Europe’s defensive future in a deteriorating strategic environment

The strategic environment in Europe has been deteriorating over the past 10 years at a pace that should prompt a strong military and defense repositioning.

The war in Ukraine, increased tensions with Russia and the proliferation of hybrid threats are the primary concerns. Yet these are not the only challenges; tensions in the Mediterranean and the Middle East persist, as well as the risks weighing on critical infrastructure and supply chains.

This has caused a rethinking and reboot of European resilience and sovereignty at a time when the US is demanding more commitment from its European partners in the transatlantic alliance. Yet, in this context of urgency to upgrade and strengthen defense capabilities, the two pillars of Europe’s construction, France and Germany, have been facing a multitude of disagreements, and sometimes conflicts, over the way to achieve the much-needed strategic autonomy and industrial military cooperation that has become a priority for European states.

One of the main causes of industrial and strategic discord between the two countries in the defense sector, which has intensified in recent years, has been the Future Combat Air System. This highlighted the difficulties that exist in the convergence of regional sovereignty with national interest. It is also a symbol of diverging ambitions.

Obviously, when it comes to defense, this translates to the company level. Here, the contention between Dassault Aviation and Airbus over leadership, intellectual property and workshare was very clear. Yet, beyond this, the very goals they sought to achieve were also different.

Indeed, while this project was a big and ambitious, the countries had differing operational requirements. Without going into the details, France, for example, needed an aircraft that was both carrier-capable and nuclear-capable, whereas Germany did not.

In June 2026, unfortunately, President Emmanuel Macron and Chancellor Friedrich Merz acknowledged the failure to reach an agreement, ending the fighter aircraft component of FCAS while trying to retain its combat cloud element. As they say, the devil is in the details.

The failure of FCAS has other consequences, as systems and projects are always linked in the field of defense. As a result, the Main Ground Combat System, originally conceived as the land-based counterpart to the air program, has been undermined. Because of the erosion of trust, some commentators argue that even this project could be split into two separate tank programs, rather than pursuing the original goal of delivering a single European platform.

At a time when the world is watching developments on the Ukraine front, we see low-cost drones and projectiles destroying multimillion-dollar traditional military equipment. This illustrates another risk of the tensions between France and Germany: The focus on big industrial programs and competition between the companies involved does is not conducive to the needed innovation and changes on the battlefield that have been noticed even by amateurs.

It is worth remembering that in the immediate aftermath of the Second World War, Germany was banned from having any armed forces. The Allied powers imposed a full demilitarization to prevent the resurgence of German military power. Only in 1955, mainly because of the Cold War, was the Federal Republic of Germany allowed to establish the Bundeswehr, which was integrated into NATO and placed under strict constitutional constraints.

Following Russia’s invasion of Ukraine in 2022, Berlin launched a major rearmament program marked by the creation of a €100 billion ($114 billion) special fund to modernize its armed forces.

Germany’s large-scale rearmament has created a broader industrial rivalry with France. As Berlin works to catch up and develop its industrial base, this has been seen and interpreted as a “Germany First” approach.

The German defense budget is projected to exceed €180 billion by 2030 — about double the predicted level in France — and obviously this spending is expected to benefit German defense companies such as Rheinmetall, Diehl and Hensoldt.

This is increasing the pressure on France’s leading defense companies, including Dassault Aviation, Thales and Naval Group, and pushing Paris to strengthen domestic procurement amid increasing industrial competition and tensions over market share in Europe and elsewhere.

Another important point of contention is that Berlin continues to procure major US and Israeli defense systems, particularly through the German-led European Sky Shield Initiative, rather than the Franco-Italian SAMP/T air-defense system.

This highlights the issue of what is called “ITAR contamination.” In short, this means that if a system incorporates any US military-controlled technology, the entire product becomes legally restricted through strict US weapon-export laws under International Traffic in Arms Regulations.

Many small and medium-sized enterprises in France are therefore reluctant to collaborate with German, and also Polish, counterparts because defense equipment produced by those countries often incorporates components of US origin that are subject to ITAR. Because France ranks as the world’s second-largest arms exporter, this can undermine its market share through potential export restrictions.

This rift has even spilled into domestic politics. Germany’s foreign minister has described France’s defense efforts as “insufficient” and called on Paris to reduce its social spending and increase military investment, while France has criticized Berlin for adopting an opportunistic and pragmatic approach that weakens European sovereignty.

These are not the only sources of tension. One might say that the conflicts of interest go beyond purely technical military disagreements and reflect diverging visions of what European sovereignty really means.

France remains committed to strategic autonomy and the protection of its national defense champions. Germany is clearly determined to build the largest conventional military force on the continent, prioritizing capability and scale over the geographical origin of its defense suppliers. It is a goal set and scheduled, so the procurement of equipment from outside Europe is not an issue for Berlin.

This reliance on US technologies within parts of the German defense industry contrasts sharply with France’s ambition to preserve an independent industrial base. It also comes at a time when the German automotive industry is facing a severe crisis. The surge in military spending is therefore seen as a lifeline for German industry, and has effectively sparked a pivot toward defense manufacturing; some companies are leveraging their mass-production capabilities to scale up the assembly of military drones and interceptors.

Truth be told, this massive German military buildup is reshaping the traditional balance of European construction. In the postwar era, France has long held the military advantage while Germany maintained economic dominance. Paris now foresees potential industrial decline and increasing competition from Germany in global defense export markets. It accuses Berlin of selective cooperation, as the Germans seek mutualization of French nuclear deterrence yet focus on supporting their own industrial champions. This is true but can you blame them?

There is little doubt that defense is an important industry and its stakeholders are looking to preserve their share and even grow with the expected increased military spending. Despite rearmament efforts, Russia produces more military equipment than all of Europe combined, by a significant margin. Therefore the long-term solution, which unfortunately is urgently needed, is to build a stronger European defense framework, potentially with the ultimate goal of a European army.

Existing tensions run the risk of obliterating innovation, rather than growing the global industrial base. In this context, the pooling of resources and integration of capabilities is the only way to answer growing strategic challenges.

It starts with agreement on what European sovereignty and autonomy really means.

• Khaled Abou Zahr is the founder of SpaceQuest Ventures, a space-focused investment platform. He is the CEO of EurabiaMedia and editor of Al-Watan Al-Arabi.