Europe’s Defense Sector: Rethinking Cooperation Between State and Industry
Across Europe, defense institutions are entering a period of rapid transition, and the landscape is being reshaped at unprecedented speed. After years in which military budgets were gradually reduced, governments now face the consequences of sustained underinvestment: outdated equipment, insufficient production capacity, and industrial ecosystems that struggle to respond to fastchanging security threats.
As geopolitical tensions rise and long-standing underinvestment becomes impossible to ignore, governments are no longer debating whether to strengthen their armed forces, but how to do so without sacrificing sovereignty, security, or strategic autonomy. This moment of renewal forces a fundamental rethink of how states and industry collaborate - balancing rapidly expanding budgets, accelerating technological change, and the growing influence of private actors in mission-critical capabilities.
With Benoit Lison, Leader of Amrop’s Global Defense Practice.
More spending = more strength?
As a result, Europe is witnessing an unprecedented rise in defense spending. The European Defense Agency reported that total defense expenditures across EU member states are expected to reach €381 billion in 2025, with an important share - nearly €130 billion - allocated specifically to new procurement and significant upgrades. Meanwhile, EUwide initiatives such as Readiness 2030 and ReArm Europe aim to mobilize hundreds of billions more to reinforce the continent’s longterm capacity to deter and defend. These programs are designed to support governments in replenishing stockpiles, securing critical infrastructure, and rebuilding industrial readiness after years of erosion.
Yet increasing budgets does not automatically translate into stronger defense forces. European armies must simultaneously tackle traditional capability gaps and invest in modern technologies such as cyber defense, advanced sensors, drones, AIenabled systems, and secure digital networks. Several assessments highlight that Europe still trails behind larger global powers in adopting nextgeneration military technologies, leaving national defense organizations with pressing choices around innovation and procurement.
Cooperation or overdependence?
This reality puts pressure on Europe’s defense industry. Many manufacturers cannot currently deliver at the pace needed for largescale rearmament. Analysts note that Europe’s industrial base is too fragmented and too slow to match the accelerated timelines that modern conflict scenarios require. This has driven armed forces to seek deeper cooperation with private companies - not only traditional defense manufacturers, but also datadriven technology firms that increasingly provide essential capabilities such as secure communications, ISR data processing, cyber resilience, and logistics optimization.
However, this collaboration comes with new strategic dilemmas. When national defense organizations rely on digital platforms provided by large private players, especially those operating globally, how can they prevent overdependence? And how can highly sensitive information be safeguarded when managed through externally developed digital systems? These questions are now central to the debate on Europe’s sovereignty. The EU’s recent proposals emphasize the importance of scaling national and regional industrial capacity while building safeguards to protect confidential military information and missioncritical technologies. At the same time, thoughtleadership analyses stress the need for Europe to ensure it retains control over fundamental defense innovations rather than outsourcing these capabilities to foreign entities.
Independent go-betweens to reduce risks
Beyond technological and industrial challenges, there is a human capital dimension. Ministries of defense must rebuild the expertise required to assess emerging technologies, structure large procurement programs, and make informed decisions in an increasingly complex security environment. Years of downsizing have left gaps in specialist knowledge, from cybersecurity to systems integration and digital warfare, which now need to be urgently addressed.
Given this combination of pressures, a new organizational model is gaining traction: the use of independent “middle offices” - neutral intermediaries that work between ministries of defense and private industry. These actors can help governments evaluate technological solutions, manage multivendor ecosystems, guard confidential information, and maintain autonomy in strategic decisionmaking. By being structurally independent from suppliers, they reduce the risk of vendor lockin while still enabling defense organizations to benefit from privatesector innovation.
As Europe enters a new era of defense renewal - marked by higher budgets, new technologies, and more integrated cooperation - such neutral intermediaries may offer a practical pathway to navigate the competing demands of sovereignty, innovation, and operational readiness.
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