A new report by former Italian PM and European Central Bank chief Mario Draghi has sounded an alarm over EU defense spending, warning that 63% of defense orders from EU countries between mid-2022 and mid-2023 went to U.S. companies. The report stresses that Europe is failing to leverage its own defense capabilities, placing too much reliance on non-EU suppliers.

Key Concerns Highlighted by the Report:

  1. Heavy Reliance on U.S. Suppliers:
    • 63% of EU defense contracts went to U.S. firms.
    • 15% of orders placed with other non-EU suppliers.
    • The Netherlands recently ordered U.S.-made F-35 warplanes, highlighting this trend.
  2. Underinvestment in European Defense Companies:
    • The report points out that Europe is not joining forces to build competitive European defense companies.
    • A lack of investment in joint procurement and development weakens the EU’s ability to modernize its armed forces.
  3. Low R&D Spending:
    • In 2022, EU countries spent just €10.7 billion ($11.8 billion) on defense research and development (R&D).
    • This represents only 4.5% of total defense spending, compared to $140 billion (16%) in the U.S.
  4. Diverse Equipment and Logistical Challenges: Lack of joint procurement leads to inefficiency, as seen when EU countries supplied Ukraine with 10 different types of howitzers, complicating logistics with varying 155 mm shells.

Solutions and Recommendations:

  • Collaborative Projects: Successful examples like the A-330 Multi-Role Tanker demonstrate the benefits of pooling resources and joint development.
  • Increased EU R&D: The report calls for greater focus on European defense R&D to modernize forces and reduce reliance on the U.S.
  • Stronger European Industry: By investing in European firms, the EU can strengthen its defense capabilities, enabling it to better address security needs and reduce dependence on non-EU suppliers.

This report comes at a critical time, as the EU faces challenges in providing sufficient weapons and ammunition to Ukraine while revitalizing its own defense sector.

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