NATO’s European allies collectively spend approximately half what the US spends on defence, but get much less than half of the output. Politicians and pundits have deplored this state of affairs for decades, but European governments have failed to make any appreciable improvements. As long as the US was prepared to shoulder the lion’s share of the NATO burden, and the threats to European security were chiefly from non-state actors, this did not appear to matter. But the situation today is different. Europe, including the UK, has responded by increasing defence spending, but there is still no agreed strategy for how to get a better ‘bang for the buck’.

The history of European efforts to address this problem is a long one. The so-called Two Way Street has been a contentious issue throughout the Alliance’s history. At the start of my career in the Ministry of Defence, I spent an enjoyable but fruitless year contributing to something called the independent European Programme Group (the lower case i was important to the Thatcher Government). Towards the end of my career, I advised on the implementation of NATO’s Smart Defence initiative. In the interim, the European Defence Agency came into existence and other organisations and agencies, such as OCCAR, were formed to address the same set of issues.

With so much effort, why have the results been so meagre? Fundamentally, it is a problem of competing European national imperatives, overlaid by powerful US political and industrial clout. Those European States with significant defence industries – chiefly France, Germany, Italy, Spain and the UK – wish to protect their industrial champions for reasons of sovereignty and jobs. They seek to do this by promoting defence exports and entering into collaborative projects with one another. Exports certainly help to spread the non-recurring costs of defence equipment projects, but they generally come with a commitment to transfer technology and some of the production to the customer, which in the long run has the effect of reducing the size of the readily available export market. European defence equipment collaboration has a chequered history. Spreading the non-recurring costs certainly provides benefits to the participants, but tortuous workshare agreements, which elongate procurement timescales and thus increase overall costs, have reduced, if not eliminated, these benefits in most cases. Choosing to buy from the US can facilitate standardisation and lower costs for the customer, but it reinforces the US defence industry’s dominance of the market.

States such as the UK have addressed this dilemma by relying on ‘best value for money’ as the primary criterion for deciding where to spend the defence pound, accepting that this will often mean buying off the shelf from the US. Others, notably France, have been more insistent on the concept of national sovereignty and protecting their domestic defence industry. The disagreement between France and Germany over how best to take forward the Sky Shield initiative, designed to make collective procurement of new missile defence systems, is symptomatic of this divergence of approaches. The EU has made provisions for third-party states to participate in its defence R&D projects, but has ruled that these parties may not lead projects or benefit from EU funds.

In recent months, there have been a number of official statements acknowledging this issue, though not all point in the same direction. The document setting out the outcome of the recent UK Strategic Defence Review includes the following sentence: “It is no longer affordable for NATO Allies, especially within Europe, to develop their own exquisite capabilities at low production volumes.” Later in the same document it is stated that: “The National Armaments Director must have the ability to increase coordination and collaboration with allies……including through agreeing common standards and greater collaboration on R&D.” However, the dominant theme on the relationship with industry in this document and in the Government’s Industrial Strategy and National Security Strategy is of backing UK defence industry in order to provide a ‘defence dividend’ for the UK economy.

The recent French National Strategic Review 2025 has more to say about European defence industrial cooperation, though, unsurprisingly, it has a decidedly EU tinge. For example, “The EU must continue developing an autonomous and sovereign European Defence Technological and Industrial Base (EDTIB) through a decisive step change, by prioritising key capability areas set out in the European Defence White Paper of 19 March 2025” and “France must support the joint development of defence capabilities between Europeans, in line with the operational needs of the armed forces. The emergence of European champions, which must become the preferred solution for procurement, must also be supported. This transformational development is essential for the future, and will require courageous decisions based on the concept of the European champion, which will lead to controlled and accepted forms of mutual dependence in favour of genuine overall European sovereignty”.

If the European allies are to meet the objective of becoming more self-sufficient in defence procurement, they will need to turn aspirational language into actionable plans set within an overarching framework. Otherwise, the fine words will become forgotten as national defence ministries follow the path of least resistance, seduced by the availability of larger budgets and driven by domestic political and employment considerations. (Reports of disagreements between France and Germany over the development of a Future Combat Air System illustrate the point, though why the Europeans should be developing two competing 6^th Generation jets is an even bigger question.)

What might such a framework consist of? There are, no doubt, several different ways in which it could be constructed, but it should contain the following elements:

• Agree to acquire in sufficient numbers the critical enabling capabilities on which the Alliance currently depends on the US, such as air-to-air refuelling, air transport, suppression of enemy air defences (SEAD) and intelligence, surveillance, target acquisition and reconnaissance (ISTAR) capabilities, as well as missile defences and long-range conventionally armed missile capabilities.
• Decide which of these it would be reasonable to expect the European defence industry to provide, and which will have to be procured from the US, either for reasons of time or sheer technological complexity.
• Of those requirements that European industry can meet, agree on a national champion or champions (in case of a collaborative solution) whose product will be acquired by as many states as need it, with production arrangements being determined by what would be most efficient and the timescale to be met: in other words, a form of defence industrial role specialisation. Industry should be encouraged to bring forward its own solutions, building on the success of Airbus and MBDA.
• Decide which of the enabling capabilities it would make sense to establish as a force held in shared ownership and resourced from common funds.
• Agree on how to sequence the acquisition programme, depending on urgency, industrial capacity, and the projected availability of funds. This should include assessing the rate at which industrial capacity can be increased to guard against excess demand driving up prices.

It would be naive to believe that such a framework would be all-embracing or would trump all other considerations. Clearly, there will always be a large volume of procurements that could not be subjected to a multinational approach, either for reasons of timescale or commodity type. In current circumstances, for example, rapid improvements to integrated air and missile defences may only be possible by buying from the US. In addition, stuffing too many projects into such a framework would clog it up and ultimately defeat the object of the exercise. Some will say that, in the interests of speed, it would be better to leave the ramping up of European defence capabilities to individual allies. This is a not unrespectable argument, given the chequered history of European defence collaboration projects, but it would perpetuate the current less effective or more expensive (or probably both) regime. For this reason, it is essential to break with the past, however difficult that will be in political terms.

There is no shortage of other deficiencies in the defence acquisition arrangements of the UK Ministry of Defence and many of its European counterparts. This is recognised by the UK government, which has put forward a number of ways in which it intends to reform the Ministry of Defence’s acquisition processes. Many of these, it has to be said, sound familiar to those versed in the history of attempts at reform in this area. Indeed, it is symptomatic of the shaky institutional memory of the Ministry of Defence that these should be presented as new ideas. Partnership with industry, for example, was a theme of the 2005 Defence Industrial Strategy, which foundered on Treasury reluctance to publish long-term defence capability plans. The tight fiscal situation facing the UK will reinforce the Treasury’s caution but it is the imminence of the security threats to the country that make it necessary today to create a stable planning environment for the defence industry. Let’s hope the Ministry of Defence is more successful in reforming the system this time round. The forthcoming Defence Industrial Strategy should provide some clues. Let’s hope too that, faced with a near-term threat to their security, the European allies can establish a framework for improving the efficiency and effectiveness of their defence acquisition system. Adopting the proposals in this article, or something like them, would be a first step.

The European Leadership Network itself as an institution holds no formal policy positions. The opinions articulated above represent the views of the authors rather than the European Leadership Network or its members. The ELN aims to encourage debates that will help develop Europe’s capacity to address the pressing foreign, defence, and security policy challenges of our time, to further its charitable purposes.

Image: Flickr, NATO North Atlantic Treaty Organization