The Arms Race Leaves Europe Facing a Severe Shortage of Military Supplies

By Mika Horelli, BRUSSELS

On Tuesday, March 4, European Commission President Ursula von der Leyen presented a plan to strengthen Europe's defence and support Ukraine. The plan, "ReArm Europe," seeks to mobilise up to €800 billion in funding. Its core component is a €150 billion support package, through which the EU would offer loans to member states for joint defence procurements. Additionally, the Commission proposes allowing EU countries to increase their defence spending without violating budgetary constraints by introducing a special exemption rule from the EU's fiscal regulations. The EU's budget would also be tapped for defence-related projects, including redirecting unused regional development funds.

The plan also aims to attract private investors by expanding the European Investment Bank's role in financing the defence industry.

Von der Leyen estimated that if EU member states increased their defence spending by an average of 1.5% of GDP, it would generate €650 billion over four years. Combined with the EU's €150 billion loan program, this would amount to an €800 billion defence package. However, the exact sources of this funding remain unclear, and further discussions will take place at an emergency EU summit today, Thursday, March 6.

The goal of directing €800 billion toward strengthening EU member states' defence capabilities and supporting Ukraine raises significant questions about the sources and timelines for acquiring the necessary equipment and military supplies.

Production Shortfalls and Import Dependence

Despite the rapid increase in defence spending across the EU due to the war in Ukraine, Europe's domestic defence industry still struggles with limited production capacity. Years of underinvestment and depleted stockpiles mean that Europe urgently needs to scale up its military production.

Between June 2022 and June 2023, approximately 78% of EU countries' defence procurements were placed with non-EU suppliers. Of these, 63% came from the United States. EU-based procurement has remained low, with only about 20% of defence orders placed with European suppliers since 2022.

Beyond procuring weapons systems, maintenance and logistics are critical to defence strengthening. Defence preparedness requires acquiring weaponry and ensuring its upkeep and operational readiness. EU member states must invest in transportation infrastructure, fuel reserves, and maintenance capabilities.

For instance, many of Europe's railway networks and bridges would need upgrades to transport modern military equipment. It remains an open question of how much of this infrastructure investment should be funded through defence budgets.

Immediate Needs vs. Long-Term Investment

Urgent requirements, such as replenishing stockpiles due to the war in Ukraine, demand immediate solutions. However, as demand surges, supply chains face delays. Long-term investments in developing new European defence equipment and expanding production capacity take time. Designing and deploying new weapons systems typically takes five to ten years. Additionally, shortages of critical and strategic raw materials, such as rare minerals and component supply bottlenecks, could further slow production.

Substantial hurdles exist in expanding defence budgets and developing realistic rearmament plans. Europe's defence industry will need years of development to produce sufficient military equipment, meaning the continent will have to rely on imports—particularly from the United States—for the foreseeable future.

Whether the Commission's "ReArm Europe" plan will allow for purchases outside the EU remains uncertain. France, in particular, has previously insisted that EU taxpayers' money should only be used to support European industry. However, given Europe's insufficient production capacity, von der Leyen's urgency to implement the plan makes it nearly impossible without external procurement.

Trump's Pressure and the U.S. Defense Industry's Capacity Limits

Even before the European Commission unveiled its plans, U.S. President Donald Trump demanded that NATO member states raise their defence budgets to 5% of GDP. This has been widely interpreted as an opening gambit to push NATO countries to allocate around 3.5% of their GDP to defence. In 2024, the U.S. defence budget stood at approximately $886 billion, accounting for 3.2% of the country's GDP.

Given that European NATO members already source most of their weaponry from the U.S., the pressure to acquire new equipment with ReArm Europe funding would be directed toward American suppliers—if EU nations permit it. However, it remains highly uncertain whether even the U.S. defence industry can meet such a significant surge in demand.

American defence manufacturers are already operating at their limits. The annual production of Patriot air defence missiles is under 740 units, and F-35 fighter jet orders have extended delivery timelines by several years. Artillery shell production has been increased in response to the war in Ukraine, but bottlenecks remain critical. For example, TNT—the essential explosive in many munitions—had to be imported until recently, and only now is the U.S. constructing new domestic production facilities. Semiconductor shortages have also slowed the manufacturing of many weapons systems, and supply chain vulnerabilities persist. Meanwhile, finding skilled engineers and production workers remains challenging, as labour shortages impact the U.S. defence industry.

A rapid increase in allies' defence budgets translates into new investments in the American arms industry. However, expanding factories and setting up new production lines takes years—even in the U.S. If EU and NATO countries suddenly sought to spend hundreds of billions more on arms from the U.S., the likely outcome would be years-long waiting lists.

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