Europe’s Defense Build-Up and the Limits of Execution
Europe’s defense debate has matured quickly. Budgets are rising. Venture and growth capital are flowing into defense and dual use technology. Autonomy, drones, and software defined systems are moving from experimentation to deployment. On paper, Europe appears more serious about rearmament than at any point since the end of the Cold War.
However, persistent challenges continue to create friction across Europe’s rearmament effort, slowing the conversion of intent and funding into deployable, sustained capacity. These challenges are not singular or easily isolated, but they are becoming increasingly visible as spending accelerates.
Execution has elasticity, and Europe is nearing its limit
Execution is not binary. It has elasticity.
At lower levels of demand, Europe’s defense system can absorb new programs, suppliers, and technologies with relative ease. As demand accelerates, friction rises nonlinearly. Skilled labor becomes scarce. Certification and testing pipelines clog. Suppliers compete for the same subcomponents. Political and regulatory oversight intensifies rather than relaxes.
What often appears as slow execution is the system signaling that it is approaching its limits. This is why simply adding money does not translate proportionally into output or readiness.
Why primes and startups are solving different problems
Europe’s defense landscape is often framed as a contest between incumbents and new entrants. That framing is misleading.
European defense primes are optimized for low failure, high liability environments. They exist to minimize catastrophic downside, not to maximize speed. Their pace is not a flaw. It is the cost of being trusted to deliver complex systems that must function reliably for decades under extreme conditions.
New defense companies, by contrast, tend to be optimized for innovation, speed, and rapid iteration. They move quickly, accept higher levels of risk, and thrive in domains where failure is survivable and learning cycles are short. They are not slower versions of primes. They are addressing a different class of problem.
The execution gap emerges when Europe asks one category of actor to behave like the other. Primes are pushed to move like startups, while startups are implicitly expected to shoulder prime level responsibility. Neither transition happens cleanly.
What Europe is actually building a hybrid execution model
In practice, Europe is converging on a hybrid execution model, even if it is rarely described as such.
Core systems remain anchored in established European primes. Around them, a growing perimeter of newer firms supplies autonomy, sensing, software, and specialized production. Execution depends less on any single actor than on how effectively these layers are integrated.
However, this hybrid model does not yet constitute a fully European defense ecosystem.
Despite rising budgets and renewed industrial policy, the share of major European defense contracts awarded to US firms has increased since 2022, particularly in aerospace, air and missile defense, long range fires, and key command and control and ISR systems. By value, more than one third of post 2022 procurement by European NATO members has gone to US suppliers, a higher proportion than in the years immediately preceding the war.
This reflects delivery speed, system maturity, and integration risk rather than a lack of political intent. It also underscores a structural reality. Europe’s current hybrid model remains externally anchored in several of the most complex and integration critical layers of modern warfare.
Integration, not actor count, is the binding constraint
This integration layer is where execution either accelerates or stalls. Interface ownership, systems engineering capacity, and program level coordination matter more than the number of companies involved.
Europe’s challenge is not a lack of actors. It is a lack of integration, and in some domains, a reliance on non European integrators to supply it.
Procurement is where execution choices are made implicitly
Procurement is not merely a purchasing function. It is where execution models are selected, often without being explicitly acknowledged.
How tenders are structured determines where integration risk sits. How exemptions are used determines whether speed or openness is prioritized. Whether programs are national or collaborative determines how much execution capacity is duplicated or shared.
Individually, these choices are often pragmatic. Collectively, they shape the defense system Europe is actually building. It is neither fully centralized nor fully sovereign, but a patchwork whose performance depends heavily on context and urgency.
Ukraine exposes an alternative logic
Ukraine’s experience highlights a different approach.
By licensing designs for production outside its borders, Ukraine is pairing battlefield driven technological learning with external industrial capacity. This is not ideological experimentation. It is a response to the necessity of survival.
In areas such as drones, Ukraine is iterating designs continuously under combat conditions, producing technologies that are often ahead of those developed elsewhere. By licensing production to partners in Europe, Ukraine gains speed and scale, while host countries revive or repurpose underutilized manufacturing capacity, create jobs, and strengthen their industrial base.
This is not a zero sum arrangement. It is a mutually reinforcing one, and it illustrates a form of collaboration that Europe has historically struggled to operationalize at speed.
The real question for 2026
Europe is not failing to execute. It is executing largely in line with how its institutions are designed.
The question is whether that design is sufficient for the security environment Europe believes it is entering. Execution elasticity is finite. Integration capacity is scarce. Political urgency will not always provide cover for exceptions and workarounds.
The central issue for 2026 is not how much Europe spends or what it invents, but whether it can evolve this hybrid model into a more complete and resilient ecosystem, or whether reliance on external primes becomes a durable feature rather than a transitional phase.