Russia’s invasion of Ukraine and President Trump’s abrupt cutoff (and resumption) of aid to Kyiv has jolted Europe. The continent’s leaders have responded by pledging to boost defense spending by €800 billion.
“Europe must take responsibility for its capacity for deterrence and security,” European Commission President Ursula von der Leyen said in her announcement of the spending plan. “Our European values, democracy, freedom, the rule of law are under threat.”
Von der Leyen’s plan will allow governments to take out loans and increase national debts without incurring penalties under the bloc’s strict fiscal rules. If forthcoming, the funds should be spent as much on adapting civilian tech, including drones and quantum computing, as on traditional defense contractors producing tanks and fighter jets. Additional incentivizes are needed to speed European innovation, research and development of future weapon systems.
The Ukrainian battlefield offers compelling evidence to shift priorities. Ukrainians have developed inexpensive drones and leveraged private communications satellites to hold off a massive offensive by a materially superior Russia. Artificial intelligence powered drones conduct autonomous navigation against military targets and to carry out swarm attacks that confuse and saturate Russian air defenses.
Although the EU already supports defense start-ups and small and medium-sized enterprises, it plans to allocate a mere €2 billion over seven years to the Hub for EU Defense Innovation. Promised new funds should focus on producing inexpensive war drones. The EU should partner with Ukraine and Turkey, Europe’s leading drone producers.
AI is key. The vast majority of foundational AI models in the EU are American or Chinese. This leaves the EU vulnerable as EU defense companies may have to wait for updates from abroad that may not be optimized for their specific needs.
If the EU falls behind in foundational AI, it will harm EU defense-industrial competitiveness, slowing the development of robotics used for advanced manufacturing. AI can simulate how defense applications such as drones or missile guidance systems will perform under various conditions, reducing the need for physical prototypes. It optimizes the design phase, improves logistics for production, and even conducts inspections of products for defects.
Quantum computing represents another priority. Quantum accelerates processing, giving it the potential power to decipher digital encryption that underpins military communications. It promises great progress in sophisticated sensing, such as locating submarines and detecting mines.
Although quantum computing remains in its infancy, its future industrialization and potential military use seem uncertain as long as the EU is able to attract only 5% percent of global quantum private investments, compared to 50% in the United States. Former Italian Prime Minister Mario Draghi’s report on the future of European competitiveness published in September 2024 points to lagging private investment as a main reason for the EU falling behind in both AI and quantum computing. The report contrasts European weakness with the US’s strong position thanks to the availability of venture funding.
The EU will need to bake the Draghi recommendations into its defense ambitions. Venture funders must be more encouraged to invest in defense startups.
The European Investment Bank’s recent decision to allow lending to defense companies and the channeling of existing EU investment funds toward small and medium-sized innovative companies represents a good start. The EU also needs to consider whether to divert to defense manufacturing its cohesion funds, designed to help poor members catch up.
Donald Trump’s threats to withdraw the US’s security umbrella over Europe have spurred the continent to action. In response, the EU needs to offer a clear vision – and substantial funding – for civilian-driven military innovation.
Henrik Larsen, PhD, is a non-resident fellow with the Tech Policy Program at the Center for European Policy Analysis. Until recently, he was a Senior Researcher at the Center for Security Studies at ETH Zürich focused on NATO and Ukraine. He previously served as a Political Adviser with the EU Delegation to Ukraine and with the EU Advisory Mission to Ukraine. He was a Research Fellow at the Harvard Kennedy School, a Fellow with the Carnegie Endowment for International Peace, and a Visiting Researcher at Stanford University.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth 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.
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