The Governance and Funding of European Rearmament

Gaps in European military equipment are substantial compared to Russia's military build-up. The European defence market is fragmented and weakened by home bias in procurement, low order numbers and technological gaps. With the US now retreating from its role as Europe's guardian, greater European cooperation will be essential to close technological gaps and reduce rearmament costs. Procurement will need to be pooled to reduce market fragmentation and avoid that additional demand for defence goods will mainly drive up prices. Better-integrated defence markets would both increase competition and facilitate entry of new defence technology firms. The combination of integrated markets and scaled-up procurement could halve unit costs. This article discusses how this could be achieved either by scaling instruments in the current institutional framework or by creating a new intergovernmental institution, the European Defence Mechanism.