Europe seeks to build its own military-industrial complex

As geopolitical tensions rise and NATO rearmament accelerates, the European Union is embracing a model long associated with the United States: a sprawling military-industrial complex. According to the Wall Street Journal, Europe is channeling hundreds of billions of euros into defense—driven by Russia’s war in Ukraine and pressure to reduce dependence on US contractors.

Germany has urged the EU to exempt defense spending from fiscal rules, as the bloc embarks on a five-year rearmament campaign. Yet 78 percent of EU procurement since Russia’s 2022 invasion has flowed to US firms like Lockheed Martin and Northrop Grumman. Europe hopes to reverse that imbalance by reshaping its fragmented defense sector.

Companies such as Rheinmetall, Airbus Defence, and BAE Systems are rapidly expanding. Rheinmetall alone aims to triple revenues to €30 billion by 2030 and has already acquired US and European suppliers in a bid to create a US-style general purpose defense contractor. However, scaling up in Europe remains a challenge; national rivalries have produced duplicative weapons platforms, from fighter jets to submarines.

One successful model, missile maker MBDA, functions as a joint venture across multiple countries—offering a potential blueprint for other sectors. However, legacy inefficiencies and nationalist reluctance to consolidate continue to hamper progress.

To address these gaps, the EU has introduced €150 billion in joint procurement loans and hopes to make 40 percent of military purchases collaborative by 2030. Private equity and venture capital are also stepping in, targeting innovation in AI, cyber defense, and drone technologies.