But behind the scenes, the people trying to implement this grand ambition are running into a thicket of procurement hurdles and national preferences.

A panel discussion last Friday, co-hosted by The Sentinel and consultancy Teneo, highlighted the gap between aspiration and reality. Despite EU incentives for industrial integration and encouraging words from national governments, the speakers described how European defence spending is still getting stuck in silos, chilling competitiveness and putting a ceiling on industrial growth.

The case for consolidating Europe’s defence industries is clear. Joint procurement would give a bigger demand signal to the market, allowing companies to invest more efficiently in research and development – potentially helping them to win export orders outside Europe, too. Allied armies would be more interoperable. And sharper competition would ensure European buyers got the best possible equipment for the right price.

But among Europe’s bigger countries at least, most big contracts are still given to domestic companies. The defence sector has carve-outs from competition law, meaning there’s less need for fair and transparent procurement processes; and design requirements are often so complex, and so peculiar to each country, that outsiders can’t penetrate them.

As a result, a huge chunk of European defence spending goes on parallel R&D processes, and relatively little on production. Worse, since no country’s defence industry has continental scale, several high-end capabilities simply don’t exist and have to be outsourced to the US. By refusing to depend on each other, Europeans have created a bigger dependency on an outside power.

Artisanal production

Part of the issue is that each European country has its own military doctrine, which in turn requires different equipment specifications. While defence companies often create specific variants for export customers, Europe’s bigger countries can be so demanding that a bespoke product is required – without placing big enough orders to justify the initial R&D outlay.

Take the UK’s Ajax armoured vehicle, whose survival was confirmed this week by the Ministry of Defence. As journalist and former tank commander Mark Urban writes on his Substack, the Army imposed 1,318 specifications on the procurement, a burden so onerous that “the producer of a rival vehicle this week said they were glad they didn’t get the contract”.

All of this for an initial order of fewer than 600 vehicles – less than half a unit per design specification. It’s little wonder that Britain has so far sunk £6 billion (€7 billion) into the platform before it has even passed field testing. Short of a big export order coming in (unlikely given Ajax’s history of failed field tests), that’s more than £10 million per unit in development costs alone.

By contrast, the US has produced nearly 7,000 units of its closest Ajax equivalent, the Bradley infantry fighting vehicle, since 1981. That’s an economy of scale more than ten times better than the UK’s, and the only way the UK can match it is by combining forces with its neighbours.

If Britain were a global power and Ajax a unique capability, the outlay might be justifiable. In fact, other European countries make very good infantry fighting vehicles with similar specifications – Germany’s Puma or Sweden’s CV-90, for example – that could fulfil the role if the Army were a little more flexible.

Part of the problem is that Britain has a small Army that used to be a big one, and that now lives beyond its means. During the Second World War it ordered more than 100,000 units of the Universal Carrier, a tracked and armoured troop transporter. At that scale, bespoke procurement makes sense.

A weakness for the personal shopping experience is not unique to Britain. As the Financial Times reported earlier this month, the German Navy placed more than 7,000 specifications on the design of its F126 frigate, then ordered just four of them (plus two more later). The project is now €2 billion in the hole and the lead contractor, Damen, is leaving acrimoniously. As with Ajax, perfectly viable alternatives exist on the European market.

When European countries do agree to joint procurement, it normally comes with a side order of joint production, resulting in unwieldy consortia that are often marred with culture clashes, disagreements over design specs and fights for control. The FCAS joint fighter jet is providing an example of that in real time.

In a rational Europe with a functioning single market, countries would collaborate on procurement specifications and then buy, at scale, whichever product was best. Perhaps Britain would buy German armoured vehicles and Germany would buy British frigates. At that point, Europe’s defence market would start to look a lot like America’s, and could transform defence spending into fighting power at a similar rate. But both culturally and politically, there is a long way to go.

EU incentives

The EU is trying to nudge its member states to behave more like this through a range of funding mechanisms that encourage joint R&D and production. This may achieve some success with newer technologies, where national procurement patterns are not yet baked in.

But EU officials are clear-eyed about what they can and can’t do. As Sanna Laaksonen, a member of Vice President Henna Virkkunen’s cabinet, said at The Sentinel’s event last week, the European Commission can provide incentives but it can’t tell member states how to conduct military procurement.

National sovereignty in defence is ironclad in the EU treaties. Article 346 of the Treaty on the Functioning of the European Union (TFEU) provides a sweeping exemption from EU competition rules for military procurement: “any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material”.

Whether through EU treaty change or some form of multilateral agreement, the decision to create a European market for defence will have to be made by national governments. They’ll need to overcome institutional resistance at home and at the same time persuade each other to act in lockstep, since lowering trade barriers unilaterally is rarely a profitable move.

As countries rush to increase their defence spending, early indications are that they’re following established patterns. In the last two weeks alone, Rheinmetall has announced a €1 billion German order for infantry equipment and another €300 million contract for drones. Almost all of Germany’s recent spending splurge has gone to domestic companies.

Europe’s military weakness does not come from lack of funds. NATO’s European members jointly spent more than China in 2025, and more than half of what the US spent. Fragmentation is what has stopped them turning that budget into fighting power – and that will be true no matter what percentage of GDP they spend.

In the news

• China has placed export controls on seven European defence companies over alleged arms sales to Taiwan, preventing them from buying dual-use goods, Chinese newspaper Global Times reported.

• The European Commission will draft guidelines on how the EU should act if its mutual defence clause is activated, the president of Cyprus has said.

• Rheinmetall has received an order worth €1.04 billion from the Bundeswehr to provide additional units of its Infantry Soldier of the Future – Enhanced System (IdZ-ES).

• Drone manufacturers in Spain, mostly SMEs, have come together to form a new industry association called Ecuas in response to disappointing growth that they blame on regulatory barriers, El País reported.

• The UK is assembling a coalition of Northern European navies to form a joint maritime force that will use common platforms and systems, as well as shared digital and logistics systems, according to UK Defence Journal.

Further reading

• The EU should take advantage of its post-Orbán consensus to lock in a majority voting system for foreign policy and security decisions, to prevent future obstructionists from abusing their veto power, Francesco Nicoli, Roel Beetsma and Guntram B. Wolff wrote for Bruegel.

• Germany’s push to develop the biggest conventional armed forces in Europe is dividing its society as well as its neighbours, notably France and Poland, Anne-Sylvaine Chassany and Leila Abboud wrote for the Financial Times.

• The fast and massive increase in European defence budgets “will reinforce the temptation of purely national development and acquisition,” Claude-France Arnould and Luuk van Middelaar wrote for the Brussels Institute for Geopolitics, calling for stronger European political leadership.

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Defence industries around the world have a peculiar legal framework because of national security provisions, an effect exacerbated when dealing with a superpower. In past decades, the risks to European buyers have been largely theoretical and judged to be a worthwhile trade-off to access cutting-edge weaponry. That may be starting to change.

Last week, Reuters reported that US officials had told European customers that contracted weapons deliveries under the Foreign Military Sales (FMS) program would be delayed, including to frontline states in the Nordics and Baltics, as shipments were directed to US forces fighting in the Gulf.

Estonia’s Defence Minister Hanno Pevkur said this week that US ammunition shipments for the HIMARS multi-launch rocket system were “on hold” with apparently no indication of when they might resume. “We will try to gather as much information as possible,” he said.

Compounding the problem, the US places tight restrictions on how its equipment can be used. “In the case of HIMARS, it is theoretically possible to use ammunition from other manufacturers, but that would again require permission from Lockheed Martin and the US government,” Pevkur said according to news site ERR.

No recourse

Now that shipments are coming under pressure, European buyers are starting to realise they have very little recourse against US suppliers that fail to meet their obligations, and are at risk of losing their money or having other orders halted if they try to exercise their rights.

It’s a sharp reminder of the imbalance of power in the trans-Atlantic relationship.

Last autumn, Swiss officials learned that deliveries of Patriot air defence systems would be delayed by several years due to competing demand in Ukraine, and paused payments. In response, the US simply redirected Swiss payments for F-35 jets into the Patriot budget, broadcaster SRF reported last month – something it can easily do under the FMS program.

This structure, peculiar to the defence sector, in effect puts the combined market power of the US arms industry behind each individual contract, leaving buyers outmatched in any contractual dispute.

“Well over CHF100 million” (€109 million) was redirected from the F-35 to the Patriot budget, SRF reported. It interviewed a senior procurement official, Urs Loher, who “told SRF how much money has already been shifted. But under pressure from US authorities, he can no longer disclose the exact figure.”

The reallocation of funds “is very unsatisfactory”, SRF quoted Loher as saying. It also reported that the US had raised the total price of the Patriot contract by 50% since signing it, to about 3 billion francs.

A bird in the hand

The current supply squeeze and the longer-term Atlantic divergence are starting to have an effect on European decision-making.

“It’s frustrating when we impose a payment freeze and the money is simply redirected,” SRF quoted Werner Salzmann, a senator from the right-wing Swiss People’s Party, as saying. “We need to think carefully about whether we want to keep signing such agreements.”

In Estonia, a former top general said that a delay of more than three years for the HIMARS ammunition should prompt a rethink. “If it goes beyond that, then alternatives should be examined,” ERR quoted Martin Herem as saying. “Fortunately, Estonia has signed a contract with Korea’s Hanwha Aerospace, which could provide either relief to this problem or even a replacement.”

And Denmark this week signed a contract for the SAMP/T NG air defence system, a rival to the Patriot made by Thales and MBDA. Prime Minister Mette Frederiksen had earlier this year announced a preference for good equipment that arrives quickly over excellent systems that might not: “If we can’t get the best equipment, buy the next best”. The order, announced last September, marks the first sale of the Franco-Italian system outside its home countries.

Permission to engage

Restrictions on how equipment can be used are also becoming more problematic for European buyers. Even without President Donald Trump’s threats to take Greenland by force, events have shown the problem of European states not having full sovereign control of their arsenal.

After Russia’s invasion of Ukraine, the US blocked the Netherlands and Denmark from donating their F-16s for several crucial months. Two years later, it continued to restrict the use of certain British and French missiles because they contain some American components. Buying American weapons does not mean owning them.

The risk is clear. If Vladimir Putin attacks NATO territory, the US may fail to intervene, which would be harmful enough. But the US is also within its rights to stop its weapons being used to fight back – assuming they’ve been delivered at all.

European leaders need to think about that scenario, and how much they’re willing to pay to avoid it.

In the news

• Mediators have failed to break the deadlock between Dassault and Airbus over the future of FCAS. Germany’s Boris Pistorius wants a decision “this week” as Friedrich Merz and Emmanuel Macron meet.

• Polish Prime Minister Donald Tusk has cast doubt on whether NATO’s Article 5 would be respected, and urged the EU to work towards a common defence policy, in an interview with the FT.

• Airbus and Thales are working with Poland’s Radmor to build a dedicated satellite for the Polish armed forces.

• Korea’s Hanwha is setting up a new entity in Germany to produce ammunition, air defence, artillery and strike weapons.

• Rheinmetall has received a German order for drones worth an initial €300 million, under a framework potentially worth billions.

Further reading

• Europe must implement a security architecture that works with a reduced or absent US role, Justin Logan and Rachel Tausendfreund wrote for the German Council on Foreign Relations.

• For Europe to manage its own defence “will require fundamentally different planning, coordinated investments, and a shared framework for collective deterrence and defence”, according to Claudia Major from the German Marshall Fund of the United States.

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But this is not a story about Estonia’s decision to redirect half a billion euros from infantry fighting vehicles (IFVs) to drones. What’s arguably more interesting is Finland’s decision to spend the same amount of money to double its stock of self-propelled artillery.

The parallel decisions, both by countries preparing seriously for a high-intensity war, show that the shift to drones is real but is not the whole picture. Estonia will upgrade its existing IFVs rather than replacing them. And the Finns are doubling down on a technology that evolved alongside the battle tank and defined Cold War land doctrine.

Drones are the new, shiny thing; in the past five years they have gone from being a niche system to a core pillar of combined arms warfare. It’s rational that money is pouring in as armies rush to build up their capabilities from zero. Once that’s done, however, attention will shift back to legacy systems that are still relevant, and that will need to be produced in much greater numbers to sustain a full-scale war effort.

Drones in demand

Late last week, Estonia’s defence minister said the country was cancelling a €500 million procurement program for new armoured vehicles and instead directing the budget to air defence and drones. “We are keeping up with what we are learning from Ukraine,” Hanno Pevkur said according to news site ERR. “The focus is on countering drones, air defence and unmanned systems.”

