Why does the EU’s large military purchase cost fall into the pocket of the United States？

A strategic report commissioned by the European Union pointed out that EU countries have purchased too many weapons and equipment from overseas in recent years, and about two-thirds of the military purchase expenses have fallen into the pockets of American arms dealers, which is not conducive to Europe’s defense independence. There are many advanced military equipment such as Gust fighters and Leopard 2 main battle tanks in the European Union, but why do member States continue to hand over large amounts of military purchases to American companies? Where is the road to strengthening military industry in Europe?

Where does the EU spend on military procurement?

Entrusted by the European Union, the strategic report on Europe’s future competitiveness written by former Italian Prime Minister and former European Central Bank President Mario Draghi was released recently. According to the report, from mid-2022 to mid-2023, 78% of the total EU defense equipment procurement expenditure went to non-EU suppliers, of which 63% went to the United States.

The report believes that "Europe is wasting common resources". In 2022, European collaborative procurement accounted for less than one-fifth of defense equipment procurement expenditure. The member states of the European Union did not unite in the defense industry to help European military enterprises integrate and reach scale.

According to media reports, the Netherlands, Germany, Poland, Romania, Belgium, Denmark, the Czech Republic and other EU member states are all planning to buy the F-35 stealth fighter of Lockheed Martin of the United States, and Poland also spent about $10 billion to purchase the American Apache helicopter gunship.

On the other side of the Atlantic, the American military industry is booming. The Wall Street Journal quoted the State Council as saying that from September 2022 to September 2023, the United States received more than $80 billion in arms orders, including about $50 billion from Europe, five times the historical normal level.

The well-known American financial consulting website "Colorful Fool Website" advises investors to give priority to investing in military stocks this year, because in the long run, the returns of such stocks are "rich and stable". Among the six investment targets recommended by the company, Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon Technology, the five largest American arms dealers in the world, occupy the top five.

Why buy American-made arms?

Analysts believe that there are multiple reasons why American military equipment is more favored by EU member states than weapons and equipment made in Europe.

First of all, under the impetus of the United States, NATO member States promised to increase their defense expenditure to 2% of GDP within 10 years in 2014. The escalation of the Ukrainian crisis has further stimulated European countries to increase their defense spending. Many countries in Europe have increased their defense budgets, but the demand for military purchases is far from self-sufficient. In the past two years, the limited production capacity and difficult delivery of weapons in the EU have become the focus of public opinion. Some weapons are not produced by EU countries themselves and can only be purchased from the United States.

Secondly, the progress of European defense integration is slow, and its internal weapon system is not unified. In recent years, the US-led NATO has vigorously promoted the interoperability of weapons and equipment. From the perspective of coordinated operations, EU member States also tend to purchase "made in the United States" weapons. As the report says, there are 12 different types of combat tanks in Europe, while the United States only produces one.

Third, the technical level, combat capability and reliability of American weapons are higher than those of European weapons. The United States has conducted many foreign military operations and wars, including large-scale military assistance to Ukraine, so that American weapons such as the Patriot missile system and the Haima rocket system can get more performance opportunities and technical feedback for upgrading and improvement in actual combat. The F-35 stealth fighter, which is the most purchased by European countries, is the fifth generation fighter, and its performance is better than that of European competitors such as Typhoon and Gust.

Fourth, the United States has invested heavily in military research and development and has a price advantage. The United States has a huge defense budget and can invest huge sums of money in weapons research and development, while European countries are competitive in the field of military industry, and one country has insufficient funds and technical reserves for independent weapons research and development. The large-scale production and sales of American weapons have lowered the cost. The F-35 stealth fighters with orders of 3,500 are sold at a lower price than the "Typhoon" and "Gust" with a total output of less than 900.

In addition, the purchase of American weapons is regarded as a way to strengthen political and military relations with the United States, and some European countries hope to ensure the continued military and security support of the United States by purchasing weapons.

In short, the European defense industry is "too fragmented", lacking large-scale production capacity, and relying on the United States militarily, which has formed a vicious circle over time.

Where is the way to strengthen military industry in Europe?

Draghi’s report pointed out that in order to achieve true strategic independence and enhance its global geopolitical influence, Europe needs to develop strong and independent defense industry capabilities.

The report suggests that the EU should increase defense expenditure and related R&D investment to restore the capabilities lost due to decades of insufficient investment and replenish the depleted equipment inventory. At present, the EU’s total defense expenditure is about one-third of that of the United States, and only 10 EU member States have reached the NATO target that defense expenditure accounts for more than 2% of GDP. In the defense expenditure, the United States spent about 16% on research and development in 2023, and the proportion in Europe in 2022 was only 4.5%.

The report pointed out that the European defense industry is still facing fragmentation challenges. If EU countries "go their own way", the limited European market may form internal competition, and there will be problems such as lack of standardization and interoperability due to different weapon systems.

Jian Junbo, deputy director of the China-Europe Relations Research Center of Fudan University, said that the EU is promoting unified standards and joint research and development of weapons systems, which will help strengthen the European military industry in the long run and keep more military purchases in the EU internal market.

According to the website of European Security and Defense magazine, European countries have taken a series of cooperative defense measures to enhance their collective action ability and strategic autonomy. European defense cooperation plans such as European defense fund, permanent structural cooperation and European defense industry strategy bring new opportunities for European defense enterprises.