Europe’s struggle to build a credible defense industrial base

The European Union’s top diplomat, Kaja Kallas, recently emphasized that deterrence only holds if it is credible, noting that current progress in ammunition and air capabilities remains insufficient. Industry leaders warn that while scaling production is technically possible, it is stifled by a lack of political alignment. Micael Johansson, CEO of Saab, points to a three-to-four-year backlog on high-volume products, urging governments to move beyond short-term output goals toward sustainable, scalable capacity.

The tension between national sovereignty and integration

Member states remain tethered to the practice of favoring "national champions" over broader European cooperation. Former NATO official Camille Grand observes that political considerations frequently override economic logic, complicating the European Commission’s efforts to streamline procurement. While Brussels has introduced initiatives like the €7.3 billion European Defense Fund and the €150 billion SAFE loan instrument, nations are often forced to choose between purchasing proven, readily available third-country systems or investing in less mature, domestically developed alternatives.

This fragmentation extends to the corporate sector, where calls for consolidation meet significant friction. Governments are wary of losing industrial influence, jobs, and technological sovereignty, fearing that a centralized approach would leave smaller nations dependent on a few dominant powers like France and Germany. Luis Simon, director of the Center for Security, Diplomacy and Strategy, notes that while some countries support cooperation, they remain cautious of losing control over their own defense value chains. As a result, industry experts suggest the most pragmatic path forward may not be a single monolithic structure, but rather flexible coalitions of states collaborating on specific capabilities like artillery and drone technology.