Across the continent, drone procurement is in the headlines. Last month the Dutch forces said drone and counter-drone units would be integrated into every formation. British commandos this week demonstrated how cargo drones could improve the mobility of heavy weapons teams in difficult terrain. Everyone wants long-range strike drones, and cheap interceptors to counter them.

Note how drones in most cases are augmenting existing capabilities, not replacing them. Similarly, Estonia is not removing armoured vehicles from its order of battle; it’s merely delaying upgrades to spend its budget on a more pressing need. Nobody is going all-in on drones.

Talk of the end of legacy systems is most likely overstated. From fiat currency to email, tech bros have a track record of wrongly declaring the end of things. More often, they continue to exist alongside their supposed replacements.

The obituary of the battle tank has been written before, after the introduction of attack helicopters and anti-tank guided missiles. And yet new defensive systems and tactics evolved to keep it relevant. As it turns out, a big gun on a protected mobile platform is a useful tool in many scenarios.

SPARTY time

Similarly, Finland appears to have calculated that self-propelled artillery (SPARTY for fans of military acronyms) will continue to be useful in the coming decades. A day after the Estonian drone news, the Finnish defence ministry announced the purchase of an additional 112 K9 howitzers from Korea for almost €550 million, more than doubling its stock.

Self-propelled guns were first used at scale in the Second World War, providing heavy fire support to mechanised formations. During the Cold War, advances in counter-battery fire, whereby an enemy could detect the source of incoming shells and shoot back with their own artillery, led in turn to ‘shoot and scoot’ tactics to reposition guns after each salvo. This reduced the usefulness of towed guns, which are slow to redeploy.

Modern self-propelled howitzers like the K9 can fire NATO standard 155mm shells up to 40km, well beyond visual targeting and at the limit of FPV drones’ operational range. Combined with mobility and decent armour, this makes them hard to kill so long as the airspace is at least contested.

This appears to have factored into Finland’s decision. The defence ministry noted the K9’s “good off-road and road mobility” and said the new purchase would “partially replace aging towed artillery equipment”.

A few weeks ago, Rheinmetall CEO Armin Papperger drew unfavourable media coverage for his disparaging comments about the limitations of Ukrainian drones. “This is not the technology of Lockheed Martin, General Dynamics, or Rheinmetall,” he said, provoking particular criticism for an ill-considered reference to “Ukrainian housewives” assembling drones at the kitchen table.

But while his tone was objectionable, Papperger’s message had a ring of truth to it. Once the novelty of drones fades, modern armies will still be buying tanks, planes and guns. And, if war comes, lots and lots of ammunition.

In the news

• Rheinmetall has agreed to form a joint venture with Destinus to scale production of strike missiles, the two companies announced. The new company will be 51% owned by Rheinmetall and based in Germany.

• Small arms maker Colt CZ has joined fellow Czech company CSG in listing on Euronext Amsterdam, alongside its existing listing on the Prague Stock Exchange, it said in a statement.

• The European Commission is planning new guidelines on merger control that would relax restrictions and encourage the creation of “European champions” to rival giant US and Chinese firms, the Financial Times reported citing a draft it had seen.

• French helicopter gunships have shot down Iranian Shahed drones in the Gulf using their 30mm nose cannon, Defense News reported, in a display of relatively low-cost interception capability.

• Germany has pledged to spend an additional €4 billion on assistance for Ukraine, buying a mix of US and German equipment with a focus on air defence and long-range strike capabilities, the Kyiv Post reported.

• Belgium and Spain will each donate €1 billion in military equipment to Ukraine, Defence Minister Mikhail Fedorov said after talks with his counterparts Theo Franken and Margarita Robles, DS News reported.

Further reading

• The European Defence Agency’s annual report reveals new mandates for structured cooperation between member states, and ambitions in loitering munitions, ground drones and air defence.

• The EU and NATO are in a “turf war” over Europe’s rearmament, with both trying to take on new capabilities in defence industrial policy, Henry Foy wrote for the Financial Times.

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As with most topics related to European defence, each country is doing things its own way.

German media reported over the weekend that men aged between 18 and 45 would need permission from a military careers centre to leave the country for more than three months. The provision, which previously went unnoticed, is in the small print of a new military service law that took effect at the beginning of this year.

Reading beyond the headline, it appears that the law is intended to keep track of men who might be called up in case of emergency, rather than to restrict their movements in the present moment. In practice, the military must grant the permission if “no specific military service is expected during the period in question,” news agency DPA quoted an official as saying.

The public appears to have understood the nuance. A German friend in Brussels reports that the story is not a big topic of conversation among his friends back home, who are subject to the provision.

Still, it’s notable that lawmakers chose to frame the requirement as seeking permission to travel, rather than simply notifying the authorities of one’s movements. That suggests they may be starting to introduce the idea that citizenship brings obligations as well as entitlements – an alien concept to the majority of living Europeans.

The new German rules do not impose military service on anyone, but require male citizens turning 18 to attend a recruitment centre and answer a questionnaire covering their education, health, and willingness to serve. Women may choose to attend and volunteer. The hope is to raise the number of active-duty soldiers to 260,000, from 180,000 now.

The path to more intensive recruitment is clear. By 2035, the German armed forces will have records of every male citizen aged 18 to 27. Some will have completed basic training, and all will at least have seen a military facility and exchanged a few words with a recruiting sergeant. And the authorities will have some idea of who is healthy and likely to respond positively to a voluntary call-up.

Finnish fortitude

Other European countries impose a range of requirements, from compulsory military service to no requirement at all, through a whole spectrum of intermediate measures including targeted recruitment, voluntary service and civic alternatives.

Finland has the most comprehensive system, with a longstanding requirement for all men to complete an initial period of service and then remain in the reserves until age 60, with periods of active service throughout; women can volunteer to do the same.

This means that Finland, with a population of less than 6 million, has only around 24,000 full-time military personnel but can quickly increase this to around 280,000 trained reservists in wartime. In a desperate situation, it can call on up to 900,000 people with at least some history of military service.

Finland’s approach reflects its geography and history, and can’t necessarily be replicated elsewhere. It fought an existential defence against the Soviet Union in 1939-40, eventually ceding territory but inflicting enough damage to ensure its survival as an independent state. Its border with Russia is more than 1,300km long, the longest of any European country bar Ukraine.

Ramping up, slowly

Neighbouring Sweden puts more of a focus on civil defence and resilience, which it frames as an active duty of all citizens. Nevertheless, it has a compulsory questionnaire for citizens turning 18 – similar to the German approach, but treating women the same as men – which it uses to identify the most suitable candidates to invite for service.

Several other European countries including Greece, Austria and Denmark have compulsory service. No two countries are quite the same: some apply equally to men and women while others have stricter requirements for men; some have an alternative option for civic service, while others require all healthy citizens to undergo military training.

Across Europe, requirements are gradually getting more stringent. Denmark extended the draft to women for the first time in 2025, and also lengthened the standard service period from four to 11 months. Earlier this year, Croatia reintroduced compulsory service for men for the first time since 2008.

Nonetheless, training is not the same as going to war. Last November, France’s top general sparked a backlash by saying that the country must be ready to “lose its children” in the event of war with Russia, lamenting that society lacked “the spirit to accept suffering in order to protect who we are”.

Across Europe, polls have shown historically low proportions of young people willing to fight to defend their country. As the continent prepares to deter Russia without America, the first battle is for the spirit of its citizens.

In the news

• Fire Point is working with other European companies to develop an interceptor that can destroy ballistic missiles for a unit cost of less than $1 million (€860,000), Reuters reported after interviewing its co-founder Denys Shtilierman.

• Russian submarines spend a month in British waters carrying out covert surveillance of undersea cables and pipelines, UK Defence Secretary John Healey said.

• NATO’s Allied Air Command is calling on defence companies to develop new technologies to detect airborne threats, UK Defence Journal reported, following drone incursions into Poland last year.

• France plans to spend an additional €36 billion on defence between now and 2030, bringing its total budget to around 2.5% of GDP by the end of the decade, Reuters reported. It will build up stocks of strike missiles, air-defence interceptors and artillery shells.

• Czechoslovak Group (CSG) has won contracts worth $2.5 billion (€2.1 billion) to deliver air defence systems to countries in Southeast Asia, through its export subsidiary Excalibur International, it said in a statement.

• Romania’s Mangalia Shipyard, the country’s only facility capable of building military vessels, has gone bankrupt, newspaper Ziarul Financiar reported.

• Wild Hornets, a Ukrainian maker of FPV drones and interceptors, has claimed to have destroyed two Shahed strike drones from a range of more than 500km using new remote control technology, DS News reported.

Further reading

• Germany’s F126 frigate project has become “one of Germany’s biggest defence procurement disasters” with officials looking to strip Dutch shipbuilder Damen of its role as lead contractor, the Financial Times wrote.

• Russian soldiers are routinely forced to bribe their commanders to get jobs in the rear and avoid being thrown into suicidal assaults – or simply to avoid a beating or worse, the Economist reported.

• Plans for a new air-launched ballistic missile could dramatically improve Ukraine’s ability to strike targets deep inside Russia, Wes O’Donnell wrote on his Substack.

• The Iran war calls into question both America’s willingness and its production capacity to deliver weapons to Europe, even for orders that have already been placed, Luigi Scazzieri and Giuseppe Spatafora wrote for the EU Institute for Security Studies.

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Last Friday, Iran destroyed an American E-3 Sentry aircraft on the tarmac at the Prince Sultan Air Base, deep inside Saudi Arabia. Besides its own role in air defence, this airborne warning and control system (AWACS) plane had a price tag of about $300 million in the 1990s, and could cost double that to replace today.

Iran said a Shahed was used, and the US has not contradicted that claim. The Iranian strike drone, also used extensively by Russia in Ukraine, can be manufactured for as little as $20,000 – more than 10,000 times less than the target it destroyed.

Economic targets are just as vulnerable. On Monday, a Shahed struck and set ablaze a Kuwaiti oil tanker laden with crude oil as it lay at anchor off the coast of Dubai. As Phillips O’Brien has pointed out, the total cost is in the same bracket as an AWACS: about $150 million for the ship, and $200 million for its cargo. And there are perhaps 200 tankers trapped in the Gulf.

While the Shahed has caused trouble for Ukraine, the Gulf theatre shows the full extent of its transformative power. It has brought a large number of soft, expensive targets into range which cannot all be adequately defended with current systems. And unlike missiles it can be built in a garage, meaning its production cannot be halted by air power alone.

Rush for countermeasures

The race is on to find a reliable and cost-efficient countermeasure, both to meet demand in the Gulf and to limit the effectiveness of strike drones in any future conflict. And while the initial developments are taking place in the military domain, the vulnerability of critical infrastructure will eventually require a broader societal response.

In the purely military sphere, companies are developing a range of systems to detect, track and engage strike drones at scale, without scrambling fighter jets or expending multimillion-euro interceptors each time.

Young European companies are developing low-cost interceptor missiles and drones designed primarily to hit Shahed-like targets for a few thousand euros per fire. Germany’s Quantum Systems has partnered with Ukraine’s WIY Drones to scale production of the latter’s Strila interceptor – and won a contract to supply 15,000 of them to Ukraine.

The biggest companies are also taking part. Airbus this week tested an autonomous aircraft, Bird of Prey, designed to search and destroy strike drones. Armed with low-cost Mark 1 missiles built by Estonian start-up Frankenburg Technologies, the Bird of Prey can potentially destroy up to eight Shaheds in a single sortie before landing safely for reuse.

Early detection is a key component of successful interception, and here Europe’s fragmentation is a weakness. Europe’s various armed forces currently lack the ability to coordinate effectively with each other, especially in a scenario without American leadership through NATO, reducing the chance of strike drones being tracked and intercepted as they overfly several territories.

The bomber will always get through

Coordination will also have to improve between the military and civilian domains, recognising that the armed forces will not be able to intercept every drone in a conflict at scale. In 2022, Ukraine introduced an app called Eppo which allowed civilians to flag drone and missile sightings to the Air Force, rounding out an often incomplete radar picture.

Civilians may have a role to play in defeating drones, as well as detecting them. Strike drones carry a smaller payload than ballistic missiles, and their effectiveness can be significantly reduced by measures as simple as reinforcing structures. Since early in the war, Ukrainian critical infrastructure has been hardened in this way.

