As the third anniversary of Russia's further invasion of Ukraine approaches, lessons from the conflict are beginning to become clear: the Ukraine War exposed the high costs of failed deterrence, shattering both the existing architecture for European security as well assumptions for the global order, leaving EU leaders grappling with the path forward. European leaders have had to internalize that war in Europe remains an ever-present risk, that Russia has become an insider threat, and that European underinvestment in its defense sector has made the EU less capable to defend and protect its interests in the shifting geopolitical environment.
Europe is not facing a perfect storm, but the results of complacency to a gathering storm. Years before Russia invade Ukraine, Russia invaded Georgia and the Crimea. Before conducting sabotage operations against European critical infrastructure, the Kremlin was sowing disinformation to destabilize European democracy. As demands of supporting Ukraine's military empty out Europe's arsenal, as of 2022, only eight European NATO member states met threshold of 2% of GDP for investment in their defense sectors, a commitment made and neglected since 2014. These shortfalls are only becoming more evident – and more critical to fill – as new American President Trump, for whom “footing the bill” for partners' defenses has long rankled, shifts from a strategy of unlimited support for Ukraine to a more America-centered foreign defense policy.
Awakened to the new geopolitical realities, European leaders have launched a number of initiatives to scale up to meet defense requirements. Only seven European NATO member states have not yet reached the 2% of GDP threshold for defense investment. The EU launched a slew of new defense programs in 2023 to plug holes, such as the European Defense Industry Reinforcement through Common Procurement Act (EDIRPA) and the Act in Support of Ammunition Production (ASAP). In 2024, the EU proposed its first ever European Defense Industrial Strategy to support competitiveness and readiness in the defense sector.
EU leadership is now urging member states to adopt a new concept that integrates these measures and institutionalize them to build a stronger and integrated defense sector: the European Defense Union.
European Defense Union: What is it?
The European Defense Union is a draft concept to significantly increase defense cooperation across the EU by pooling resources, developing joint capabilities and coordinating strategies under the framework of the EU's Common Security and Defense Policy (CSDP). To advance this concept, European Commission President Ursula von der Leyen has appointed the first-ever Commissioner for Defense, Andrius Kubilius, a former Prime Minister of Lithuania.
While member states will retain responsibility for their own troops, the concept calls for coordinated efforts to strengthen the defense industrial base, innovation and the Single Market. New Commissioner for Defense Kubilius and High Representative Kaja Kallas are charged with drafting a White Paper on the Future of European Defense within the first 100 days of taking office (i.e. by early March 2025).
The white paper is expected to address strengthening defense sector capability issues, enhancing industrial competitiveness and critical investment needs, and providing an overall approach to defense integration. It will outline the path towards key initiatives such as a European air shield to strengthen air defense across the continent, expanded cyber-defense capabilities, closer EU-NATO cooperation, incentives for private defense investment, common defense projects and innovation, reducing external dependencies in defense procurement, and increased intra-EU collaboration in industrial, innovation, procurement and production issues.
Summing up the mission of the European Defense Union, European Commission President von der Leyen sets the goals: “We need to spend more, spend better and spend together.”
Challenges to Integrating the European Defense Sector
While the concept looks good on paper, operationalizing it will require building consensuses that have proved difficult in the past. Further, reform of the sector will take place in the challenging context of the need to scale up procurement and production to supply Ukraine all while the US seems positioned to scale down support to force an end to the conflict.
Europe's defense industrial base is fragmented for a reason. National policies have preference for national defense companies meeting the needs of the national armies, and member states guard these sovereign prerogatives fiercely. The end result is many defense companies producing multiple versions of equipment, with different specifications. This is inefficient, but hard to overcome. The EU hopes to change the incentives by offering opportunities for joint procurement using pooled funding. However, there will be winners and losers. Who will decide what country and company gets what joint contract?
Another issue that figured prominently in the EU summit this week is how to balance the initiative to strengthen the defense industrial base through “Buy European” policies or “strategic autonomy,” while mitigating the risks that protectionist policies could trigger additional tensions with the Trump Administration. Washington wants Europe to buy more US exports to address the trade imbalance. President Trump is already on record that he plans to target Europe next with comprehensive tariffs.
Finally, Europe is facing the classic “guns versus butter” dilemma. Eurozone's growth projection for 2025 is nearly flat, 1% if the bloc avoids headwinds of tariffs and rising energy costs. At the end of 2024, the European Central Bank warned that elevated debt levels and high budget deficits, coupled with weak long-term growth-potential and policy uncertainty, are increasing the risk that fiscal slippage will reignite market concerns over sovereign debt sustainability. The growing public debt crisis, and how to manage it through austerity budgets, was a leading factor in the collapse of governments in France and Germany in 2024. Investing more in defense comes at a cost to other priorities, as member states are obliged to stay below the EU agreed guardrails of limiting budget deficits to 3% of GDP and debt to 60% of GDP.
European Commission President von der Leyen's political guidelines for the Commission's new term places a united Europe and collective action at the center of her program, stating “Our threats are too great to tackle individually. Our opportunities too big to grasp alone.” Her top line priority is strengthening Europe's sustainable prosperity and competitiveness. Given that the threat perception of Russia is not the same across the bloc, there are risks that if increased investment in the defense sector cannot be tied to national economic growth targets, new jobs and broader positive impacts beyond the sector, some national governments risk domestic perceptions of being misaligned with national priorities.
Since the beginning of the war, Russia has sought to divide Europe, trying to influence public opinion that supporting Ukraine is not worth the costs. Three years into the war, these costs are keenly felt across the EU and set to deepen as the US changes tack. Advancing the European Defense Union will be a critical test of European resolve, not just vis a vis Ukraine, but on countering Russian political/military aspirations in Moldova, Georgia, the Balkans and beyond Europe, such as in the Arctic region.
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