“The demand for weapons in EU countries is growing. Will local companies be able to satisfy it?”, — write: epravda.com.ua
Since the mid-1990s, the defense spending of European countries has steadily decreased. According to the estimates of European agencies, this led to a significant underfunding of NATO’s military resources in the amount of about 1.4 trillion dollars. The Russian-Ukrainian war forced Western countries to reconsider their attitude to defense spending. It is expected that in 2024, European states will spend 500 billion dollars on defense, which is 15.5% more than in 2023, and 25% more than in 2022. However, even such rates do not compensate for many years of underfunding. According to Bloomberg, the needs of European armies within NATO are estimated at 200 billion dollars. These funds are needed to upgrade tanks, armored vehicles and aircraft to partially offset losses from previous funding cuts. In addition, the war in Ukraine showed Europe’s critical dependence on the US defense industry. This stimulates European countries to increase the production of weapons. It is about the creation and modernization of systems. Among the priorities is the development of ammunition and technologies to increase the military independence of the region.Advertisement: The increase in defense spending raises a key question: where to get the money? To reduce the gap between the defense industrial complex of the USA and the EU, Europe needs to raise its defense spending to the level of the USA – 3.3% of GDP. This means an almost two-fold increase in the budget: from $380 billion to $680 billion.Advertisement: However, the state of the budgets of the leading economies of the European Union – Germany, France, Italy and Spain – does not allow this to be done without an additional debt burden or a radical refocusing of budget policy. When considering debt financing, only Germany has a sufficient margin of safety due to a relatively low level of public debt to GDP. Other countries, in particular Italy and France, will face serious challenges. According to Bloomberg estimates, in order to spend 3.3% of GDP, the countries of Western Europe will have to attract 2.8 trillion dollars. debt This could be critical for Italy, where public debt to GDP will reach 163% by 2024 (+16% compared to 2023). In France, the debt burden will increase by 12.5%, reaching 127% of GDP. An increase in defense spending and a reorientation towards domestic production can have a positive economic effect. The increase in demand stimulates the economy, partially offsetting the increase in debt. However, due to the fragmentation of the European defense sector, the creation of an effective domestic production chain will take at least four to five years. This will require coordination between EU countries and a clear strategy for the development of the military industry. In the short and medium term, the main beneficiaries will remain American defense companies. The Baltic states, Germany and Poland continue to buy American weapons. For example, Germany has initiated the strengthening of European air defense (ADF) through the purchase of the IRIS-T (Germany), Patriot (USA) and Arrow 3 (Israel) systems. At the same time, France and Italy are lobbying for a long-term transition to European production. As a result, the EU strategy is aimed at the development of the domestic military industry. European defense companies will receive long-term benefits. Updating the aircraft fleet as a priority One of the main directions is investment in a new generation of aircraft. Currently, NATO countries in Europe have more than 1,400 military aircraft. The average term of their operation exceeds 20 years. This state of the fleet creates an imbalance: the number of European aircraft is 10% less than in the Russian Federation. In addition, about 300 aircraft need urgent replacement due to their long service life. The EU actively invests in replenishment, modernization and development of aircraft. However, recent purchases indicate that the American F-35, developed by the company Lockheed Martin, is becoming the main aircraft for NATO. British BAE Systems and Italian Leonardo joined the creation of the F-35. At the same time, Rafale aircraft from the French Dassault Aviation remain a secondary choice for the EU. Read also: Asian defensive tiger. How Korea built its own military industry The EU perspective is aimed at developing a new generation Eurofighter Tempest aircraft, which belongs to the sixth generation. It is being developed by BAE Systems and the MBDA consortium. In parallel, the creation of a next-generation aircraft from the Swedish company SAAB, which will replace the current Gripen model, is being considered. Modernizing the Meteor air-to-air missile is becoming an important part of the strategy. The missile developed for the Gripen integrates with most modern aircraft. It is produced by the MBDA concern, which unites BAE Systems, Airbus and Leonardo. Covering the shortage of air defense equipment, anti-missile systems and their missiles. The main air defense system for the EU is the American Patriot from the Raytheon company, which shoots down ballistic and aeroballistic targets. It also produces missiles for this system. The European Union needs additional air defense systems that can be used in the medium term and that should be developed by the EU countries. To combat low-cost and low-flying targets that are also dangerous, short-range systems like Rheinmetall’s Skynex are needed. An alternative is the European SAMP-T system, which is produced by Eurosam, a joint venture between the French company Thales and the MBDA consortium. Other manufacturers of air defense systems of various ranges include SAAB, manufacturer of the MSHOAD system; Rheinmetall, developer of Skynex, fixed and mobile Oerlikon systems; Kongsberg Gruppen, manufacturer of NASAMS long-range systems.Self-propelled artillery: an urgent need A comparison with Russia, the main threat to the EU, reveals a significant shortage of artillery installations. NATO countries in Europe have ten times fewer such installations than the Russian Federation (over 6,000 versus about 500). According to military rules, the defending side must have at least 50% of the artillery of the attacking force. To reach this level, the European Union needs to increase its arsenal by more than 2,500. settings Taking into account the average price of the PzH 2000, CAESAR and M109 Paladin models, the European NATO countries will need more than 40 billion dollars to produce this number of installations. However, most manufacturers of such howitzers are private companies. Among the public ones is BAE Systems, which produces the M109, AS-90 and Archer. Another important direction is the production of artillery shells, the shortage of which is observed not only in Europe, but also throughout the world. Among the main public manufacturers of artillery shells, Rheinmetall (Germany) and BAE Systems (Great Britain) stand out. Both companies hold leading positions in this field, which underlines their importance for the European defense industry. Europe needs a new defense spending strategy that combines immediate action with long-term planning. Investing in own production capacity can reduce dependence on the US defense industry and increase the level of military autonomy. Effective coordination between EU countries and attracting private capital will be decisive factors for overcoming defense challenges.