More recently, Ukraine has authorised civilian infrastructure operators to buy and operate air defence systems. In coordination with the Air Force, employees of a power plant or train station can shoot down inbound strike drones – and have begun successfully to do so in recent weeks, Defence Minister Mykhailo ​Fedorov said this week.

The idea is beginning to catch on elsewhere in Europe. The Czech government is considering giving infrastructure operators the authority to use air defence systems – to counter both strike drones and smaller, locally operated models that can disrupt airports or conduct surveillance of strategic locations.

Too late for the Gulf

Bringing new countermeasures online will take time. Back in the Gulf, the US and its allies seem to have no answer to the Shahed. That leaves three scenarios: a continuation of the status quo, a negotiated peace to Iran’s advantage, or an escalation into a ground war.

All three of these scenarios will leave the Strait of Hormuz closed, oil prices high, American credibility degraded and NATO under pressure. Vladimir Putin will be flush with cash and eager to press his advantage – meaning Europe has no time to lose.

In the news

• Cross-border defence procurement deals are more likely to succeed if companies commit to manufacturing in the target market, Belgium’s defence minister Theo Francken said.

• The EU’s External Action Service is planning to issue guidance on how Article 42.7 of the EU treaty – the bloc’s equivalent to NATO’s Article 5 – can be activated, Euractiv reported.

• Ukraine’s air defences shot down 89.9% of Russian drones and missiles in March, the defence ministry said, up from 85.6% in February.

• The European Defence Agency (EDA) has hired Anders Sjöborg as its deputy chief executive, whose roles will include increasing support for joint procurement.

• Poland’s state arms manufacturer PGZ is to build anti-drone interceptors developed by Estonian startup Frankenburg Technologies in order to scale up production.

• Slovakia produced hundreds of thousands of artillery shells last year, and has increased its exports by 2,200% in the past four years, Bloomberg reported.

Further reading

• The International Institute for Strategic Studies (IISS) has a long read on how UAVs are used in intelligence, surveillance and reconnaissance (ISR).

• The scenario of Iranians rising up against the regime following US and Israeli airstrikes has “withered on the vine” and the likelihood of an Islamic Revolutionary Guards Corps (IRGC) dictatorship is “ascendant”, Graeme Herd wrote for RUSI.

• Iran’s ability to fire ballistic missiles at targets up to 4,000km away is largely symbolic but could still change the geopolitical picture, Markus Schiller said in an interview with the Stockholm International Peace Research Institute (SIPRI).

• I saw down with Julia Kril for a chat about Europe’s defence industry and the war in Iran.

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Cross-border defence procurement deals are more likely to succeed if companies commit to manufacturing in the target market, Belgium’s defence minister has said.

Theo Francken was speaking at the inauguration of a new facility outside Brussels owned by Greek optics maker Theon, built to service a joint German-Belgian order that it won last year.

“When I get a €4 billion budget, the first thing people ask is ‘what’s in it for us?’,” Francken said. If a supplier commits to opening a local production line, “that’s what I need to hear: jobs, jobs, jobs.”

While EU policymakers push to integrate the bloc’s defence market, big contracts still tend to be awarded to national producers. A bumper German drone contract, worth an initial €540 million, was this year split between two German companies: Helsing and Stark. The UK is persisting with Ajax, an armoured vehicle project that has repeatedly failed field tests, at least in part to preserve manufacturing jobs.

Francken joked that he always enjoyed opening factories in Belgium, but this occasion was even sweeter for being in his home constituency of Zaventem. “I’m a politician,” he grinned.

Greeks bearing goggles

Today’s ceremony marked the formal opening of Theon’s Belgian subsidiary, following its winning bid in September to manufacture its clip-on thermal imaging device, IRIS-C, for the German and Belgian armed forces. The device attaches to a soldier’s helmet and can detect people and vehicles at night or through cover.

“The European defence industry is fragmented,” said Theon CEO Christian Hadjiminas. “Every nation, understandably, has the desire to support its own industry... there’s no optimisation.”

Nevertheless, he said, the deal shows that there’s room for relatively small European defence companies to win big cross-border contracts. Besides the commitment to manufacture in Belgium, he also credited cross-border procurement agency OCCAR with bringing the deal together.

OCCAR, formed in 2001, coordinates the procurement of defence equipment between Belgium, France, Germany, Italy, Spain and the United Kingdom, sometimes with guest nations also participating. Its projects include the A400M transport aircraft and the Boxer armoured vehicle.

Theon hopes that its new Belgian facility can eventually develop into an export hub for future contracts across Europe, Hadjiminas said. “Here is the example of where Europe should be going.”

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The Hungarian government is clashing with the EU on every front, and Viktor Orbán’s success or failure in retaining power next month will have a major effect on the bloc’s ability to act cohesively on questions of geopolitics and rearmament.

The election on 12 April will pit Orbán’s Fidesz party against the Tisza party led by Péter Magyar, a former ally who broke away from Fidesz in 2024 alleging widespread corruption. Tisza is leading in the polls but observers worry that Orbán, who has centralised power during his 16 years as prime minister, could use his control of state institutions to remain in power.

In recent months, Magyar has criticised the government’s close relations with Moscow and vowed to break Hungary’s dependence on Russian energy. He is not as closely aligned with Ukraine as some European leaders, but would be much less likely to unilaterally block Ukraine-related policies if he becomes prime minister.

By contrast, recent developments suggest that Orbán could make things even more difficult for the EU’s policy on Russia and Ukraine. Many in Brussels appear to have adopted a strategy of ‘wait until after the election’, both in the hope that Magyar wins, and to avoid letting Orbán play the martyr to EU overreach ahead of the vote.

Semper Fidesz

At last week’s EU Council summit, Orbán blocked a €90 billion EU loan to Ukraine after previously agreeing to it in December. All 26 other members agreed to the measure, including other occasional Ukraine holdouts Slovakia and Czechia, meaning Orbán’s veto was the only spoiler.

EU leaders gave unusual expressions of anger. Commission President Ursula von der Leyen said the loan was blocked “because one leader is not honouring his word”, and pledged to find a workaround. German Chancellor Friedrich Merz described Orbán’s actions as “a gross act of disloyalty”.

In an interview with Contexte this week, Council President António Costa said Orbán’s behaviour was a “clear violation of the principle of sincere cooperation” and hinted at a potential need to change the Council’s rules: “it’s up to the lawyers to understand what the effect of these violations is”.

The EU’s mistrust of Orbán’s government deepened further this week when security officials alleged in the Washington Post that foreign minister Péter Szijjártó routinely calls his Russian counterpart during breaks in Council meetings to give him “live reports on what’s been discussed”.

The passing of information to Moscow was already widely suspected at a senior level. “We’ve had our suspicions about that for a long time,” Polish Prime Minister Donald Tusk posted on X after the report. “That’s one reason why I take the floor [at the EU Council] only when strictly necessary and say just as much as necessary.”

Tusk’s comments suggest that, beyond the ability to block certain measures outright, Hungary’s presence as a Russian ally in the EU Council has a broader effect of suppressing debate and the sharing of sensitive information.

That suppressive effect may spread further after a phone call between a Politico journalist in Brussels and a senior European Commission official was compromised earlier this month. On 25 March Politico acknowledged that the recording, published on YouTube on 16 March, was genuine. The conversation concerned the Druzhba pipeline, whose supply of Russian oil to Hungary and Slovakia has been halted due to damage in Ukrainian territory.

Both the Commission, which issues secure mobile devices to its employees, and Politico have said they found no evidence of a security breach. At the time of writing there is no information about how the leak occurred or who is behind it.

Playing it SAFE

The EU has taken limited steps to punish Hungarian obstructions. The Commission notably neglected this week to approve Hungary’s bid for SAFE defence funding. It approved the French and Czech plans, which had been delayed, leaving Hungary alone among the 19 applicants to still be waiting for the green light.

Further measures may be necessary to prevent Hungary blocking or otherwise disrupting EU policymaking if Orbán wins the election. Law changes are not out of the question and have been done before: In 2022 the EU changed its rulebook to withhold billions of euros from Hungary and Poland over rule of law violations.

“I think everyone has asked their legal services to check,” Contexte quoted Costa as saying in reference to Orbán’s veto of the Ukraine loan last week. “There is always a way to overcome the contradiction and to find the more coherent solution [in line] with the sense of the treaty.”

In the news

• British forces are ready to board and detain Russian shadow fleet tankers in UK waters, the defence minister has said.

• Two people have been arrested on charges of spying for Russia after allegedly surveilling a person in Germany who supplied drones and their components to Ukraine, Germany’s Federal Public Prosecutor’s Office said.

• Russia is shipping lethal support including drones to Iran, the Financial Times reported citing officials briefed on Western intelligence reports.

• Poland is exploring various multilateral defence financing mechanisms alongside its €44 billion share of the EU’s SAFE loans, its finance minister has said according to Reuters.

• Volkswagen is in talks with Rafael, which builds Israel’s Iron Dome system, to switch production at one of its car plants to air defence assets, the Financial Times reported citing two people familiar with the plan.

• The Dutch armed forces will add drone and counter-drone capabilities to their combat formations from April and work more closely with industry, their top commander has said.

Further reading

• The EU’s decision to draft a new European Security Strategy (ESS) is an opportunity for European leaders to come together and create a path to becoming a genuine strategic actor, Felix Koesterke wrote for the Egmont Institute.

• Developing native European capabilities in intelligence, surveillance and reconnaissance (ISR) will be crucial to securing NATO’s border with Russia in the High North, Barbara Kunz and Aino Esser wrote for SIPRI.

• Europe should consider forming a “new partnership of middle powers” with Gulf Arab countries, Rym Momtaz wrote for Carnegie Europe.

• Polish society, once unanimously Atlanticist in its view of security policy, is now divided between people who want to stay close to the US and others who prefer a European approach, Peder Schaefer wrote for The Parliament.

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But those same wartime dynamics also create obstacles to closer integration: The blurred line between military and civilian life in Ukraine can’t be replicated in countries that aren’t at war, while Ukrainian companies’ operational secrecy can make it hard for them to find partners in Europe.

Plugging Ukrainian innovation into EU supply chains could create commercial opportunities as well as strategic resilience. The Iran war has created huge global demand for cheap interceptors, a technology at which Ukraine excels. Moreover, much of this demand comes from the GCC countries that may, as Michael Stephens wrote for RUSI this week, seek to diversify their foreign relations given the harm that America’s war has brought down upon them.

Europe’s need to replace American capabilities has also become more urgent as a result of events in the Gulf. Vladimir Putin’s war chest is replenished thanks to the surge in oil and gas prices; and Donald Trump, who fails to grasp the difference between a treaty obligation and a war of choice, is more likely to shirk the defence of a European NATO ally after they unanimously declined to commit forces to the Gulf.

Drone leadership

Ukraine’s technological lead is greatest in drones of all kinds, from naval drones to air defence interceptors to strike drones of various ranges. It has scaled production so rapidly that it may soon be able to sell various models without undercutting its own needs, or simply licence further production in the EU market.

“Ukraine’s wartime drone innovation is remarkable,” said Raluca Csernatoni, a research fellow at Carnegie Europe, at an event this week organised by France’s Institute for Strategic Research (IRSEM). She noted that Ukraine produced around 3.5 million drones last year – more than 10,000 a day – and that number could increase to 7 million this year.

It has also developed command and control (C2) systems that integrate this new technology and respond to novel threats being deployed in the high-intensity war. Other European countries’ C2 systems “are not adapted to this level of threat”, Elisa Royer, a defence policy advisor at the European External Action Service, told the same event.

The European Commission is eager to close the gap, the better to help Ukraine but also to shore up the EU’s own defences. Its Action Plan on Drone and Counter Drone Security, published last month, foresees a ‘Drone Alliance’ with Ukraine to develop a joint industrial ecosystem, and groups Ukraine alongside EU member states in its call to develop drone detection capabilities.

When it comes to drone production, “Ukraine is considered a quasi-member state … this is the political guidance,” Royer said. The aspiration is that “when someone buys Ukrainian, they buy European”.

Hurdles to integration

Nevertheless, it’s not always straightforward for Ukrainian companies to expand into EU countries, form partnerships there, or participate in EU projects.

Most drone manufacturers are first and foremost small businesses, with limited budgets and administrative capacity. That puts some EU and NATO projects, which require a presence in a member state, out of reach: Hiring someone to open an overseas office or hack through EU bureaucracy means one less engineer on the payroll.

Another issue is the low profile kept by many Ukrainian companies for reasons of operational security. A senior European officer who recently visited Ukraine told The Sentinel he had met companies producing large quantities for drones that effectively “don’t exist”, so low is their public profile.

