Europe's Strategic Dilemma: Between American Dependence and Institutional Overload

The demand for European defense autonomy has gained new urgency since Donald Trump's return to the White House in January 2025. However, while the political rhetoric sounds increasingly confident, a sober analysis of current developments reveals a fundamental paradox: Europe faces the necessity of massively expanding its defense capabilities—without possessing the institutional structures that would enable this and without the political unity that would be required.

Recent events in March 2026 illustrate this dilemma with remarkable clarity. The Trump administration is not only demanding higher defense spending from NATO allies but is also threatening the annexation of Greenland, interfering in European domestic politics, and warning that the non-participation of European states in military operations to open the Strait of Hormuz would be very detrimental to the future of NATO. These developments have prompted President Emmanuel Macron and Commission President Ursula von der Leyen to speak of Europe as a global power. However, this claim could prove to be a dangerous illusion.

The numbers speak a clear language: Germany has risen to become the fourth-largest military spender in the world in 2025, with defense expenditures of $107 billion, as reported by the International Institute for Strategic Studies (IISS). Defense production is expanding in Europe at three times the rate compared to 2020. Denmark opted for the French-Italian air defense system SAMP/T NG in September 2025—against the American Patriot system. This decision signals a growing willingness to strengthen European defense capabilities.

In parallel, significant industrial partnerships have emerged. In March 2026, Diehl Defence and the Spanish Indra Group signed a strategic cooperation agreement for the joint development and production of air and missile defense systems. The collaboration combines Diehl's expertise with the IRIS-T missile family—including the short- to medium-range systems IRIS-T SLS and SLM, as well as the under-development IRIS-T SLX for extended ranges—with Indra's competence in radar systems, tactical communication, and command and control systems. Rheinmetall finalized the acquisition of the Naval Vessels Lürssen business in Spain in March 2026 to create a German system house for naval shipbuilding and unmanned surface systems.

France and the United Kingdom have established formal coordination in nuclear policy, capabilities, and operations. Paris has committed to increasing its nuclear warheads as part of a new deterrence strategy that could potentially bring other European nations under its nuclear umbrella. Nordic and Baltic states have deepened their integration and cooperation to support Ukraine, combat hybrid operations, and strengthen security in the Baltic Sea region.

However, these impressive developments cannot mask the fundamental structural problems that stand in the way of genuine European defense integration. The European Union is a vehicle for economic cooperation—a peace project, not a war project. Its institutions are not designed for defense coordination. The EU does not have an army, and Brussels can only spend money on defense through financial grants to member states or theoretically through the issuance of joint debt.

In the current system, the latter would amount to fiscal transfers from Germany and the Netherlands to France, Greece, Italy, and other high-spending countries. These potential beneficiaries have a variety of legitimate security concerns—mainly in the Eastern Mediterranean, the Middle East, and North Africa—that have little to do with the Russian threat. Asking German and Dutch taxpayers indefinitely to finance these commitments carries the risk of a dangerous backlash.

A consolidated European defense sector would require countries to forgo key sources of employment and export revenue in favor of a system with little democratic oversight or coordination. Despite Macron's rhetoric, France is the country most resistant to the consolidation of the European defense sector. Such a move would force Paris to abandon the principles of national independence that have shaped its statecraft since 1958. French unwillingness to cede control over defense has already doomed the Franco-German FCAS fighter jet project. Recent statements by Emmanuel Macron and German Chancellor Friedrich Merz in February 2026 suggest that a breakthrough remains elusive.

The challenge is exacerbated by economic reality. When the Maastricht Treaty was signed in 1992, the European Union and the United States together represented more than half of the global economy. The U.S. share has remained constant at 26.3 percent in 2023. However, the share of the European Union has significantly shrunk—to 14.7 percent. At the same time, China has risen to become a peer competitor to the United States.

The German situation illustrates the dilemma particularly clearly. German manufacturing is still struggling to adjust after losing access to cheap Russian energy. It is also under enormous and increasing pressure from Chinese competition. In February 2026, Brussels decided to support Ukraine through joint debt issuance rather than through confiscated Russian assets—against Berlin's objections. In this context, proponents of European power are simultaneously asking German taxpayers to increase defense spending, purchase military equipment that is predominantly manufactured outside Germany, and subsidize the defense spending of other European countries. Viewed in isolation, each of these demands would be inflammatory and carry the risk of increased support for extreme parties on both the left and right. Together, they form a powder keg.

A new treaty could solve this problem and create both a framework and a consensus for greater European integration in defense. However, attempting to negotiate such a treaty would upend the politics of the continent. Several member states are either outside NATO and committed to neutrality or openly sympathetic to Russia. A treaty amendment for collective defense would destroy the delicate framework of cooperation that connects Northern and Southern Europe.

While the EU defense market entry strategy for 2026 shows ambitious goals—specialized Defense Skills Programs are set to equip around 600,000 European professionals with defense-relevant skills by 2030—time-to-market challenges remain significant. Despite substantial progress, the European defense sector remains fragmented along national lines, limiting economies of scale. A lack of sufficiently large orders from governments hinders defense companies from reaching their manufacturing capacity, creating bottlenecks. Heavy regulation, strict procurement rules, and compliance standards further exacerbate the challenge.

Former Lithuanian Foreign Minister Gabrielius Landsbergis articulated the central question on March 18, 2026: Perhaps a formal geopolitical Europe is impossible. Perhaps coalitions of the willing are the realistic vehicle for defense, security, and foreign policy for the foreseeable future. But Europeans deserve to know that this is the choice being made—and that it does not come without cost.

The solution lies not in creating a European military power under Brussels' leadership but in a return to intergovernmental cooperation among like-minded countries. NATO must remain at the center of the European defense architecture, with the U.S. continuing to provide the costly and technologically advanced capabilities necessary to deter Russia. New spending programs should be developed through intergovernmental agreements, with NATO focusing on maintaining interoperability among its members.

Projects like the GCAP fighter jet development program between Italy, Japan, and the United Kingdom strengthen European security. Poland is rightly advised to look to South Korea for military equipment and expertise, as both rely on large conventional ground forces. EU member states should commit to granting partner status to all U.S. contracting allies in Brussels' defense financing initiatives.

The reality in March 2026 is clear: Europe must strengthen its defense capabilities, but this process must respect the existing structures of economic integration that have secured 70 years of peace and prosperity. The division of labor between economic and military affairs has preserved peace in the Euro-Atlantic area for more than seven decades. Abandoning this order means risking catastrophe—for both European integration and the transatlantic security architecture.