational superiority—represents a potential model for how defense contracting might look in the future.
European defense industries are also responding to increased, albeit fragmented, demand from nations. However, more must be done to ensure that production capacities can meet both immediate and future needs. Firms are beginning to take on more risk, building critical inventory independently, and those able to deliver quickly will be rewarded. This marks a significant cultural shift in the defense industry and European attitudes toward the industry, one that bodes well for the future of US-EU cooperation. By fostering joint ventures and co-investment opportunities, the United States and Europe can combine their respective strengths—US entrepreneurial dynamism and European engineering expertise—to address production challenges effectively.
The conflict in Ukraine has also underscored the need for agility in defense production. Wartime inflation, such as the quadrupling of the cost of a 155 mm artillery shell from approximately €2,000 before February 2022 to around €8,000 now, as mentioned by the chair of the NATO Military Committee, Admiral Rob Bauer, demonstrates the urgency of transforming defense manufacturing. Despite these challenges, European shell production is expected to reach an annual rate of one to two million shells by late 2024, potentially surpassing US output. With the right focus and investment, Europe can rise to meet its defense needs and significantly contribute to the transatlantic alliance.
As Europe addresses these immediate production challenges, it is becoming increasingly clear that longer-term strategic alignment is also critical. Although current efforts primarily focus on securing funding and streamlining procurement, there is increasing awareness that aligning the defense policies of the United States, the EU, and NATO members with broader national security strategies will be essential for tackling complex, evolving threats. Coordinating military readiness with broader security goals, including economic and technological resilience, is likely to become a critical component of future transatlantic cooperation. This alignment will help ensure that defense investments are strategically targeted to maximize both military and societal resilience, creating a more unified transatlantic response to hybrid and multidimensional threats.
The strategic imperative
There are three areas that the United States, the EU, and its member states must address together to ensure the transatlantic alliance is fit for purpose.
1. Money: Securing adequate funding
Securing necessary funding is paramount. Once a distant goalpost, NATO’s 2 percent of GDP target is now the starting point for ensuring robust defense capabilities. The lessons from Ukraine underscore the need for substantial financial commitments, but they also highlight the power of collective action and the importance of transparent communication with the public. Both the United States and the EU—with the support of its member states—must be willing to make these investments to not just maintain security, but to drive innovation and economic growth in the defense sector that will likely bring wider economic benefits.
2. Procurement: Streamlining acquisition processes
NATO’s new comprehensive defense plans could require Europe to increase its military capability targets by about a third, with calls to push defense spending to around 3 percent of GDP. The British government has gone some way to commit to this with the current administration seeking to increase defense spending to 2.5 percent, although the timeline to achieve this remains open. More ambitiously, Poland’s president also pushed earlier this year for NATO to establish a 3 percent target. This represents both a challenge and an opportunity for Europe to demonstrate its commitment to collective defense and leverage its economic strength for security. However, even if the necessary funding was available, current procurement models are not equipped to allocate these funds effectively. Comprehensive reform must accompany increased spending to ensure efficiency and impact.
Reforming defense procurement is about creating a system that can adapt to the fast-paced demands of modern warfare. The appointed European defense commissioner should focus on achieving EU-wide procurement reform. By prioritizing decentralization, empowerment, and speed—particularly in acquiring rapidly evolving technologies such as software and cyber capabilities—Europe can ensure that its defense capabilities are proactive rather than reactive. The United States, with its large procurement portfolio, should learn from such reforms and implement those that are relevant across the US system, too, thereby fostering a more cohesive transatlantic defense strategy. (This topic will be discussed further in a forthcoming report by the Atlantic Council’s Commission on Software-Defined Warfare.)
3. Production: Transforming defense manufacturing
Transforming defense production is where the future of US-EU cooperation can truly shine. The Ukraine war has exposed the limitations of current production capacities, but it has also sparked a renewed focus on innovation and efficiency. The United States and the EU must invest in scalable, efficient production methods that can meet the demands of modern warfare while also driving technological advancements. The United States should take an active role in this transformation, offering technological expertise and coinvesting in European production facilities to ensure that both sides benefit from enhanced manufacturing capabilities—including those efforts that are already underway.
The increasing reliance on drones exemplifies this broader shift toward technologically advanced and cost-effective military assets. Drones are becoming central to both surveillance and combat operations, offering a clear example of how technological advancements can drive significant military impact at a fraction of the cost of traditional assets. The production and deployment of drones, particularly those with artificial intelligence capabilities and enhanced autonomy, should be at the forefront of these efforts. Moreover, these military advancements are likely to pioneer civilian applications, such as drone deliveries, unlocking significant economic activity beyond their military use. This dual-use potential makes investment in drone production a strategic priority, with broad implications for both defense and civilian sectors.
Public-private partnerships and closer cooperation with the United Kingdom and other non-EU European countries such as Switzerland, Norway, and Turkey could significantly enhance Europe’s defense manufacturing ecosystem. This approach addresses immediate needs and builds a foundation for long-term resilience and adaptability. Addressing broader economic, social, and political challenges will be essential for ensuring that Europe’s defense industry is not just reactive but a driving force in global security.