Corporate governances rules in the EU would prevent any completely invisible company from operating there. But even in less extreme cases, Ukrainian companies that have a registered address and identifiable directors may still struggle to form partnerships elsewhere in Europe if their profile is too low to build familiarity and trust.

“The more visibility you have, the more people trust you,” said Julia Petryk, CEO and co-founder of Calibrated, a communications agency that works for Ukrainian defence companies. “Companies are thinking about controlled visibility,” trying to make themselves known to potential partners without presenting a target to Russia.

Some people in the EU may resist Ukrainian integration for a simpler reason: The market entry of more agile players could upset existing ways of doing business and harm entrenched interests, just as the fear of cheap grain production led many in the EU’s farming sector to resist Ukrainian accession.

Ukraine’s drone industry has brought its innovation cycle down to about four months, noted Liuka Lobaryeva, another co-founder at Calibrated. “This is something Europe is not ready for.”

In the news

• The planned sale of EM&E to Indra has collapsed after Indra’s state investor SEPI raised objections due to overlaps in their ownership and leadership structures. Ángel Escribano, who co-owns EM&E, had refused SEPI’s demand that he step down as president of Indra, El País reported.

• European countries have unanimously refused US President Donald Trump’s request to send warships to the Gulf. “Washington did not consult us,” German Chancellor Friedrich Merz said. “We would have advised against it.”

• France and Germany will make a final attempt to mediate between Airbus and Dassault to secure the future of the FCAS joint fighter jet project, President Emmanuel Macron said on Thursday at an EU summit. A German official said a deal must be reached by mid-April to avoid complicating budget decisions.

• The UK, Finland and the Netherlands plan to create a mechanism for joint financing and procurement of military equipment. “By joining forces, we get more security with the same resources and we strengthen our alliances as well,” Dutch Finance Minister Eelco Heinen said.

• Danish soldiers made preparations to resist a US invasion of Greenland in January, flying out bags of blood and explosives to blow up runways, public broadcaster DR reported this week.

• Poland is interested in joining the GCAP joint fighter jet program alongside the UK, Italy and Japan, a minister told state broadcaster TVP. The UK indicated that it was open to expanding the consortium, UK Defence Journal reported.

Further reading

• Gulf Arab countries “will be re-evaluating their future following the US’ betrayal of its security guarantees”, Michael Stephens wrote for RUSI, suggesting an opportunity for the UK, France and other European countries to step up defence partnerships.

• European assistance to GCC countries could ultimately help Ukraine’s war effort due to ties between Russia and Iran, and to the shared need for the counter-drone technology at which Ukraine excels, Nikola Zukalová wrote for the Wilfried Martens Centre.

• European Commission President Ursula von der Leyen overstepped her role by holding direct talks with GCC leaders and taking a public stance on the Iran war that “did not reflect any European consensus”, Claude-France Arnould wrote for the Brussels Institute for Geopolitics.

• The EU should define its grand strategy in a ‘European Security Strategy’ document, as it last did in 2003, Sven Biscop wrote for the Egmont Institute. EU strategy “should at least involve the UK, which is pivotal”, he wrote.

• Donald Trump’s panicked response to Iranian strikes on GCC energy infrastructure suggests that Iran has achieved “escalation dominance”, allowing it to dictate the pace of the war, Mark Urban wrote on his Substack.

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Four years is several innovation cycles for a country at war. Ukraine has developed and deployed low-cost interceptors to counter Shahed drones, which the US may now buy. Its drone production has surged nearly 1,000-fold since 2022. The pattern repeats through history even for leading powers: Equipment and tactics changed dramatically from 1914 to 1918, and from 1939 to 1945.

Now innovators around the world, including Europe, are trying to bring some of that urgency to the defence sector before the shooting starts by borrowing a concept from the world of tech: the ‘hackathon’.

‘Hacking’, in this context, doesn’t mean breaking into computer systems. It means bringing people together to solve a technical challenge through brainstorming, collaboration and fast iteration of ideas. Over an intense day or two, participants will go from having a vague idea of a problem to pitching a solution.

Defence tech hackathons are springing up all over Europe, sometimes with the armed forces in attendance. There was one in Tallinn two weeks ago, another in Rzeszów last weekend, and one in Brussels starting tomorrow. Earlier this week, the Belgian navy sponsored a hackathon in the port of Zeebrugge for the second year – this time overlooking a captured Russian shadow fleet tanker.

“Hackathons are a very useful way of getting people to work together,” said Leo Exter from Hack Belgium Labs, the organiser of the Zeebrugge event. “Working towards a pragmatic result, limited in scope and under time pressure, has the capacity to get people into teamwork mode very quickly and very efficiently.”

It was not an occasion for startups to pitch their products, since the focus was on coming up with entirely new ideas. Most of the participants were employees of larger companies, contributing in a personal capacity; some were in uniform. The only prize on offer was a day at sea with the navy.

Outside the box

It’s rare to see uniforms and scruffy sneakers in the same room, but the naval brass was well aware of the problems with slow military procurement and how the tech sector could help.

“We cannot rely on systems from yesterday,” said Admiral Tanguy Botman, the head of the navy. “We need people who dare to think differently, outside our military box.”

Participants were thrown into teams and quickly started brainstorming broad problems such as how to make military procurement processes more accessible, or translating operational needs into technical requirements. The overall mission was to improve maritime security, both for a wartime scenario and for the hybrid warfare that is already taking place.

“Naval is the domain most vulnerable to grey zone attacks,” said Yves Van Seters from the Antwerp Maritime Academy, who was facilitating the event. Civilian ships, energy infrastructure such as wind farms, communication cables, and ports are all vulnerable to attack or disruption, he noted.

Ideas ranged from specific technical innovations, such as a shared sensor cloud between the navy and merchant shipping, to more abstract ideas around streamlining the military tendering process or creating a ‘speed-dating’ platform to match procurement needs with civilian innovations.

There are no bad ideas, Exter said. The process is intended to bring together people with a range of backgrounds, encourage them to think creatively, and find solutions that may even go beyond the scope of the original problem.

The military may not adopt new ideas as quickly as a hackathon can conceive them but the process does make a difference, said Cdr. Michel Eyckmans, an Innovation Officer representing the navy at the event. Last year’s winning idea, a pop-up navy recruitment centre in a mobile shipping container, is currently undergoing a feasibility study. “There’s a good chance it will be built,” Eyckmans said.

In the news

• A factory in Spain owned by Czechoslovak Group (CSG), has been suspended indefinitely from bidding for NATO contracts as part of a corruption investigation into the NATO Support and Procurement Agency (NSPA) begun last year, El País reported.

• The US on Thursday lifted sanctions on Russian oil in an attempt to keep a lid on global prices, which soared above $100 a barrel on Monday due to the market disruption caused by the US attack on Iran. Brent crude has since stayed around the $100 level.

• Dozens of Ukrainian instructors will train German soldiers in disciplines including gunnery, engineering and drone warfare, Reuters reported citing an interview with German army chief Lt. Gen. Christian Freuding.

• The European Parliament this week called for a more integrated single market for defence through increased and longer-term EU funding for defence projects, common procurement, simplified regulations, and incentives for cross-border projects within the EU.

• Leonardo’s UK subsidiary has agreed to buy Becrypt, which builds secure operating systems, mobile device management, and data transfer applications. It expects regulatory approvals to be completed within Q2 2026.

Further reading

• European governments must make a concerted effort to win public support for increased defence spending, which will require tax rises or spending cuts elsewhere, Armida van Rij wrote for the Centre for European Reform. Defence procurement must also “get its house in order” and spend public money more efficiently, she wrote.

• France’s extended nuclear deterrence is a good “stopgap” but falls short of matching the US nuclear umbrella, and may also come under pressure if populists take power in France, Wannes Verstraete wrote for the Egmont Institute.

• Ukraine may benefit from the Iran war in the longer term through demand for its cheap interceptors and the strategic leverage this can provide, Olena Prokopenko wrote for the German Marshall Fund.

• Europe’s rearmament spending is unevenly distributed, with countries closest to Russia generally increasing their spending by the most, Thomas Laffitte wrote for the Brussels Institute for Geopolitics.

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Standing in front of a nuclear submarine at the Atlantic base of Ile Longue, the French president noted the breakdown of global rules and the recent increase in security risks including nuclear proliferation. In response, he announced an increase in the number of French warheads and said that details of its stockpile would no longer be public.

More importantly for European allies, he set out a new doctrine of “forward deterrence” that will allow French nuclear-armed fighter jets to deploy to other countries, and for those countries to take part in joint exercises involving French nuclear forces.

There are a host of caveats. Allies will contribute only to conventional elements of nuclear exercises and there will be no shared decision-making on the use of nuclear weapons: “the final decision lies in the hands of the President of the Republic alone”. The definition of “vital interests” that might trigger the use of nuclear force will remain entirely French, and confidential.

Those same caveats apply to the United States, which also hosts air-launched nuclear weapons on European soil and leads joint exercises. As Europe’s interests diverge from America’s and leaders doubt Washington’s commitment to the Atlantic alliance, France is positioning itself to step into the vacuum.

Post-American order

While Macron paid lip service on Monday to NATO’s “complementary” nuclear mission, he made clear that the US should no longer be seen as a reliable guarantor of European security. “Their recent national security and defence strategies illustrate a reordering of US priorities and are a strong incentive for Europe to address its own security more directly,” he said.

There are indications that other European countries, which have long rebuffed French pretensions to continental leadership, are coming around. Macron said on Monday that eight countries have entered into a “dialogue” with France on shared deterrence: the UK, Germany, Poland, the Netherlands, Belgium, Greece, Sweden and Denmark.

Getting the Germans on board was a particular diplomatic coup for France, particularly in light of ongoing disagreements over the FCAS joint fighter jet program. In a joint statement on Monday, Macron and German Chancellor Friedrich Merz announced the creation of a “high-ranking nuclear steering group” and said that Germany would participate in French nuclear exercises beginning this year.

The statement paid extended tribute to NATO and to US capabilities forward-deployed in Europe, whose largest contingent is in Germany. Still, the agreement with France shows Germany at least beginning to hedge against the potential unravelling of the Atlantic alliance. The participation of Poland, the most Atlanticist of Europe’s big countries, is equally revealing.

Conventional coup

France’s offer to extend limited access to its nuclear exercises may also help it establish a leading role in conventional deterrence, much of which uses the same systems and exists on the same escalation ladder as nuclear strategy.

Macron’s joint statement with Merz said that “France and Germany will also increase their ability, as Europeans, to manage escalation beneath the nuclear threshold – in particular in the fields of Early Warning and Air Defence and Deep Precision Strike.” By putting its unique nuclear capability on the table, France can guarantee itself a leadership role in any joint exercises or operational command chains that include a nuclear option.

The inclusion of Sweden in France’s list of partners is also noteworthy because it has recently begun openly talking about restarting its own nuclear program, suspended in 1968, in partnership with other Nordic countries and perhaps Germany. By bringing Sweden inside the tent, France may have reduced the urgency of those conversations.

Still, France’s nuclear guarantee for Europe is far from absolute. French doctrine makes no allowance for tactical nuclear weapons, instead maintaining the threat of an annihilation strike and ambiguity about what might trigger its use. Macron reiterated that stance on Monday: “France… has abandoned any notion of tactical use of nuclear weapons and we will not go back on this.”

That logic makes sense as a last-ditch guarantee of French independence without a superpower budget. It’s not clear whether it will be sufficient to deter limited nuclear escalation by the likes of Vladimir Putin, who might reasonably calculate that France wouldn’t engage in mutually assured destruction in response to a battlefield nuclear strike.

A fully effective European nuclear deterrent would require tactical escalation options as well as a usage doctrine based on European interests rather than those of one country. France’s forward deterrent has neither – but is still a welcome step towards security independence and a more joined-up conventional deterrent.

In the news

• The US and at least one GCC country are looking to buy interceptors from Ukraine to counter Iranian Shahed drones, the Financial Times reported, offering an opportunity to Ukrainian and other European start-ups making low-cost interceptors. Existing US missiles are advanced but extremely expensive, making them ill-suited to countering waves of low-cost drones.

• Ukraine may suffer from globally depleted stocks of air defence interceptors, since it faces competing demand from the US and GCC states, EU foreign policy chief Kaja Kallas has said.

