Transactional Alliances Fragment European Defense
The Future Combat Air System (FCAS) saw its centerpiece New Generation Fighter (NGF) cancelled by June 2026 due to infighting over workshare and specifications. RUSI and the Marshall Center confirmed that Europe is increasingly comfortable debating its own nuclear deterrent as a hedge against US retrenchment, indicating that allies view the US resource shift as a structural change in alliance accountability. A State Department report highlighted that despite increased spending targets, the European Defense Industrial Base (EDIB) remains highly fragmented, with national firms producing low volumes and lacking economies of scale. The RAND Corporation observed that when the US uses its military presence and commitments to reward or punish individual allies, it incentivizes them to prioritize national defense over collective European architecture.
Currently, 78% of EU member states' procurement goes to foreign suppliers, with 63% of that spending flowing directly to US defense firms, according to a State Department report and the Centre for European Reform (CER). This heavy reliance on American industrial capacity means that higher spending does not automatically translate into strategic independence for Europe. Even as Europe attempts to reduce this reliance through initiatives like the SAFE program's 65% European content rule, the State Department's Office of the Historian documented that the US actively opposes these measures to protect its own companies and maintain control over alliance procurement. RUSI asserted that this structural dependency extends to nuclear deterrence, noting that British and French nuclear capabilities would struggle to independently offer credible extended deterrence against Russia without US backing.
MGCS Collapse and €57 Billion Annual Cost
A State Department report and RUSI indicated that the Main Ground Combat System (MGCS) faces similar collapse risks. Germany's Heeresmodernisierung 2023+ and broader rearmament are hampered by specific industrial policy divergences, including a preference for national production or co-production that added 4 to 17 percent to procurement costs, according to Vision of Humanity. Vision of Humanity also determined that complex co-production programs added another 12 to 18 percent due to specific national requirements. Vision of Humanity observed that the "juste retour" principle further inflates costs by prioritizing partner-country subcontracts over the most competitive suppliers.
Article 346 TFEU allows member states to exempt defense from common market competition rules, enabling protectionist practices for national contractors, according to a State Department report and the Kissinger Center at SAIS Johns Hopkins University. A State Department report and the Kissinger Center at SAIS Johns Hopkins University documented that member states consistently resist transferring decision-making power to supranational bodies, driven by fears over national security control and domestic political pressures from defense industries. Germany's lack of need for a nuclear-capable, carrier-borne fighter contributed to FCAS's cancellation, while German unions and industry associations demanded protection of domestic jobs, according to State Department reports and Defense Priorities. War on the Rocks highlighted persistent structural hurdles, such as an 18-month drone certification process in Germany. The fragmentation costs the EU €18 to 57 billion annually, Phenomenal World reported, and sustains heavy reliance on US imports, which accounted for 55 percent of European arms imports between 2019 and 2023, Phenomenal World found. These national vetoes and industrial divergences thus explain why Europe struggles to achieve the economies of scale needed for true strategic autonomy.
Post-1990 Drawdowns and Hollowed Capabilities
The Marshall Center and the Belfer Center observed that drawing on historical precedents like the post-1990 drawdowns, periods of reduced US predictability and the resulting "peace dividend" typically lead to European capability hollowing once political urgency fades. The Marshall Center documented that during these intervals, European allies outsourced defense to the United States, triggering reductions in armed forces and defense industries across the continent. The Marshall Center and the Belfer Center determined that this structural reliance on American security guarantees resulted in "hollowed out" capabilities and major readiness shortfalls that persisted long after the initial drawdowns. RUSI and the Belfer Center asserted that even when European governments pursue aggressive new spending trajectories, such as targeting 3.5% of GDP by 2035, these efforts often fail to translate into sustainable deterrence because budgets remain heavily weighted toward personnel costs rather than warfighting capacity. A State Department report warned that rapid US military drawdowns risk creating immediate capability gaps and suboptimal defense investments as allies scramble to fill the void.
2025 Hague Summit Reaffirms Article 5 Fragility
RUSI indicated that this transactional approach exacerbates existing fissures, as evidenced by the 2025 Hague Summit's need to reaffirm Article 5, which signaled the fragility of the Euro-Atlantic Security Architecture (EASA). The RAND Corporation and the Belfer Center documented that reconfiguring US alliance accountability under a framework that treats Russia as a distraction fundamentally alters the internal hierarchy of European power structures, shifting from unconditional security guarantees to transactional burden-sharing. CEPA and RUSI observed that as Washington prioritizes China and executes resource tradeoffs away from Europe, it creates a leadership vacuum and compels European allies to rapidly develop their own geopolitical and defense capabilities. However, this dynamic is more likely to trigger new intra-European security dilemmas that fragment collective decision-making rather than creating a stable, multipolar Euro-Atlantic architecture. The RAND Corporation determined that the US strategy of using its military presence and commitments to reward or punish individual allies incentivizes front-line states to focus on national defense priorities over collective NATO objectives.
The Marshall Center reported that rising defense capabilities among front-line states like Poland, Sweden, and Finland are not translating into a cohesive European security backbone due to persistent structural inefficiencies. RUSI pointed out that while Europe is rearming with a new NATO target of 3.5% of GDP on hard military capabilities by 2035, national procurement remains highly fragmented. A State Department report concluded that a significant portion of European defense spending flows directly to US firms, meaning increased European investment often reinforces transatlantic dependency rather than fostering true strategic autonomy. RUSI further asserted that the internal hierarchy is destabilized by divergent threat assessments and nuclear dependencies, as British and French capabilities alone may struggle to cover the full range of Russian threats without American backing.
Russia Exploits US Distraction and European Fissures
Treating Russia as a distraction reconfigures US alliance accountability, compelling European nations to internalize security costs through increased defense spending, according to the NEST Centre and the Belfer Center. This approach, however, risks exacerbating intra-European divisions by incentivizing national over collective defense, leaving Europe more heavily armed yet still dependent and fragmented.
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