Europe Has to Choose Between Depending on American Technologies or Using Second-Rate European Solutions

That is the conclusion that analyst Daniel Gros, member of the board of the Centre for European Policy Studies, comes to in his report Mind The Gap: The Economics Of More Europe In Defence.

The European economy is large enough to reduce a huge transatlantic gap in military spending. However, increasing expenditures will not automatically lead to stronger capabilities. The significant gap in military R&D between the US and Europe remains a structural weakness of the EU. Without harmonized efforts to close this gap Europe will continue to depend on American technologies.

Two examples illustrate these fundamental drawbacks. The A300 cargo plane was late in development for several years, and the costs of its design (30 billion Euro) exceeded the initial budget by 10 million euro. Given the fact that under 200 planes were built, the design costs alone amounted to 150 million euro per aircraft which is comparable to production expenditures and the price for which those planes are sold for.

Another example is regarding the anti-aircraft SAMP/T system based on the Aster missiles that started in the early 1990s. In terms of its capabilities it is similar to The Patriot system with the exception of hitting mid-range ballistic missiles but its production is very limited. The MBDA Consortium that builds it says that they need 22 months to make new missiles and from 3 to 4 years to make new systems.

The countries behind MBDA (primarily, France, Great Britain, and Italy) continue to ban more flexible production due to fear of losing production capacity. Even though there's a need for a European alternative to the American Patriot system, the contract to speed up production was signed only in early 2025. The delay was due to the need to reach agreement between the three countries (with their frequently changing governments) to make amendments to the initial agreement.

Cyber security is another area where the national level actions are far from sufficient. Nevertheless, the countries were unable to agree on collective actions.

The European Cyber Security agency (ENISA) faces an obvious shortage of resources. Its annual budget is 26 million euro only. The German Cyber Security agency boasts an eight times bigger budget of 240 million euro. The budget of the American Cybersecurity and Infrastructure Security Agency (CISA) amounts to 2.7 billion dollars US, and the budget of the military cyber security command is 1.7 billion US.

Member countries continue to veto giving ENISA any executive powers because cyber security is believed to be a national prerogative.

The European space industry is not competitive. The annual revenue of each of the two main private companies, SES and Eutelsat, amounts to roughly 2 billion Euro. The annual budget of Hispasat is only around 200 million euro. These funds are tiny compared to the income of Starlink.

Total private R&D expenditures in the space and defence industries amounts to 9 or 10 billion Euro both in the EU and in the US. But it is canceled out by a colossal difference in overall military R&D spendings of the US government. The US spends more than $100 billion compared to 9 billion in the EU, 2/3 of which are covered by France and Germany.

The huge difference in the R&D expenditures is the foundation of the US dominance in high-tech weapons. There are almost no signs of harmonized efforts of Europe to close or at least reduce this gap. Until it happens, Europe will have to make a difficult choice between depending on American technologies or using second-rate European solutions.

Source: https://www.ceps.eu/ceps-publications/mind-the-gap-the-economics-of-more-europe-in-defence/