• The European Commission will this month propose the ‘28^th regime’ allowing companies to operate across the EU under a single set of rules, President Ursula von der Leyen said on Wednesday – a development that could help young defence companies secure funding and scale up across borders.

• The FCAS project will be “dead” if Airbus doesn’t change its stance, Dassault CEO Eric Trappier said this week, claiming that the German partner “doesn’t want to work with Dassault”. Airbus has previously accused the French firm of trying to change the agreed terms of the deal.

• Three US F-15 fighter jets downed in Kuwait may have been mistakenly shot down by a single Kuwaiti fighter pilot rather than ground-based air defences as first assumed, the Wall Street Journal reported.

• The US has lifted some sanctions on Russian oil to offset the closure of the Strait of Hormuz.

Further reading

• European defence procurement is heavily concentrated in favour of the top ten companies – much more so than in the US – and policymakers should devise ways to include innovative young companies, Ethan Kapstein, Javier Octavio Ospital Greslebin and Guntram B. Wolff wrote for Bruegel.

• The positive reactions around Europe to Macron’s nuclear deterrence speech show extensive diplomatic preparation as well as a changed strategic environment, Claude-France Arnould wrote for the Brussels Institute for Geopolitics.

• European deterrence depends as much on shared conventional capabilities as on the extension of France’s nuclear umbrella, Luigi Scazzieri wrote for the EU Institute for Security Studies.

• The Iranian regime will need to be able to declare victory internally if there is to be any hope of a ceasefire in the Middle East, Mark Urban wrote on his Substack.

• The Trump administration appears to have no strategy for a long war in Iran, or even clear war aims, Daniel Drezner wrote on Substack.

• Iran appears to be losing its ability to launch missiles and its production capacity for Shahed drones is limited, meaning it’s unlikely to overwhelm US, Israeli and GCC air defences, Phillips O’Brien wrote on Substack.

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US, Israeli and GCC air defences have intercepted most of Iran’s retaliatory missile barrage so far. Nevertheless, their ammunition is limited and there are indications that Iran is burning through them with cheap drones and older missiles, holding its most advanced missiles in reserve. If their launchers survive, they can pose a threat for months to come.

Iran is the most formidable enemy America has fought since at least Vietnam. It has the social complexity of Iraq, the terrain of Afghanistan, and the population of both combined. Its politics are unique and what comes next is impossible to predict. All that’s clear is that there will be no clean regime change and that the consequences will be global and long-term.

Here, then, are various scenarios for how the situation could evolve over the coming weeks and months. These ideas do not necessarily exclude each other, and some are more likely than others. They’re intended to stimulate debate and assist with forecasting and scenario planning:

Inside Iran

• Messy revolution Iran’s grassroots protest movement is rekindled and overthrows the regime – but with no real hierarchy or credible opposition leaders, it struggles to create a stable successor.

• Regime consolidated Iranians rally around the flag, allowing the regime to crush dissent and appoint a younger generation of leaders, more energetic and capable than those who have been eliminated.

• Pragmatists prevail Moderates within the regime take power and negotiate an honourable peace through backchannels to the US. The regime remains largely intact and tensions remain.

• Nuclear breakout Iran dashes for nuclear enrichment and succeeds in creating enough fissile material for a warhead. This takes at least several months. With regime survival at stake, the use of such a weapon can’t be discounted.

• Ethnic fragmentation One or more ethnic minority groups, concentrated in Iran’s peripheral regions, take advantage of the regime’s weakness to form de facto independent ethno-states, along the lines of Iraq’s Kurdistan region. Local strongmen exercise power through clan-based patronage networks.

US posture

• Abandonment The US declares ‘mission accomplished’ if the regime is overthrown, Khamenei’s successor is less radical, or the nuclear program is demonstrably set back. There is no guarantee Iran would respect a unilateral end to hostilities, however.

• Bombing without end With Iran’s air defences mostly eliminated, the US continues a strategic bombing campaign indefinitely. Iran is impoverished and unable to respond militarily, but the regime remains in place and the population is radicalised.

• Boots on the ground The regime’s survival prompts the US to escalate, perhaps after being targeted by a terror attack. US forces take major cities and put in place a puppet regime, but fail to prevent a major insurgency.

• Domestic instability The war, begun without Congressional approval, is deemed illegal by significant parts of the US establishment, particularly if it escalates to a ground commitment. This leads to widespread protests, Trump being impeached, or – in extremis – senior officers refusing to obey unlawful orders.

Regional fallout

• Oil dries up Iran maintains enough of a threat to shipping that the Strait of Hormuz is disrupted indefinitely. It may develop naval drones akin to Ukraine’s Sea Baby that can be covertly launched from anywhere along its coast. Oil prices are persistently high but GCC countries struggle to ship their exports.

• Iraq collapses Shia militias linked to Iran become more active and may overthrow the government, particularly if the latter’s oil revenue is disrupted. Iraq collapses into civil war; or the militias take control and use Iraqi state assets to assist the Iranian regime.

• GCC instability Collapsing oil revenues and the flight of wealthy expats and tourists put a severe strain on GCC economies. The social contract, based on extensive patronage, comes under pressure, possibly leading to elite infighting or social unrest.

Global implications

• Power shifts East Popular opinion in the Global South turns sharply against the US, fuelled by Russian and Chinese propaganda about an unprovoked war of aggression. China’s power quietly grows.

• Russia emboldened High oil prices fill Russia’s war chest, limiting the effectiveness of sanctions and allowing it to maintain its war against Ukraine. A prolonged war in Iran or instability in the US may embolden Vladimir Putin to attack other countries in Europe.

• Chinese opportunism China takes advantage of America’s distraction and the depletion of its long-range strike missiles and air defence interceptors – both crucial to a Pacific campaign. It becomes more aggressive towards Taiwan or seizes disputed islands in the South China Sea.

• Global terror attacks Groups linked to or sympathetic to the Iranian regime carry out terror attacks against American or Israeli – or simply Jewish – interests around the world. Indiscriminate attacks in other Western or GCC cities are also possible.

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European leaders have wisely stayed out of it and Donald Trump, unlike previous American adventurers in the Middle East, seems unconcerned about building a coalition to bolster his diplomatic credibility. But while Europe won’t be directly implicated in any conflict, it could alter the course of the war in Ukraine and the broader strategic picture for Europe.

Trump, previously an isolationist, has become more willing to use force. Of the two recent threats he has made, against Venezuela and Greenland, he has executed one and abandoned (for now) the other. The Iran situation looks more like Venezuela, with its large military build-up and longstanding enmity, than like Greenland, which horrified many in the Republican establishment.

The emerging Trump doctrine also seems unconcerned with nation-building, which characterised previous American engagements and was arguably the reason for failure in Iraq and Afghanistan. The operation to remove Nicolás Maduro was clean and successful on its own terms, and Trump may wish to repeat the trick in Tehran.

The hardware being moved to the Middle East also supports this view. The US is ready to suppress Iran’s air defences conduct a prolonged bombing campaign along several axes of attack, possibly with special forces operations, but not to mount a land invasion.

Risk of escalation

The risk is that Iran might withstand the bombing and then unleash so much havoc in the region, and so much damage to Trump’s pride, that America is forced to escalate. Iran’s arsenal of ballistic missiles and Shahed drones could target American bases, Israel, US allies in the Gulf, and globally systemic oil infrastructure.

Iran’s regime would not survive a total war, at least not in its present form. Its best outcome is a negotiated deal that it can claim as a victory at home, as reflected in its diplomatic stance until now. “We are ready for negotiation, but not for dictation,” foreign minister Abbas Araghchi said back in November.

Anything that looks like a surrender to America is more difficult, verging on constitutionally impossible for Iran. If Trump pushes too hard, the regime’s choice will be between death and dishonour. Many would choose to die on their feet.

Post-revolutionary Iran is a unique construction. It contains elements of an Islamist theocracy, represented by the clerical hierarchy; a military-industrial junta (the IRGC); and even a representative democracy (liberals are excluded but moderate reformists can sometimes exert influence as president). All of these structures overlap and often compete.

One of the few things that unites these power bases is a narrative of ‘resistance’ to American imperialism, an idea that predates the Islamic Revolution. That will make it very difficult for the elite to swallow anything that looks like capitulation, and anyone who suggests it is liable to be purged.

Another problem from the Iranian side is a deep lack of trust in the US. Trump in his first term ‘withdrew from’ (Iranians might say ‘violated’) the JCPOA nuclear deal, which Iranian moderates had fought hard for internally. The US has invaded two of Iran’s neighbours in this century. If the regime gives up the threat of a nuclear deterrent, as Trump now insists, what guarantee will it have against future aggression?

It is tempting to think, given recent protests in Iran, that an American campaign would quickly topple the hated regime and bring about something better. But in light of Iran’s complex society and fraught history with the US, a prolonged period of instability is more likely. That is what’s at stake if the two sides can’t find a mutually agreeable way to climb down in the coming days and weeks.

Europe alone

A prolonged American engagement in the Middle East would leave it with even less intent and capability to be active in Europe, particularly if rivals elsewhere see an opportunity to strike – factions rising up in Venezuela, or China making a move on Taiwan or some island in the South China Sea.

Europe would have to entirely take over support for Ukraine, which would require a rapid improvement in surveillance and intelligence as well as an uptick in deliveries of weapons, ammunition, and ballistic missiles.

Russia could be affected by a slowdown in weapons shipments from Iran, but the effect would be mild: Iran’s most notable contribution has been the Shahed drone, which Russia is now able to produce itself. The lost benefits to Russia are likely to be limited to occasional drone and missile shipments and small numbers of trafficked soldiers.

That in turn could make Vladimir Putin more likely to open up a second front, counting on a direct threat to bring Ukraine’s European backers to the negotiating table and trusting that the US, bogged down in Iran, would have no appetite to get involved.

The time for Europe to rearm is already tight. A new war in the Middle East could further speed up the clock.

In the news

• Ukraine liberated hundreds of square kilometres in the days leading up to the fourth anniversary of the Russian invasion.

• Emmanuel Macron is preparing to make an announcement on France’s nuclear doctrine next Monday.

• Belgium will reinforce the port of Antwerp, Europe’s second-largest, with anti-air and anti-drone defences by next year.

• Rheinmetall is likely to win a contract worth hundreds of millions of euros to supply drones to Germany’s armed forces, joining local startups Helsing and Stark, the FT reported.

• NATO’s tech accelerator is struggling to appoint a permanent managing director, Sifted reported.

• Two European air defence startups, Estonia’s Frankenburg Technologies and Munich-based Tytan Technologies, have each raised €30 million.

• Rheinmetall is focusing on a fast-firing 7.62mm minigun for light drone defence, favouring a kinetic weapon over other options such as lasers or jamming, Defense Express reported.

Further reading

• It’s not clear how European countries will meet their military spending targets given limited fiscal headroom, and they may have to mandate military service to meet manpower requirements, according to the IISS’s annual report.

• Russia is developing air defence systems that could defeat the British and French nuclear deterrents, Sidharth Kaushal wrote for RUSI.

• Russia can be deterred but, four years into the war, Europeans must lose the illusion that a fair peace in Ukraine is just around the corner, Ian Bond wrote for the Centre for European Reform.

• Bilateral or small multilateral defence clusters are more realistic in the immediate term than full European integration, Luigi Scazzieri wrote for the EU Institute for Security Studies.

• The West is on “a collision course with a Russia that is on a war footing”, General Roly Walker, the head of the UK Army, wrote in an op-ed for the Daily Mail.

• European leaders are split on whether to achieve industrial sovereignty through economic integration or deregulation, Grégoire Roos wrote for Chatham House.

• A credible European security guarantee to Ukraine after any cease fire is the only way to guarantee against a resumption and possibly broadening of the conflict, Sven Biscop wrote for the Egmont Institute.

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But an important element is missing. Even large, advanced forces can be defeated if their assets are not knitted together by an effective command-and-control (C2) layer – particularly in a hybrid conflict where civilian and military responsibilities overlap. Brilliant but isolated systems can be probed, learned and bypassed one by one.

Until now it has fallen to US commanders to unify Europe’s capable but fragmented forces within NATO. If the C2 layer, data standards and targeting architectures remain predominantly American, even record European budgets and a booming defence‑tech scene will be over-reliant on US decision chains at the moment of crisis.​

On paper, Europe is rearming, digitising and hardening its infrastructure at speed. In practice, it still organises for peace‑time silos. Threats are managed as if military, cyber, energy and borders were separate theatres, instead of facets of one continuous battlespace.

