For decades, the European Union has relied on the U.S. for its defense. That worked when interests aligned. Today, it cannot be assumed. Disagreements over the war in Iran, trade and even Washington’s uncertain commitment to NATO show that the two allies can often find themselves worlds apart. 

An ally is an ally, but Europe still needs the capacity to stand on its own.

The problem isn’t money. European defense spending is rising and the continent includes several of the world’s largest economies. But spending doesn’t equal capability — the technology that money buys does.

Modern defense systems are built on software, satellite links, encryption and data. Many of their components are designed, owned or controlled by American firms. In some cases, they may include proprietary restrictions — so-called kill switches — or depend on external permissions to function fully.

Any system that can be limited or disabled by another actor cannot be considered sovereign. Operational autonomy requires full control over everything from hardware to code and cryptographic keys.

This is the logic of modern supply chains. The entity that designs and governs the architecture controls the system. That creates a structural asymmetry between the U.S. and the EU.

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This article is part of the The Parliament’s special policy report “Unlocking investment for EU competitiveness.”

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Europe’s dependence

The EU has decided to accept this compromise because American technology is excellent. The U.S. defense sector is unmatched in scale, speed and integration. It leads in space, cyber and precision systems. The alternative is often reliance on China, which is strategically and politically untenable.

But dependence has costs. Foreign policy decisions made in Washington — including delays on weapons deliveries to Ukraine — have shown that access and support are not guaranteed. Dependence turns differences of opinion into operational risks.

A second challenge relates to innovation. The U.S. has created strong links between government, venture capital and industry.

Structures such as the Defense Innovation Unit — which helps the Pentagon buy technology quickly through pilot contracts and fast procurement — draw in startups and scaleups, including from abroad, pulling European firms into the American system.

These companies are then compelled to relocate teams, move intellectual property and build operations where capital and procurement are faster.

The result is a transfer of talent and technology. Europe trains engineers and scientists, then sees them thrive elsewhere. Despite strong universities and a deep industrial base, fragmented markets and slow procurement limit growth at home.

EU-wide research and development spending has edged up from 2.09% to 2.24% of European gross domestic product from 2014 to 2024. Programs such as Horizon Europe are valuable, but insufficient. They are slow to adapt and often lack urgency, taking a long-term approach.

Building a response

Europe must invest more in its own defense technology, speed up procurement and nurture demand for startups working on dual-use systems: satellites, advanced materials, AI and secure communications.

In parallel, the EU needs larger pools of capital. Europe invests far less venture funding in defense and deep tech than the U.S. Dedicated growth funds, sovereign co-investment vehicles and corporate partnerships would help firms raise larger rounds within the EU.

National governments must strengthen ties between universities, industry and investors so that research teams become companies that grow at home.

EU member states must also cooperate industrially to build shared programs that reduce duplication and accelerate production. Existing initiatives such as the Future Combat Air System and the Global Combat Air Programme are not sufficient.

Finally, critical intellectual property must remain under European control, supported by common standards that enable firms to integrate and scale.

None of this means rejecting the U.S. of course. NATO endures and cooperation remains vital. But Europe must stand on its own two feet to make the alliance work as well as it can.

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