Is Europe Waking Up in Defense? Alarm Bells from Munich to Paris
A significant crisis is developing between Europe and the United States, with some analysts describing it as the most important transatlantic crisis since the 1956 Suez Crisis. At that time, Britain and France, unable to accept their diminished global power, collaborated with Israel to intervene in Egypt’s nationalization of the Suez Canal. However, swift action from the U.S. and the Soviet Union compelled them to retreat.
Today, Europe is not only diminishing as a great power but also on the brink of becoming powerless altogether. Reports indicate that Germany has enough ammunition stockpiled for only a few days in the event of a Russian attack. This vulnerability became evident at the Munich Security Conference, where U.S. Vice President JD Vance sharply criticized Europe’s lack of military preparedness, leaving the conference chairperson in tears. Having long relied on the U.S. for protection, Europe is now confronting the reality of its vulnerability.
This situation suggests that Europe is likely to significantly increase its defense spending soon. The phrase “nature abhors a vacuum” applies here. Since the 1990s, many Europeans have believed that global peace was permanently guaranteed. Young people traveled freely across the continent through Erasmus programs, fostering friendships and marrying across borders. Migration from Central Europe and the Balkans temporarily alleviated labor shortages, enabling pension systems to support ever-growing payouts. Throughout this period, Europe largely overlooked the changes in Russia. Even after Russia annexed Crimea in 2014, it remained Europe’s largest natural gas supplier.
One of Europe’s most striking signs of complacency is the significant decline in its military stockpiles. In 1992, Europe possessed 19,000 tanks; today, that number has shrunk to just 3,000. It had 3,600 fighter jets, but now only about 1,000 remain. While the U.S. has redeployed its military resources globally, Europe has failed to reinforce its own capabilities. Over the same period, the U.S. increased its defense budget by 150%, Russia by 300%, and China by an astounding 1,100%. In contrast, Europe’s defense spending has stagnated instead of growing.
Europe Is Lagging in Defense Innovation
The issue involves not only defense budgets — how much is allocated to salaries and weapons — but also how much investment goes toward defense innovation. Europe is, once again, lagging behind. The total defense spending of European NATO members is 2.5 times less than that of the U.S. However, within that spending, the portion dedicated to defense innovation in the U.S. is 14%, while in Europe, it is just 4%. In 2024, investments in defense technology startups totaled $3.5 billion in the U.S., compared to only $800 million in Europe.
This gap is particularly troubling given that modern warfare is increasingly asymmetric and dependent on new technologies. The most prominent example of this shift is drone warfare. A $1,000 drone built from commercially available parts can take down a $10 million tank, and a $5 million autonomous naval vessel can sink a $500 million submarine. Europe must replenish its ammunition stockpiles and promote military innovation to adapt to the changing nature of warfare.
A Major Opportunity and Increasing Competition
For this reason, European countries will rapidly increase their defense spending, with a significant portion directed toward technological investments. I have previously written about the opportunities in defense technology, a field where Turkey has strong capabilities. That’s why we must follow European developments and position ourselves accordingly closely. Take, for example, Helsing, Europe’s most highly funded defense tech startup, valued at $5.8 billion. It has just announced its entry into the drone industry. This presents both a significant opportunity and growing competition.
After the Munich Security Conference, French President Emmanuel Macron gathered several European leaders in Paris to address these issues. They probably sipped wine, shared their complaints, and then went their separate ways.
If I were in their position, I would take decisive action. First, I would loosen the purse strings. Europe’s defense spending as a percentage of GDP is currently about 2%. This should increase to 5%.
Secondly, I would allocate resources towards innovation. This could result in the emergence of exceptionally valuable companies that would also enhance the economy. According to Lakeside Ventures, even increasing spending to 3.5% instead of 5% could cultivate companies with a total market value of $245 billion.
Third, I would avoid over-centralizing procurement processes, which can lead to bureaucratic nightmares. Instead, I would structure them in a more decentralized way. Innovative products have been crucial in Ukraine’s war efforts because procurement decisions can be made at the brigade level. Each brigadier general has a budget and can purchase what they need.
Fourth, I would leverage Turkey’s defense industry innovations in the post-Trump world instead of viewing alliances through a rigid political lens to benefit Europe. Let’s see what European leaders will do.
This article is a translated version of “Avrupa savunmada uyanıyor mu? Münih’ten Paris’e alarm zilleri” which was initially published in Economic Daily (Nasıl Bir Ekonomi Gazetesi) in Economic Daily on February 21, 2025.