Adversaries are already probing the gaps. When unidentified drones flew over Belgium’s Doel nuclear plant and nearby critical sites in 2025, airspace control and the operator could see parts of the picture, but energy regulators and local police lacked a shared, real‑time view and common playbook. When drone incursions shut or disrupted Scandinavian airports the same year, military, air traffic control and law enforcement struggled to share feeds fast enough to agree on intercepts before flights had to be suspended.

Similar coordination gaps show up in hybrid incidents against rail and energy infrastructure, where cyber teams see signatures but transport operators, police and militaries lack the legal and technical pathways to treat it as one campaign. The problem is no longer a lack of sensors or tools, but a lack political, legal and technical mechanisms to stitch them into a single response under stress.

New stacks, old silos

Europe’s emerging neo‑primes are, in many ways, exactly what policymakers asked for: companies that ship useful capability on wartime timelines instead of peacetime ones. They integrate sensors, autonomy, effectors and data services with a speed that traditional primes struggle to match, and they are already on the Ukrainian frontline, iterating against the hardest possible user feedback.

But if each ministry, service or country buys these capabilities into its own vertical command stack, Europe risks building an archipelago of power: islands of excellence, separated by institutional water.

The technical standards matter, but what really counts is whether intent, data and effects can move across ministries, services and borders at the speed of a Russian hybrid campaign. That requires not just interoperability at the interface level, but political agreements about who can see what, who can decide what, and how responsibility is shared when sensors, shooters and operators sit in different jurisdictions.​

The answer is not “one more platform”, but rather a different organising principle. Europe needs to treat C2 as the primary strategic asset: a sovereign, software‑driven layer that horizontally connects forces, agencies and infrastructures, instead of stacking yet another vertical system on top of existing silos.

In practice, that means a C2 core that ingests data from legacy platforms and new drones alike, represents legal and political constraints as code, and exposes tailored views to militaries, homeland security, energy operators and law enforcement within a single, shared architecture. Nexus C2, a platform built by my employer Intelic, works across units and organisations to create a common operational picture and unified tasking chain for systems and effectors. This horizontal integration is what turns many small capabilities into one coherent instrument of power.

Mechanisms of power

If Europe builds this kind of sovereign, horizontally integrated command backbone, it can turn the current wave of spending and innovation into real power. If not, its capabilities will remain fragmented and it will risk being defeated even by a smaller adversary.

Europe now has a critical mass of talent, startups and emerging neo‑primes delivering sensors, effectors, software and drones at high speed to the front line. But transforming this into war-fighting power will require more than shared standards and APIs. Data, intent, and effects must flow seamlessly across services, domains, and borders so that small innovations compound into credible deterrence.

The question is shifting from who builds the best drone to who organises the ecosystem most effectively; countries that take interoperability seriously must decide how they structure their industries, not just which systems they buy.

A combat‑grade, platform‑agnostic C2 layer is the mechanism that turns neo‑prime diversity into strategic coherence, where heterogeneous feeds are fused into a common operating picture and where different actors can coordinate decisions and effects without rebuilding their stack each time.

Alexandre Almeida is a business developer at Intelic.

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Previously, European leaders would clutch at any softening from Washington to deny the strategic shift and delay the painful divorce. As Phillips O’Brien wrote last year, the good cop routine “lulled [European states] into thinking the US was still there to help, that they were not faced by an existential threat, and could wait before taking drastic action”.

This time, though, Europeans weren’t buying it. Ignore the reports of the standing ovation and the formules de politesse trotted out by conference organiser Wolfgang Ischinger and European Commission President Ursula von der Leyen. Behind the diplomatic niceties, European resolve has not melted away.

Von der Leyen said the EU must make credible the mutual defence clause in its treaties, effectively creating a backstop to NATO’s Article 5. Friedrich Merz and Emmanuel Macron hinted at the development of a shared European nuclear deterrent. EU foreign policy chief Kaja Kallas took aim at the “fashionable euro-bashing” coming out of America. These are not the words of mollified satraps.

The spell has been broken. As Daniel Drezner wrote: “actions speak louder than words. Nothing that Rubio said erases the dovish U.S. posture towards Russia, Trump’s appetite to colonize Greenland, or various U.S. efforts to weaponize European dependence.”

In Brussels and beyond, conversations have turned to how Europe can “derisk” from the US – the same term used for the relationship with China. For China, this stance is an upgrade from the more severe “decoupling” that would impose blanket bans on certain trades; for the US, it’s a downgrade from the Atlantic alliance. In both cases, it means keeping lines of trade open without creating dangerous dependencies on a country whose interests may or may not align with Europe’s.

Jailbreaking jets

American businesses are trying to limit the damage. Last summer, European NATO members’ pledge to raise defence spending looked like a boon: Following the pattern of previous decades, the lion’s share would flow into the US military-industrial economy. Now they risk not being invited to the dance, and are looking for ways to reassure European buyers that they are reliable partners.

In the secretive world of defence manufacturing, a breakdown in trust can quickly spiral out of control. Senior Americans I have spoken to in the last week are exasperated at the narrative around ‘kill switches’ being built into US kit so that the American government could, say, stop Dutch F-35s from taking off. They insisted there was no such capability and that any restrictions were contractual rather than technical.

It’s true that there’s no evidence of kill switches, but nor can their existence be disproven. For many European leaders that’s an unacceptable strategic vulnerability now that the trust is broken. In a radio interview this week, Dutch defence minister Gijs Tuinman even spoke about developing a capability to “jailbreak” the country’s F-35s, forcibly removing any digital blocks placed on them by the US.

Beyond this extreme scenario, the contractual terms governing advanced US kit often require it to run US software and be maintained by American contractors, baking in a certain degree of dependency that, by extension, carries the threat of being cut off from support. They also often prohibit certain uses of the equipment without American permission.

If a European country were to use its American-made fighter jets to strike Russia, for example, this might breach the terms of the contract. Even if there’s no kill switch, the US could cut off technical maintenance and software support for the platform, which would progressively render it combat ineffective over a period of months or years – much less than its expected lifecycle.

Military mercantilism

Atlanticists also point out, again correctly, that trade flows both ways and that many American-made systems are products of extensive trans-Atlantic cooperation. The F-35, for example, contains many components from the UK and Belgium.

Privately, though, they admit that this stops well short of dependency. The US has, or can quickly create, a domestic capability to replicate the British and Belgian parts. This would be likely to cost more, so it’s not in America’s interest for the relationship to break down. But the consequences are unequal: For the US it’s a bigger bill, but for Europe it’s the total loss of a capability. European components in US-owned supply chains don’t, therefore, do much to erode America’s coercive power.

Ironically enough, the structure of these supply chains mirrors the mercantilist systems put in place by European empires in centuries past. Manchester’s textile industry created demand for cotton that Egypt or India could service – but also delayed their industrialisation. Since many places could produce cotton, but only a few could economically process it into higher-value goods, the dependencies it created flowed only in one direction. The same dynamic applies between completed military systems and their components.

A rising tide lifts many boats, and European countries were for a long time happy with their place in US military supply chains – particularly since they fed into the US security umbrella that underwrote the global order. Now US defence companies face the prospect of European partners pulling out from that trade.

Last summer, as the NATO spending pledges were made, the American defence industry could be forgiven for thinking that Donald Trump was about to double the size of their market in Europe. As time goes by, he looks ever more like the president who killed the golden goose.

In the news

• The EU’s six biggest economies have proposed to form a “temporary” inner circle to pursue greater European integration, with a particular focus on defence and promoting the euro currency internationally.

• German drone startup Stark has been valued at more than €1 billion in a new funding round. Stark and rival Helsing have both recently won large contracts from the German government.

• Russian mercenary company Wagner Group is being hired by the Kremlin to carry out sabotage attacks in Europe, according to Western intelligence sources cited by the FT.

• Russian frontline communications have been severely degraded since Elon Musk cut their access to his Starlink satellites.

• Italy’s Leonardo and Spain’s Indra this week agreed to cooperate on providing cyber defence to critical infrastructure.

Further reading

• European defence procurement should be centralised without becoming overly rigid or top-down to achieve the best results, Rodrigo Carril wrote in a paper for the Kiel Institute. It must also take account of demand surges in the event of war.

• Europe should already begin designing and funding Ukraine’s reconstruction, including institutional reform, in order to secure a prosperous and reliable ally once Russia’s war is over, analysts at CEPA wrote in a research note.

• Sweden’s favourable regulatory environment has allowed it to create a disproportionate share of Europe’s tech unicorns, Luis Garicano and Per Stromberg wrote on Substack, in an analysis that can equally be applied to defence startups.

• The Economist’s Charlemagne columnist has written about France having the right strategic policy but being too annoying to lead it – in stronger terms than The Sentinel dared to!

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As in any other domain of conflict, a defensive capability alone is not enough. Since no defence is impregnable, deterrence requires an ability to counterattack. This logic has long been understood in the contexts of strategic bombing (“the bomber will always get through”) and of nuclear escalation management, and is now part of the discourse around cybersecurity as well.

The first task is detection, EU Defence and Space Commissioner Andrius Kubilius told an audience of hundreds yesterday at the Munich Cyber Security Conference. “We would never accept a situation where a hostile aircraft or drone enters our airspace undetected for days”, but this is effectively what is happening in cyberspace.

Moreover, Kubilius said Europe should develop an active response to such incursions. “If we can detect, we need to find a way to react,” he said. “Security requires operational capability, not just rules.”

Dag Baehr, Vice President of Germany’s Federal Intelligence Service, was more explicit. “You can’t solve all threats simply by being resilient; you need to be active in defence,” he told the same event. “Deterrence is about creating uncertainty.”

Attribution and retaliation

There is a growing sense that Europe is too passive in its response to Russian hybrid attacks, partly because of a fear that an attack on Russian territory – even if a proportionate response to a similar attack on Europe – might provoke an escalation. The result is that Russia has been able to conduct hybrid operations with impunity, from attacks on subsea cables to cyberattacks on critical infrastructure to (probably) closing down European airports by flying drones overhead.

Speakers at the MCSC outlined a way forward. First is a more robust system of “attribution”: naming the perpetrator of any given attack and, where possible, the state that is backing them. Louise Marie Hurel, a senior researcher at think tank RUSI, noted that non-Western countries including China, Ethiopia and Azerbaijan have already begun to do this. China, she said, has begun calling out alleged operations by Taiwan and the US directly, rather than allowing private companies to do so.

Beyond naming the perpetrator of a cyberattack, Europe must be prepared to set and enforce red lines that would prompt a response in kind, Baehr said. “There’s no point in having red lines only for your own actions… you’re just tying your own hands.”

Ukraine has already shown the effectiveness of unconventional attacks on Russian infrastructure. From last year’s Operation Spiderweb, in which drones destroyed dozens of Russian jets on the tarmac, to attacks on oil infrastructure and tankers, Ukraine has shown that operations away from the frontlines can have a powerful impact on Russia’s war-fighting ability. They have also notably not caused a nuclear escalation, the irrational fear that deters some Europeans from ‘provoking’ Russia, even when this just means trading a blow for a blow.

Hardened infrastructure

Beyond a retaliatory capability and the willingness to use it, Europe must also harden its infrastructure against all manner of attacks, both to limit the effectiveness of hybrid operations and to avoid a crippling strike in the event of a hot war.

The need to expand military transport infrastructure is already well known. But in a longer war, the loss of civilian infrastructure would be no less devastating. At the most basic level, a civilian who can look after their own family and not take up state capacity in the event of, say, a power outage is a strategic asset – something that Sweden’s ‘total defence’ preparations lean into.

Sweden is now adding a cybersecurity dimension to this concept, said Lisa Gustafsson, a director at the Ministry of Defence. Critical infrastructure must be able to withstand attacks of any kind. “Is total defence credible without cyber resilience? No.”

New technologies offer a variety of ways to strengthen infrastructure. At an event in Brussels on energy resilience earlier this week, organised by Hack Belgium Labs, one speaker suggested that small modular nuclear reactors (SMRs) could be attached to critical infrastructure such as ports to insulate them from attacks on the electrical grid. Large batteries, which have only recently become commercially viable, would provide another layer of resilience.

And if Europe’s new class of hybrid warfare hawks get their way, any such attack would be met by a quick and decisive response in kind.

In the news

• Ukraine has opened up arms exports for the first time since the Russian invasion, and on Thursday said that several firms had received licences to sell their goods abroad.

• KNDS has rejected the idea of investment from Rheinmetall, the FT reported. The Franco-German company makes the Leopard 2 tank and the Boxer infantry fighting vehicle, among other land-based platforms, weapons systems and ammunition.

