Europe Wants to Build a Stronger Defense Industry, but Can’t Decide How

France and Germany’s recent agreement to develop a new multibillion-dollar battlefield tank together was immediately hailed by the German defense minister, Boris Pistorius, as a “breakthrough” achievement.

“It is a historic moment,” he said.

His gushing was understandable. For seven years, political infighting, industrial rivalry and neglect had pooled like molasses around the project to build a next-generation tank, known as the Main Combat Ground System.

Russia’s invasion of Ukraine more than two years ago jolted Europe out of complacency about military spending. After defense budgets were cut in the decades that followed the Soviet Union’s collapse, the war has reignited Europe’s efforts to build up its own military production capacity and near-empty arsenals.

But the challenges that face Europe are about more than just money. Daunting political and logistical hurdles stand in the way of a more coordinated and efficient military machine. And they threaten to seriously hobble any rapid strengthening of Europe’s defense capabilities — even as tensions between Russia and its neighbors ratchet up.

“Europe has 27 military industrial complexes, not just one,” said Max Bergmann, a program director at the Center for Strategic and International Studies in Washington.

The North Atlantic Treaty Organization, which will celebrate its 75th anniversary in Washington this summer, still sets the overall defense strategy and spending goals for Europe, but it doesn’t control the equipment procurement process. Each NATO member has its own defense establishment, culture, priorities and favored companies, and each government retains final say on what to buy.

“Even when they buy the same German tank, they build it in different ways so a national defense company can get a piece of it,” Mr. Bergmann said.

That was what hampered the development of the German-French “tank of the future,” which will be operational — with drones, missiles, cloud computing and more — by 2035 or 2040, the countries hope. Disputes even extended to whether the tank’s main gun should be 130 millimeters, favored by the Germans, or a 140-millimeter version developed by the French.

The disjointed defense market makes it difficult for Europe as a whole to streamline costs and ensure that equipment, parts and ammunition are interchangeable across national borders.

There are also competing political visions.

“Europe needs to do a better job of defending ourselves, that’s the undisputed truth,” said Michael Schoellhorn, the chief executive of Airbus, the European aerospace giant that makes military aircraft. “Now what does that mean and with what ambition?”

France and Germany, the European Union’s two largest economies, have the two biggest defense budgets among the member states and will spend a combined 120 billion euros this year. Yet they stand on opposite sides of the debate.

France, which has its own nuclear arsenal, has pushed the hardest for Europe to invest in a stronger and more self-sufficient military. President Emmanuel Macron has repeatedly called for “European sovereignty” and “strategic autonomy” to balance the United States’ domination of NATO. And he has loudly voiced the deep anxieties that many European governments have about being overly dependent on the United States for security.

Germany, which lacks its own nuclear weapons and relies on NATO’s arsenal, is more comfortable with Europe’s unequal partnership with the United States.

The vigorous pacifist strain that followed World War II remains deeply embedded in German culture, and the public is only starting to come around to the idea that a military can be used to defend a democracy without undermining it.

Today, the effort to fill Europe’s depleted arsenal is happening at two speeds: Countries including Poland and Germany are buying fighter jets, missiles and ammunition from the United States and Asian allies, and France is pressing for the acceleration of a “Made in Europe” defense industry to increase self-sufficiency.

The divergent approaches can be seen in some of the responses to the European Sky Shield, a German initiative to build an integrated air-and-missile defense system across Europe that has rallied backing from at least 20 NATO countries. Paris viewed the program, which relies on equipment made in Israel and the United States, as excluding the European industrial base. Berlin portrayed the effort as an exceptional show of European unity.

“Berlin basically says this war shows that the E.U. doesn’t have the industrial capacities to protect itself and therefore we need to ‘buy American’ massively,” said Alexandra de Hoop Scheffer, the senior vice president for strategy at the German Marshall Fund. “And the French say this war shows that we need to step up our European defense industrial capabilities.”

France, Spain and Italy, as well as Sweden, which became the newest member of NATO this year, have argued that European funding should be used to invest in European military equipment production lines, make supply chains more resilient and generate raw materials and components instead of importing them.

The European Commission issued a similar message in March when it published a European Defense Industrial Strategy that aimed to bolster Europe’s military industrial base. The plan, the first of its kind for Europe, would link hundreds of billions of euros in subsidies to requirements that European weapons makers from different countries work together.

“Member states need to invest more, better, together and European,” the commission said.

Over the past two years, 78 percent of the defense equipment acquired by E.U. members was bought from outside the bloc — mostly from American arms makers that have no interest in tougher competition from Europe. The European Union’s new industrial strategy asks countries to spend half of their defense budgets on E.U. suppliers by 2030, and 60 percent by 2035.

Poland, on Ukraine’s western border, is spending more than 4 percent of its gross domestic product on defense. It has purchased hundreds of tanks, battle planes, helicopters, rocket launchers and howitzers from the United States and South Korea, along with British-designed frigates. Central and East European countries are also buying American.

Micael Johansson, the chief executive of the Swedish weapons manufacturer Saab, said the European Union’s strategy “points in the right direction.”

“But if you want to have industry investing billions of euros,” he said, European leaders must make long-term commitments to buy what the companies produce.

Then there is the question of how to pay for it all. The European Union’s treaty forbids member states to use the bloc’s funds for arms purchases — such spending must be done out of national budgets.

France is among several countries that have racked up enormous debts in the wake of the pandemic.

Most governments, including Germany’s, have so far opposed a proposal backed by Estonia and France to issue European defense bonds.

The Netherlands, Finland and Denmark are also wary of allowing the European Commission to gain more power by influencing defense contracts with subsidies.

And there is concern that Britain, which spends more on defense than any other NATO country in the region, would be excluded from the European Union’s military buildup by members-only preferences.

If Europe’s defense industry is to survive, some smaller weapons makers are going to have to merge or close, said Kurt Braatz, the chief communications officer for KNDS, a French and German conglomerate that was chosen to help develop the next-generation battle tank.

With a patchwork of defense companies that rarely collaborate, Europe operates more than five times as many weapons systems as the United States does in categories like tanks, fighter jets, submarines and munitions. The industry cannot compete in such a fractured state with American weapons behemoths like Boeing, Lockheed Martin and General Dynamics, Mr. Braatz said. “Consolidation is really needed.”

Only a large operation can create the necessary economies of scale and produce enough arms for export to make the industry profitable.

Such talk has stirred discomfort in European capitals. “When you start talking about mergers, you are talking about closing companies in some countries and losing jobs,” said Gaspard Schnitzler, the head of the defense and security industry program at the French Institute for International and Strategic Affairs. “And no one wants to lose jobs.”

Melissa Eddy contributed reporting.

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