The Push for a European Preference in Defence Spending

The European Union (EU) is currently in the midst of a significant debate about whether to adopt a so-called "European preference" for defence spending at the bloc level. This move is being championed by European defence manufacturers, who argue that strengthening the continent’s defence industrial base is a "strategic imperative" for its security and resilience. The push for a European preference comes as the EU seeks to reduce its reliance on third-country suppliers, particularly in the context of dealing with a transactional U.S. administration under Donald Trump. European defence industries are urging the EU to prioritise domestic production to ensure security of supply, bolster production capacity, and enhance its ability to act independently on the global stage.

Representatives from the Aerospace, Security, and Defence Industries Association of Europe (ASD) have emphasized the importance of a strong European defence industrial base, calling it a "defence capability in itself." They argue that the EU must reverse the trend of awarding procurement contracts to non-European suppliers and instead focus on investing in European solutions. The ASD spokesperson highlighted that European defence industries already represent 98% of the industry’s total turnover, making them a critical component of the EU’s defence ecosystem. By prioritising European production, the bloc can ensure greater control over its defence capabilities and reduce vulnerabilities in its supply chain.

However, the path forward is not without its challenges. EU member states remain divided on how to implement such a preference, with differing views on how to handle Trump’s transactional approach to international relations. Some leaders, like French President Emmanuel Macron, argue that the solution is "quite simple": Europe must invest more in its own production capabilities and prioritise European purchases to become more independent. Macron’s stance reflects a broader concern among European leaders about the need to enhance the bloc’s strategic autonomy, particularly in the face of rising global uncertainties.

Challenges in Achieving Defence Spending Consensus

Despite the growing recognition of the need for a stronger European defence industrial base, EU member states are struggling to reach a consensus on how to move forward. One of the key points of contention is the bloc’s defence spending gap, which is estimated to be around €500 billion over the coming decade. This shortfall has taken on added urgency in light of the ongoing conflict in Ukraine, where the EU has pledged to support Kyiv’s defence efforts, and growing concerns about Russia’s military ambitions in the region.

The European Commission has been tasked with mapping out a strategy to address these challenges, with the goal of revitalising Europe’s defence industrial base. However, progress has been slow, and recent setbacks have highlighted the scale of the problem. For example, the EU failed to meet its pledge to deliver one million shells to Ukraine by March 2024, managing to produce only about half the required amount. This shortfall has raised questions about the bloc’s ability to meet its defence commitments, both in support of Ukraine and in terms of its own security needs.

Complicating matters further is the bloc’s reliance on non-European suppliers for critical defence systems. European defence industries are calling on EU member states to "explore European first" when it comes to procurement decisions, prioritising domestic solutions wherever possible. This approach is seen as essential for building a more resilient and self-sufficient defence industrial base. However, not all member states are convinced, with some arguing that imposing restrictions on arms purchases could harm transatlantic relations and limit access to advanced technologies.

The Strategic and Economic Case for Local Production

At the heart of the debate is the strategic and economic case for prioritising local production. Proponents of a European preference argue that investing in domestic defence industries is not only a matter of security but also a sound economic strategy. By supporting European manufacturers, the bloc can create jobs, foster innovation, and strengthen its overall economic competitiveness. Moreover, a strong defence industrial base is seen as a key component of Europe’s strategic autonomy, enabling the EU to act independently in defence matters without relying on external partners.

The ASD has been vocal in its support for a European preference, urging EU member states to provide long-term commitments and firm contracts to defence manufacturers. This would enable companies to invest heavily in production capacities and manage financial risks more effectively. The association also stresses the importance of developing European solutions for defence needs, even where they do not currently exist. By prioritising European production, the bloc can avoid impeding the development of domestic capabilities and ensure that its defence needs are met by reliable and innovative European suppliers.

However, the economic case for a European preference is not without its challenges. Critics argue that prioritising domestic production could lead to higher costs and reduced competition, potentially undermining the efficiency of defence procurement. Additionally, there are concerns about the potential impact on transatlantic relations, particularly given the U.S. administration’s transactional approach to international trade and defence cooperation.

Balancing European Ambitions with Transatlantic Relations

One of the most sensitive issues in the debate over a European preference is how to balance the bloc’s strategic ambitions with its long-standing transatlantic relations. The U.S. has historically been a critical partner for European defence, providing advanced technologies and military equipment that have been integral to the continent’s security. However, the current U.S. administration’s transactional approach has raised concerns about the reliability of this partnership and the need for Europe to become more self-sufficient in defence matters.

The debate has been further complicated by recent developments in U.S. foreign policy, including the announcement of sweeping tariffs on steel and aluminium imports, which could impact the EU and spark a trade war. Additionally, Trump’s call with Russian President Vladimir Putin and his suggestion that negotiations between the two countries could begin soon has raised concerns in Europe about the potential exclusion of the bloc from key discussions on Ukraine and regional security.

In this context, some EU member states are advocating for a more cautious approach to implementing a European preference, arguing that it is important to maintain good relations with the U.S. and avoid antagonising the Trump administration. For example, Poland’s Donald Tusk has expressed opposition to imposing restrictions on arms purchases, while Lithuania’s Gitanas Nausėda has called for the EU to focus on a positive economic agenda with the U.S., including increased purchases of American natural gas and military equipment.

The Role of Funding and Future Strategies

As the EU seeks to navigate these complex challenges, the question of funding has emerged as a critical issue. Currently, joint EU money allocated to defence initiatives is a fraction of what member states spend individually on defence. For example, Germany alone is projected to have spent over €90 billion on defence in 2023, while the EU’s European Defence Industry Programme (EDIP) is set to have a budget of just €1.5 billion. This disparity highlights the need for greater investment in European defence initiatives if the bloc is to achieve its strategic goals.

Looking ahead, the EU’s next common budget, which will run from 2028 to 2034, is expected to play a key role in shaping the bloc’s defence strategy. Negotiations for this budget are set to begin in the summer, with defence and security expected to be a major priority. The European Commission is also set to publish a White Paper on Defence on March 19, which will outline its vision for revitalising Europe’s defence industrial base and how to finance it. EU leaders will have two months to consider the proposals before making decisions at their late June summit.

The ASD has called on EU member states to “explore European first” in their defence procurement decisions, arguing that this approach is essential for building a more resilient and self-sufficient defence industrial base. The association has also underscored the importance of developing European solutions for defence needs, even where they do not currently exist. By prioritising European production, the bloc can avoid impeding the development of domestic capabilities and ensure that its defence needs are met by reliable and innovative European suppliers.

Conclusion: A Call to Action for Europe’s Security Future

The debate over a European preference for defence spending reflects a broader conversation about the future of European security and the bloc’s role on the global stage. As the EU seeks to address its defence spending gap and strengthen its defence industrial base, it must navigate complex challenges, including transatlantic relations, economic pressures, and the need for strategic autonomy. The path forward will require a balanced approach that prioritises European production while maintaining cooperation with key partners like the U.S.

The stakes could not be higher. With Russia’s military ambitions in the region and the growing unpredictability of global geopolitics, Europe’s ability to defend itself and its interests is under increasing scrutiny. The EU’s failure to meet its defence commitments, whether in support of Ukraine or in terms of its own security needs, could have far-reaching consequences for the bloc’s credibility and influence on the world stage.

In this context, the call for a European preference is not just about defence spending; it is about building a more resilient, self-sufficient, and strategic Europe. As the EU looks to the future, the decisions it makes today will shape the course of its security and defence landscape for years to come. The time to act is now.