• The FCAS joint fighter jet project is close to collapse, Politico reported, citing French and German officials. The Economist reached a similar conclusion. That “would not be the end of the world”, German defence minister Boris Pistorius said.

• France and Germany have both expressed interest in a proposed new ballistic missile to be built by ArianeGroup, the French rocketry company has said.

Further reading

• Germany’s rearmament could provide a boost to its broader economy, albeit not for the next year or so, according to the Economist.

• There is still scope for Europe and the US to cooperate on missile defence in Greenland, particularly given the need to counter Russia’s Burevestnik cruise missile, Rafael Loss wrote for the European Council on Foreign Relations.

• Increased European aid to Ukraine last year almost offset the collapse in US contributions, Taro Nishikawa and Christoph Trebesch wrote for the Kiel Institut.

• European states should develop their nuclear capabilities, begin to substitute American military capabilities in Europe, and be ready to “credibly deter unwanted US interference with costly political and economic measures”, Wannes Verstraete wrote for the Egmont Institute.

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Today, as advanced language models replicate human reasoning to an uncanny degree, attention has turned to their use on the battlefield. And while we’re no closer to seeing time-travelling Austrian bodybuilders in the real world, many other scenarios – risks and opportunities alike – have jumped from the pages of science fiction into serious policy conversations.

Earlier this week I attended the AI in Defence Summit in Brussels, the first of its kind. The atmosphere was buzzy and excitable, with a pervasive sense that this technology could supercharge Europe’s rearmament and help Ukraine turn the tide against Russia, its much larger enemy.

Theo Francken, Belgium’s defence minister, made the case that AI will bring about a “military revolution”. Rather than a new weapon or component, he said we should think of it as a strategic game-changer akin to cartography or railways that “will change how armies think, move and fight”.

If he’s right, the benefit to Europe could be tremendous. If certain Cold War capabilities will soon become redundant, Europe’s limited capacity to produce them won’t matter and we won’t be starting from so far behind other powers. On the contrary, our relative lack of sunk costs and vested interests could allow Europe to steal a march on its rivals.

This leapfrogging dynamic has played out in other fast-changing sectors like fintech. Many countries in Asia now run on a mixture of cash and mobile payments. Being late to adopt credit cards was a blessing in disguise, as they could skip that stage of development entirely. In the most optimistic case, Europe’s arms industry could follow a similar logic.

Tactical advantage

Addressing the conference via videolink from the Ukrainian frontlines, Lt. Col. Kyrylo Berkal observed another factor in Europe’s favour: urgency. This is most obvious in Ukraine itself, where the stakes are existential and where some of the most dramatic innovations, such as naval drones, have taken place. “If you want to survive against a superior enemy… you should adapt,” Berkal said.

The rest of Europe can learn from Ukraine and integrate its innovative companies into our supply chains. There is also a growing sense of urgency around Europe’s own defence industry, with new startups appearing seemingly every week to tackle some shortcoming or another – both for aid to Ukraine and for the direct defence of other European territory, should it come to that.

The growing adoption of AI has also highlighted doctrinal differences between Ukraine and Russia, said Brig. Gen Oleksei Romanov, head of research and development for Ukraine’s armed forces. Ukraine’s technologists respond to emerging tactical needs from the battlefield and iterate rapidly in close coordination with field commanders, he said. Russia, by contrast, is following a rigid strategy built around centralised command and control.

This distinction mirrors the doctrinal differences during the Cold War, with NATO forces tending towards initiative and flexibility while the Warsaw Pact focused on the grand battleplan. Both approaches have their advantages, and it remains to be seen whether the benefits of AI will be more pronounced under one model than the other.

New challenges

Nevertheless, AI also brings risks, most obviously by increasing lethality. “Every previous military revolution has exponentially increased the destructive power of war,” Francken said. In the other direction, AI could allow an advanced country to go to war without putting its soldiers in harm’s way, lowering the political cost for a big country to attack a small one.

There is a military logic to giving AI more decision-making authority, but this may increase the risk of miscalculations. For example, an autonomous suicide drone can be ordered to plot a path to an enemy position or track a moving vehicle. This means it can’t be jammed during its final attack run, increasing its lethality. But will it reliably abort the attack if a civilian enters the target position, the vehicle crew surrenders, or some other contingency occurs?

And there is a less obvious danger even if final orders remain in human hands. AI hallucinations, which no model has managed to eliminate, are dangerous enough in civilian applications. If an AI were to give a false positive reading of an enemy strike, and if the human operator didn’t have time to verify it before ordering a retaliation, unintended escalations could occur.

These risks must be managed but they can’t be avoided altogether. The military benefits from AI are such that no army can afford to pass it by. As Francken concluded, for Europe to deploy AI will require brains and capital, but also moral clarity.

In the news

• The EU must become a “genuine federation” to avoid decline, since the world order under which it prospered as a looser confederation is “now defunct”, Mario Draghi has said.

• Germany is in early-stage talks with France and other countries about how to establish a Europe-wide nuclear deterrent, Euractiv reported.

• Prime Minister Keir Starmer hopes to reopen talks for the UK to join the EU’s SAFE program, the Times reported.

• BAE Systems is creating a startup incubator and looking into investing in venture capital funds, Sifted reported.

• Israel’s Elbit Systems has chosen Germany as the European production hub for artillery rockets for the EuroPULS system, Hartpunkt reported. Diehl Defence and KNDS are also involved in the project.

• Diehl Defence began work late last year on an entirely European short-range air-to-air missile known as BEAST, the company revealed this week.

Further reading

• Nordic countries should develop a nuclear weapon as US and French deterrents are no longer fully credible, Bruegel’s Jacob Funk Kirkegaard wrote in an op-ed for Euractiv. The Sentinel has written about the drive for a Nordic deterrent here.

• Darya Dolzikova, a researcher at RUSI, reached a different conclusion: Britain and France should deepen their nuclear capabilities while other European countries should focus on conventional capabilities including air defence and non-nuclear deep strikes, she wrote in a research paper.

• The Economist’s Stan Pignal laments Europe’s military fragmentation, blaming its colonial past – particularly that of Britain and France – for the continent’s failure to establish mutual trust or shared strategic objectives.

• Oliver Moody from the Times has a long read on Europe’s independent defence capability, pointing out gaps including satellites, surface-to-air missiles, and suppression of air defence (SEAD) weapons.

• Donald Trump’s disparagement of America’s allies in Iraq and Afghanistan has provoked widespread revulsion in Britain, leading many to question the national myth of a ‘special relationship’ with the US, Mark Urban wrote on his Substack.

• Rheinmetall’s rapid expansion into satellites and other new areas has allowed it to hoover up government contracts but is starting to put noses out of joint among German opposition politicians and other defence companies, the Financial Times’ Laura Pitel wrote.

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At the national level, though, neutrality remains highly salient and society often identifies very strongly with the tradition. And yet it is increasingly contested. Over recent years, governments have struggled to reconcile neutrality with contemporary geopolitical developments and evolving security threats.

Ireland and Austria offer a useful illustration of how neutrality looks from inside the EU but outside NATO, while Switzerland shows how even the world’s most robustly neutral country is adapting to new geopolitical realities.

Ireland’s neutrality is protected by Article 42.7 of the Lisbon Treaty, known as the “Irish clause”, which allows national law to override the mutual assistance obligation in that treaty. In practice, this means that if, for example, Estonia were attacked by Russia, Ireland would be obliged to provide all kinds of assistance except those prohibited under Irish law. This is presently governed by the “triple lock” mechanism requiring authorisation by the UN, the Irish government, and the Dáil.

This system is now under pressure. The government has proposed legislation to abolish the UN approval requirement, arguing that it effectively grants veto power to permanent members of the UN Security Council, including Russia and China. Critics counter that removing the triple lock would undermine Irish neutrality and weaken Ireland’s commitment to multilateralism.

The Austrian avocado

Austria’s neutrality is also enshrined in its constitution, although its interpretation has softened over time. Until the 1990s, Austrian policymakers considered EU membership to be incompatible with neutrality, but it subsequently joined both the EU and its Common Foreign and Security Policy (CFSP). In 2010, Austria revised its constitutional framework so that matters linked to the CFSP are exempt from the neutrality principle.

Today, Austria draws the line at any obligation to assist other countries in armed conflict, which is why it remains outside NATO. Nevertheless, it is able to participate fully in EU sanctions regimes, limited military pacts such as the European Sky Shield Initiative, and policing and security partnerships. Austrian commentators call this the “avocado doctrine”, with a hard core of military neutrality surrounded by a more flexible outer layer.

Moreover, there is scope for Austria’s policy to change should the threat environment dictate it. Austrian law requires it to maintain an effective defence of its own territory, but Russian aggression may push the credibility of this claim. In September last year, Foreign Minister Beate Meinl-Reisinger stated that one “cannot be neutral when faced with such a threat”. It’s conceivable, then, that Austria may look again at a mutual defence pact, in a similar fashion to Sweden joining NATO in 2024 after two centuries of neutrality.

Both countries are also quite free to export weapons and to take part in joint EU programs; both are signatories to the international Arms Trade Treaty and Wassenaar Arrangement, and are members of the Organization for Security and Co-operation in Europe (OSCE). Austria has a significant conventional defence industry, while Ireland has an advanced tech sector that could develop dual use and military technologies.

Swiss arms exports

Switzerland presents a separate case, being outside both the EU and NATO. Such is its commitment to neutrality that it did not join the UN until 2002 out of concern that membership might compromise its status – decades later than the other developed economies in Europe and elsewhere. Even today, Switzerland cannot impose autonomous sanctions, but instead adopts those of the UN, the EU, or the OSCE.

Being outside the EU, Switzerland’s arms exports are governed by national legislation rather than EU law. The current rules are rather restrictive: the Federal Act on War Materiel applies not only to complete systems, but also to components and immaterial know-how. Each export requires authorisation, as does any subsequent re-export to a third country (“end-user certification”). Moreover, exports to end-users involved in active armed conflict are categorically prohibited.

These provisions have far-reaching consequences. Because NATO members are bound to defend each other under Article 5, they all effectively become conflict parties once said article is invoked. As a result, exports of Swiss war materiel, including parts, would have to cease as soon as any NATO country was at war – presenting a considerable risk to any importing country, whose supply chain could be disrupted just when they needed it the most.

For the same reason, no military equipment containing Swiss components may be sold or donated to Ukraine. Swiss manufacturers have therefore been largely excluded from EU and member state procurement processes, arguably representing a missed opportunity for the domestic arms industry.

In response, Swiss policymakers have proposed a substantial liberalisation of the legal framework. Twenty-five countries which are otherwise compatible with Swiss arms export rules would be permitted to import Swiss equipment while involved in conflict. Re-export rules would also be eased, although the federal government would retain a veto where neutrality is deemed at risk. Proponents argue that these changes are necessary to preserve Switzerland’s defence-industrial base and, by extension, its capacity for armed neutrality.

The proposal remains controversial. Opponents are campaigning for a referendum, and given the central role of direct democracy in Switzerland, a rejection by the people would likely halt reform for years.

Taken together, these cases illustrate the growing difficulty of maintaining neutrality under contemporary security conditions. Where Europe once counted a significant number of neutral states, the brutal logic of war may soon force them to start picking sides.

Valerio Montanari works on defence policy in Brussels, and writes here in a personal capacity.

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There is much to be said for the French view of transatlantic relations, which has understood the US to be as much a competitor as an ally since the time of Charles de Gaulle. France is the only European country with a truly independent nuclear deterrent – the UK’s has a significant US dependency – alongside strong conventional forces.

But the newly fashionable view that the French were right all along is too glib. Understanding the need to break free from the US is only part of the puzzle, and other elements of French policy may stand in the way of Europe becoming militarily self-sufficient.

The EU is a confederation of small and medium countries that pool some elements of their sovereignty to achieve greater prosperity – and lately, as Mark Carney pointed out last week, to ensure their survival. Crucially, while some countries are larger and thus more influential than others, none has a special constitutional status.

This is something that former great powers, with an institutional memory of bossing others around, have struggled with. Britain’s post-imperial delusions had the most dramatic consequences with Brexit; but France also has a strong strain of exceptionalism that could, if not tempered, derail its own aim of achieving European autonomy.

All roads leads to Paris

To put it simply, when French officials talk about strategic autonomy, other Europeans often perceive an unspoken coda: “led by France”. Fairly or unfairly, many in Brussels feel that France demands special treatment within the EU, from its refusal to acknowledge English as the common language to its assumption of seniority in joint defence projects.

