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The U.S. system for supplying defense equipment and technology to other countries through the Foreign Military Sales (FMS) program has also become excessively politicized. By selling platforms such as F-35 fighter jets and Patriot air defense systems, Washington gains the ability to exert its influence over ongoing conflicts and to affect diplomatic disputes by depriving buyers of strategic flexibility.

Another U.S. law, the CLOUD Act, enacted in 2018, poses a direct challenge to data sovereignty by allowing U.S. authorities to access data stored on the servers of American companies even when those servers are physically located in Europe. Software such as the ODIN system used for the F-35 is contractually tied to updates provided from the United States. In theory, this means Washington could restrict the use of such weapons by suspending software support or halting the supply of spare parts.

As a result, Germany and other EU countries have begun developing their own regulatory frameworks. The EU’s response to ITAR has taken the form of new defense regulations, which encourage European companies to eliminate American technology from their supply chains altogether. For the time being, however, European contractors seeking export licenses are still required to disclose detailed technical information about their systems to U.S. regulatory authorities, creating the risk that commercially sensitive information could be exposed (and potentially facilitating industrial espionage).

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Currently, EU member states spend as much as 78% of their defense procurement budgets on purchases from suppliers outside the bloc, and as a result of the rapid rearmament of recent years, the share of defense procurement sourced from within the EU has fallen from 62% to a historic low of around 44%. Even within that internal market, member states award as much as 75–80% of contracts to their own domestic manufacturers rather than to companies elsewhere in the EU. As a consequence, the United States — which accounts for roughly 63% of all European defense imports from outside the bloc (well ahead of suppliers from the UK and South Korea) — effectively delivers nearly half of Europe’s overall arsenal. In response, Brussels has set itself the ambitious goal of bringing at least 50% of defense contracts back to the European market by 2030.

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ITAR-free status, indicating that a product contains no American-made components whatsoever, has ceased to be merely a marketing advantage — it has become a requirement in many defense programs. Both the European Defence Fund (EDF) and the ReArm Europe initiative take the absence of U.S. components into account when evaluating projects, and as a result, proposed systems that rely on American technology are far less likely to receive funding. Germany’s Ministry of Defense imposed a strict requirement in its competition to replace the G36 rifle: the winning design must not contain any components subject to ITAR. Denmark, meanwhile, deliberately chose the European SAMP/T air defense system over the U.S.-made Patriot to avoid the risks associated with American export controls (and Trump’s claims to Greenland).

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The real problem is not the overall size of the EU’s defense budget but its excessive fragmentation. Europe spends more than €300 billion on defense each year — roughly on par with China and second only to the U.S.

Yet this volume of outlays does not translate into equivalent strategic capability due to the fact that each EU member state seeks to channel contracts to its own domestic manufacturers. In a recent report — “Why Consolidate the European Defence Industry?” — published by the Jacques Delors Institute, the authors argue that a “collection of isolated industrial bases” is incapable of meeting the demands of prolonged, high-intensity warfare. They call for the urgent consolidation of the European defense industry in order to create pan-European industrial champions. Under the current arrangement, the EU derives 30-40% less defense capability for every euro it spends than it would if it functioned as a genuinely unified state.

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In France, President Emmanuel Macron remains the leading advocate of a unified European defense policy, but even he faces domestic constraints. The French military establishment firmly rejects any attempts by the European Commission to define the country’s defense requirements, viewing the defense sphere as a matter of national sovereignty. And even more far-reaching changes could come if the National Rally (Rassemblement National, RN) comes to power. Because of its ideological opposition to transferring sovereign authority to Brussels, an RN government would, according to Marine Le Pen herself, “kill” joint European defense projects such as the MGCS tank program.

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Europe’s response to these challenges is the European Defence Industrial Strategy (EDIS) and the accompanying European Defence Industry Programme (EDIP). Together, they set an ambitious target: by 2030, at least 50% of defense procurement should come from manufacturers based within the EU. Their main financial instrument is the Security Action for Europe (SAFE) initiative — a €150 billion EU defense fund established in May 2025 to support large-scale rearmament. It provides member states with long-term, low-interest loans to invest in expanding defense production capacity. In return, it imposes a strict condition: components supplied by countries outside the EU may account for no more than 35% of any funded project.

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To end its critical dependence on U.S. systems such as Starlink and GPS, Europe is pursuing an ambitious strategy to build its own “space shield” replete with sovereign satellite constellations. Additionally, the IRIS² project, with a budget of more than €10.6 billion, is intended to provide highly secure communications for government institutions and the military. The EU also plans to further develop its Galileo navigation system and Copernicus Earth observation program while obtaining military certification for both. Germany, meanwhile, is investing approximately €10 billion in its own constellation of 100 low Earth orbit satellites under the SATCOM Stage 4 program, often described as Germany’s “military Starlink.”

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Ukraine is playing a particularly important role in accelerating innovation in at least three ways: as a battlefield testing ground for next-generation technologies, as a catalyst for the transformation of Europe’s defense industry, and as a source of new standards for digitally enabled warfare.

The EU–Ukraine security commitments adopted in June 2024 formalized industrial cooperation, bringing Ukraine into the market as a “special partner” whose defense industry is being integrated into Europe’s industrial base even before the country joins the EU. This integration is enshrined in the EU’s foundational “White Paper for European Defence — Readiness 2030,” as well as in the official European Defence Industrial Strategy. A dedicated EU–Ukraine Task Force on Defence Industrial Cooperation under the European Commission is intended to transform the urgent requirements of the battlefield into long-term, large-scale European defense production.

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Ukraine’s experience has shown that modern military systems—drones, electronic warfare capabilities, and AI—become obsolete within weeks rather than decades

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Investment in defense sovereignty — €500 billion over the next decade, or about 0.25% of the EU’s projected GDP during that period — is more than a security expenditure. It amounts to a comprehensive project of European reindustrialization. Its main engine will be the technologies developed for military purposes, ranging from sovereign AI (such as that developed by Mistral AI and Helsing) to quantum sensors and space launch systems like Ariane 6. These technologies are expected to spill over into the civilian economy. European policymakers hope that this will reduce the bloc’s high-tech trade deficit with the U.S. and China while restoring the EU’s position as a global industrial leader.

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Building a sovereign European defense architecture is more than a military challenge. It is the European Union’s ultimate test of maturity as a global power. The success of this transformation will determine not only the security of Europe’s borders but also its long-term economic vitality.

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