Looking ahead
The next four years are crucial for setting the trajectory of US-EU defense cooperation. Securing adequate funding, streamlining acquisitions processes, and transforming defense production are the means by which the United States and the EU can build a defense partnership that is resilient, innovative, and capable of addressing the challenges of the twenty-first century. To achieve this, nations must align not only their military capabilities but also their economic, technological, and political strategies. While the potential benefits are significant—improving effectiveness, reducing fragmentation, and strengthening resilience—there are also challenges to overcome. National sovereignty concerns, divergent political priorities, and institutional complexities present real hurdles.
While initiatives to support the European defense technological and industrial base, the European Defense Fund, and Permanent Structured Cooperation provide some frameworks for enhancing EU capabilities, more significant and impactful initiatives are required. For example, a US-European multilateral lending institution focused on defense financing should be created to serve as a critical tool in bridging the funding gap and ensuring sustained investment in defense. Or the United States and France could lead by investing in the NATO Innovation Fund, expanding it with multiple sub-funds that utilize both private and public capital, each with distinct investment theses. These sorts of approaches could catalyze broader defense financing and innovation, setting the stage for a more integrated and capable transatlantic defense alliance.
Strengthening the European pillar within NATO makes sense as it ultimately seeks to strengthen the Alliance. This strategic autonomy will be crucial as the United States may increasingly focus on the Pacific and other global priorities, necessitating a strong and self-reliant Europe. However, the United States must also ensure that Washington’s shift does not weaken transatlantic ties. By actively supporting European defense autonomy within NATO, the United States can ensure that Europe remains a strong and capable partner in addressing global security challenges.
Policy recommendations
Achieving a robust and unified transatlantic alliance by 2029 will depend on the United States and the EU addressing the core issues of funding, procurement, and production. By embracing these challenges as opportunities for growth, innovation, and collaboration—and by integrating defense policy with broader national security strategies—both sides can ensure that their defense partnership is prepared for the challenges ahead. Integrating the UK and other key non-EU European countries as partners will further enhance this alliance, ensuring that it remains a cornerstone of global stability in the years to come. Success in these efforts will require overcoming significant political and bureaucratic obstacles, but the potential rewards—a secure, stable, and resilient alliance—make the endeavor well worth the effort. The United States must play a leading role in these efforts, ensuring that its commitment to transatlantic security remains strong and that Europe is empowered to take on a more autonomous and proactive defense role, securing peace and stability for future generations.
Recommendations to this effect include:
Increase defense financing beyond the NATO 2 percent target. This funding should be directed toward both traditional military capabilities and emerging technologies, ensuring that the United States, the EU, and its member states can maintain a credible deterrent against current and future threats. This additional financing should be used to create a defense-oriented multilateral lending institution into which the United States and the EU should invest to provide the necessary capital to support these initiatives without overburdening national budgets. Clear communication with the public about the necessity of this spending is essential for securing the political support needed to sustain these investments.
Prioritize the reform of defense procurement processes. The inaugural European defense commissioner should lead efforts to decentralize and streamline acquisition, with a particular focus on empowering decision makers and accelerating the adoption of new technologies. Integrating the UK and other non-EU European countries into these efforts will help create a more efficient and responsive defense procurement system across Europe, enhancing the transatlantic relationship. The United States should support these reforms by aligning its procurement processes with those of its European allies, ensuring interoperability and efficiency across the alliance. The Replicator effort could be a relevant pilot program from which to learn key lessons.
Invest in transforming defense production. The United States and the EU should leverage new manufacturing techniques and scale up production capacities to meet the demands of modern warfare. Public-private partnerships and closer cooperation with the UK, Switzerland, Norway, and Turkey will be key to enhancing production efficiency and resilience, particularly in the development and deployment of drones, which offer both military and civilian applications.
Ensure that defense policy is fully integrated with broader national security strategies, including economic and technological dimensions. A holistic approach, which includes the UK and other non-EU countries, will be crucial for building a resilient and adaptable alliance capable of responding to the complex security challenges of the twenty-first century. The United States should work closely with Europe to ensure that these strategies are aligned, creating a unified approach to global security and leveraging capital (in all its guises) to support such an effort.
Rob Murray is a nonresident senior fellow with the Forward Defense program and the Transatlantic Security Initiative within the Atlantic Council’s Scowcroft Center for Strategy and Security.
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Image: An employee works at a production line of 155 mm artillery shells at the plant of German company Rheinmetall, which produces weapons and ammunition for tanks and artillery, during a media tour in Unterluess, Germany, June 6, 2023. REUTERS/Fabian Bimmer.
Source link : https://www.atlanticcouncil.org/in-depth-research-reports/report/leveraging-europe-and-the-eu-as-a-defense-power/
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Publish date : 2024-10-07 15:00:00
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