The FCAS joint fighter jet program, which appears close to collapse, is a case in point. With the project already well underway, Dassault CEO Eric Trappier demanded a reallocation of the work share with a haughty dismissal of his partners’ capabilities: “The Germans may complain, but here [in France] we know how to do this.” As is typical for a large French company, he was swiftly backed up by the government.

For inward investment, too, Sifted this week reported that European defence startups find it prohibitively difficult to access government contracts in France, with some perceiving a bias towards established national firms.

Relations with the UK, whose military is roughly on par with France’s, have also been strained. The Telegraph reported this week that France is trying to block funds from the EU Ukraine Support Loan being spent on Storm Shadow missiles from the UK. That may be legally legitimate if a production line within the EU can meet the same demand, but the episode reinforces the impression of France prioritising its own industry ahead of – and possibly to the detriment of – Europe’s broader mission to arm Ukraine.

Similarly, the UK last year withdrew from talks to join the EU’s SAFE defence funding program after being told the price of admission was €2 billion. By contrast, Canada was allowed in for €10 million. Even adjusting for the size of the UK’s economy, which is a little less than double Canada’s, that makes the UK’s price 100 times higher than that offered to another non-EU ally.

To be clear, there is no indication that France was responsible for the inflated sum presented to the UK. But most people I speak to instinctively think it was France, which suggests a reputational problem at the very least. This diminishes France’s ability to play a leading role in an integrated European rearmament. A potential reopening of EU-UK talks on SAFE, which has been rumoured for the past few weeks, will give France a chance to change this impression.

United in imperfection

France is not alone in having some but not all the answers. Poland has been warning for years about the threat from Russian imperialism, and was shamefully ignored by Western Europe. But its traditional solution, to huddle ever tighter under the US umbrella, now looks short-sighted. Britain has been among Ukraine’s most steadfast allies but its anti-European reflex and the imagined ‘special relationship’ with the US have limited its continental influence.

And there are signs of France’s culture starting to shift. In a New Year address to the armed forces earlier this month, Macron told the country’s defence industry that it should not expect preferential access and that he would “seek European solutions if they are faster or more effective”.

So this is not to single France out for criticism, but to recognise it as one imperfect country among many. If Europe is to meet the challenge of becoming truly independent, its leaders must take ideas from everywhere without imagining that one country has been right all along.

In the news

• The UK is making a renewed attempt to join the EU’s SAFE defence funding program, the FT reported, after walking away from an earlier round of talks over an excessively high joining fee.

• The FCAS joint fighter jet program could end up with France and Germany each developing their own plane, Airbus Defence and Space CEO Michael Schöllhorn told Euractiv. In some scenarios, separate jets could still be interoperable on a shared ‘combat cloud’.

• A UK junior defence minister has reassigned a senior civil servant in charge of the Ajax infantry fighting vehicle program, which has been plagued by safety defects, the Times reported.

• Sweden is in talks with France and the UK on nuclear deterrence, following speculation that it might lead the development of an independent Nordic capability.

• The European Commission has approved another eight member states’ SAFE spending plans, leaving just Czechia, France and Hungary waiting for approval. Hungary’s request is under particular scrutiny due to longstanding rule of law concerns.

• Czechoslovak Group began trading on the Euronext Amsterdam stock exchange last Friday.

Further reading

• Europe must implement the ‘28^th regime’ for cross-border incorporation and ease the regulatory burden on venture capital to unlock the full potential of its defence startups, Miguel López Crego wrote in an op-ed for The Sentinel.

• Duncan Weldon takes a sober look at the economic cost of rearmament with reference to Britain in the 1930s, in this essay for Engelsberg Ideas.

• Donald Trump’s tendency to bluster and then back down gives Europe an excuse not to take him seriously – ultimately making it harder to break its dependency on the US, Janan Ganesh wrote for the FT.

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If Europe is to catch this wave it must first solve a more fundamental problem: how to create a favourable environment for companies to attract investment and scale across borders. The starting position is poor but two regulatory initiatives – a review of venture capital rules and a proposed cross-border incorporation system – offer a glimmer of hope.

Start with the European Venture Capital Funds (EUVECA) regulation. The European Commission is conducting a review of this framework, seeking input from market participants on the obstacles they face.

For years, people in European startups, finance and policy have been saying that the venture and growth capital ecosystem is underdeveloped and insufficiently integrated to meet the needs of ambitious European innovators and investors. Not only does this harm Europe’s ability to scale companies and attract global investors; it often leads the continent’s best innovators to move to the US as soon as they begin to gain momentum.

The Commission’s review acknowledges this reality and proposes policy responses including differentiated regulatory treatment for different sizes and types of fund managers, improvements to cross-border marketing and fundraising, and better calibration of thresholds for alternative fund managers. The aim in each case is to strengthen competitiveness while maintaining investor protection and market integrity.

These reforms should reduce regulatory burdens on fund managers, but that alone isn’t enough to solve Europe’s innovation gap. On the demand side, too, startups and fast-growing firms are subject to a plethora of legal, administrative and operational hurdles as they try to scale from one EU Member State to another. This raises costs, slows expansion and worse, as the data shows, pushes many to relocate outside the EU.

Europe has the right human capital to innovate at the highest level and enough wealth to fund growth, but excessive and misplaced regulations too often get in the way. In the broader economy, that’s a missed opportunity. In the defence sector, it’s an active vulnerability.

One regime to rule them all

Enter the 28^th Regime, a proposed legal framework for companies to adopt an EU-wide corporate form rather than being governed by a single Member State: a sort of “Europe Inc.”, to borrow a phrase from Commission President Ursula von der Leyen.

If done right, and in combination with updated EUVECA rules, this will allow startups to operate seamlessly across the EU. It could shorten company setup times, clarify governance, and enable smoother cross-border growth – all of which are critical if newly mobilised capital is to be deployed efficiently within the Single Market.

Nevertheless, political challenges remain. The proposal is at an early stage, and could face objections from the European Parliament and national governments, which will be loth to give up many of the prerogatives they currently have, such as taxation or liquidation regimes for SMEs.

Eyes on the prize

To find a way through this puzzle, policymakers should step back and think about what this combination of new regulations should seek to achieve. I would suggest that the EUVECA reform and the 28^th Regime, plus a recalibration of threshold rules for alternative fund managers, should aim to do the following:

• Promote cross-border fundraising through the introduction of clear, proportionate rules that make the EU more attractive to both institutional and retail investors.

• Reduce compliance overhead for small and mid-sized fund managers, helping them to focus on investment rather than paperwork.

• Enable startups to scale efficiently across the Single Market through harmonised legal frameworks, reducing their incentives to leave the EU for more business-friendly markets including the US.

• Support strategic priorities including digital, green and defence technologies to ensure that these sectors build a footprint in Europe.

Of course, policymakers must ensure that reforms do not weaken investor protection or systemic safeguards. A nuanced approach that differentiates by fund size, giving smaller investors more leeway to take risks, is a better approach than blanket deregulation. A careful calibration of thresholds, reporting and supervision should balance competitiveness with stability.

Additionally, reforms must integrate a certain degree of screening mechanisms for investment in defence and other sensitive sectors, ensuring that capital inflows support Europe’s strategic autonomy rather than erode it. It’s encouraging to see that the European Commission is already looking into this as part of the European Defence Industry Programme (EDIP) initiative.

Venture capital is fundamentally a business of high risk and high reward. For every successful exit there will be many projects that do not succeed. The payout for those that do must be big enough to offset this downside. For Europe to compete at the cutting edge, entrepreneurs and investors must be allowed to take risks, and indeed to fail.

But most of all, they need to be able to invest and operate across the Single Market unobstructed, accessing all the network effects and economies of scale that accrue to large, open markets. It’s time for Member States to put aside their national interests and build a combined industry that’s bigger than the sum of its parts.

Miguel López Crego is a senior policy advisor at Linklaters focused on financial services regulation.

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On Wednesday, Trump declared that he would neither use force to take Greenland nor impose tariffs on European countries who dared to defend it. He claimed to have reached the outline of a deal with NATO Secretary General Mark Rutte, which may turn out to be little different than the existing pact that already gives the US military access to the territory.

Trump’s retreat followed market jitters and unusually robust words from European leaders; the obvious conclusion is that he was looking for a victim rather than a fight. He had backed down just as abruptly in April against China, which had squared up and matched his tariffs blow by blow, before a market rout led him to abandon the idea globally.

But if the best response to Trump’s threats is to say “try it and find out”, Europe’s military weakness remains a problem. As anyone who has studied martial arts will tell you, it’s much easier to stare down a bully when you know you could survive the fight. And that’s where Carney comes in.

In his 15-minute speech on Wednesday, which it’s worth watching or reading in full, Carney made the case it’s no longer enough for middle powers to “go along to get along”. The “fiction” of the rules-based international order was tolerable when American hegemony was used responsibly, but now “this bargain no longer works”.

The instinctive response to this reversion to historical norms would be for countries to put up walls and pursue strategic autonomy, accepting a little poverty as the price of resilience, he said. But mid-sized powers, already brought close by global institutions, have the chance to do something better: work closely with each other and engage cannily with the world beyond.

Strength in numbers

“Middle powers must act together because if we’re not at the table, we’re on the menu,” he said. “When we only negotiate bilaterally with a hegemon, we negotiate from weakness. We accept what’s offered. We compete with each other to be the most accommodating. This is not sovereignty. It’s the performance of sovereignty while accepting subordination.”

This is the key insight that many in Europe cannot admit: that middle powers cannot individually be truly sovereign. The illusion of sovereignty in the post-war period meant subordination to America, and America’s great trick was to never say it out loud. With the veil lifted, middle powers must pool their sovereignty or have none at all.

This is particularly true in defence, an area in which middle powers are especially eager to signal sovereignty, and especially unable to achieve it. As I wrote recently, Europe’s larger countries still insist on developing a full range of equipment individually due to misplaced notions of sovereignty. This, combined with fragmented and top-heavy command chains, makes European armed forces far less effective than their combined budgets would imply.

Carney this week recognised both the need to spend more on military power, and to allocate those funds more effectively. Canada is doubling its defence spending by 2030, he said, but also joining the EU’s SAFE program, which supports joint procurement efforts.

Supporters of the EU like to say that it is forged in crisis, that it emerges from each storm stronger and with new shared capabilities. The emerging security situation, with a belligerent Russia and an America that is disinterested at best, may yet prove to be the most existential threat since the EU’s creation.

Commission President Ursula von der Leyen and several national leaders have conducted themselves well over the past week and seen off an acute threat. But the broader challenge remains, and the real test will be whether the EU and its member countries – plus the likes of Canada and Britain – can make the necessary structural changes to integrate and multiply their military capabilities.

In the news

• Czechoslovak Group’s forthcoming IPO will float up to 15.2% of its shares at a valuation of €25 billion, it said on Tuesday.

• German investment firm DTCP is creating a new €500 million fund focused on defence start-ups, aiming to back around 30 companies with about €20 million each, Sifted reported.

• Luminova Ventures, a Czech investment fund backing deep tech start-ups, is creating a new fund focused on dual-use technology.

• Former tank manufacturer Renault has announced a partnership with French defence company Turgis Gaillard to produce drones for Ukraine.

• Belgium has ordered eight bridge layers from Germany’s KNDS for a total value of about €80 million.

• BAE Systems has won a contract worth more than £450 million to produce a new radar system for the UK’s fleet of Eurofighter Typhoon fighter jets.

• Rolls-Royce has won an order for 350 engines for the Boxer armoured vehicle from Rheinmetall and KNDS.

• The European Parliament has called for the mutual defence clause in the EU treaties to be operationalised, Euractiv reported, as trust in the US and NATO falls.

• The French Navy on Thursday seized a Russia-linked oil tanker in the Mediterranean on suspicion of sailing under a false flag.

Further reading

• Enforcement of EU competition policy is likely to take more account of geopolitical considerations, and is a source of European strategic power, Peter Beckett wrote in an op-ed for The Sentinel.

• Russia uses a ‘gig economy’ models to carry out sabotage in Europe by recruiting agents with financial incentives for one-off operations, according to a new research paper by RUSI. It suggests pursuing cryptocurrency and cash-transfer platforms to curtail such attacks.

• Michael Shurkin, a former CIA officer, laid out some Greenland scenarios on his Substack. He wrote before Trump’s climbdown, but the analysis is still relevant.

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