Without a strategy to build out the allied industrial base, the financial pledges made at the 2025 Hague Summit will deepen dependency on the US at a time when Washington’s focus is shifting to the Pacific.
Europe should instead prioritize its own industrial base, build a coalition with middle powers including the UK, Japan, South Korea, Canada, Ukraine, and Australia, and bring US defense firms in through co-production on European soil. The result would be a more balanced and durable transatlantic relationship.
The Iran war provides a warning of what will happen when Pacific demand for US weapons competes with European needs. The continent’s production shortages cluster in exactly the categories the war exposed: air defense interceptors, precision-guided munitions, and artillery rockets.
The US fired more than 850 Tomahawks during Operation Epic Fury. At the current production rate of 85 per year, replenishing them would take a decade.
Washington has warned allies of serious delays, and the Pentagon is now weighing whether to redirect European-funded interceptors bought through NATO’s Prioritized Ukraine Requirements List (PURL) to replenish US inventory in the Middle East. Lithuania has already been told that ammunition deliveries will be delayed.
European industry struggled to scale up production even before the Hague pledges, and MBDA and Rheinmetall, two of the continent’s defense industry giants, have flagged looming ammunition shortages.
Without industrial capacity to meet the requirements of new budgets, additional spending will default to off-the-shelf platforms already facing delays on production lines. And most will come from the other side of the Atlantic.
About 51% of European NATO equipment spending between 2022 and 2024 went to the US, up from 28% in 2019–2021, according to Bruegel, a Brussels-based think tank. In 2024 alone, US Foreign Military Sales notifications for European customers reached $76bn, four times the average since 2008.
While there’s widespread recognition that this needs to change. But while European spenders are responding to the Hague commitments in different ways, none are building systemic capacity.
Berlin is leading the way in shaking off its past reliance on the US, channeling spending into German industrial champions. Rheinmetall alone stands to receive over €88bn in potential orders, with Diehl, KNDS, Hensoldt, and MBDA Deutschland close behind. Berlin’s procurement plan, covering 154 major purchases in 2025-2026, allocates only 8% to US suppliers, a sharp shift from being one of Washington’s largest defense clients. But like other allies, it has turned to the US for high-end purchases of equipment like F-35 jets.
Warsaw is on a different path. It has ordered 32 F-35As and is spending heavily on US-built Abrams tanks and Patriot missiles. It is also the largest beneficiary of SAFE (Security Action for Europe) funding at €43.7bn ($51.3bn), pairing large-scale US procurement with maximal use of EU instruments.
Germany is building German capacity; Poland is layering big US purchases on top of European procurement funded by SAFE. Both paths share a flaw: they rarely coordinate orders (apart from some missile and artillery projects) or build supply chain diversity and resilience. Even after the war in Ukraine, collaborative procurement has remained well below the bloc’s own 35% benchmark.
Both of these approaches have their own logic. But they have a shared flaw: they rarely coordinate orders (apart from some missile and artillery projects) or build supply chain diversity and resilience. The industrial base the West needs is not yet being constructed.
The answer is for European firms to lead joint ventures with US partners that bring production onto European soil, combining American technology with European industrial capacity. And there are already good examples to follow.
Düsseldorf-based Rheinmetall and Lockheed Martin announced a missile joint venture in Germany in 2025, with Rheinmetall holding the majority stake and a target of 10,000 missiles per year. COMLOG, which pairs Europe’s MBDA with Massachusetts-based Raytheon, is also opening a Patriot Advanced Capability-2 line to deliver 1,000 missiles.
Germany’s Diehl has also signed a memorandum with Lockheed to bring the production of PAC-3 MSE missile interceptors into Europe, with Spain’s Sener and Poland’s WZE already supplying components.
These are all categories in which the Iran war has exposed shortages. European firms lead, US partners contribute technology, and production happens where the demand sits, increasing capacity on the continent.
Some of the groundwork towards strengthening the European defense industrial base is already taking place. The EU’s €150bn SAFE facility has a 65% European content rule, which covers EU members, EEA countries, and Ukraine, and production by US firms on European soil is included in the threshold. The European Defence Industry Programme (EDIP), adopted in November, adds €1.5bn ($1.8bn) targeted at the categories the Iran war exposed: air defense, counter-drone, and ammunition.
But these instruments can be blunted: member states can invoke national-security exemptions to avoid EU joint procurement rules even while drawing SAFE loans, and there is a parallel risk that SAFE money simply substitutes for national budgets rather than adding to them. These instruments are the floor, not the ceiling, and the scale of the broader allied market is what will turn them into real capacity.
The point is not to choose between US suppliers and European factories, but to build production capacity across the alliance.
Luka Ignac is a nonresident Fellow with the Transatlantic Defense and Security program at the Center for European Policy Analysis (CEPA). He focuses on the intersection of emerging technology, geopolitics, and defense, with a particular interest in defense innovation and EU-NATO cooperation.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
