Europe’s Defense Dilemma

As this brief explains, there is no single reason for this failure: it is a result of a deep-seated collective action problem entrenched across the political, economic, and military fields of the European defense landscape.

This brief identifies three main insights for NATO, EU, and European policymakers to help solve Europe’s defense dilemma:

• Understanding the challenge as a collective action problem reveals three principles that can help unlock European defense cooperation: small groups, normalization, and mechanisms to incentivize cooperation (and discourage fragmentation).

• Previous experience reveals internal and external factors that influence the prospects for cooperation.

• Many different types of defense cooperation may be used to provide European leaders with a range of options to boost cooperation.

The Sorry State of European Defense Cooperation

European Defence Agency (EDA), November 15, 2022

“In terms of defence spending, the positive trend seems to be accelerating, in line with announcements from the majority of pMS [participating member states]. It remains to be seen whether pMS will follow a coordinated approach which would ensure greater efficiency and interoperability of armed forces, and avoid further fragmentation.”

Russia’s war of aggression in Ukraine has led to a transformational moment for European defense. Together, European nations have committed to nothing less than a pan-continent Zeitenwende, providing unprecedented military assistance to Ukraine, drastically hiking defense spending, and reversing long-standing defense policies. But the real test for European leaders is yet to come: Can they deliver lasting change in Europe’s ability to defend itself?

One important element of transforming European defense — and the focus of this paper — is the level of multinational cooperation in Europe. Increasing European defense cooperation promises political, economic, and military benefits for the nations involved. As EU high representative Josep Borrell explains: “We could avoid competing for the same products, competing for the same things with a limited industrial capability. We may have greater bargaining power; we could ensure the interoperability of the armies.”

Yet the benefits of European defense cooperation have proven elusive. Cooperation remains the exception, not the rule. The excerpt above from the European Union’s latest annual report on European defense spending captures the current European defense dilemma: Europe is spending more on defense but cooperating less. Or, as one headline bluntly summarized, “Record EU defence spending masks failure to collaborate.”

According to EU data, both the total amount of cooperative spending and the number of cooperative initiatives have decreased significantly over the last decade. As of 2020, cooperative equipment spending fell to 11 percent of total defense spending, far short of the European Union’s target of 35 percent and the lowest figure since EDA records began in 2005. The same trend applies to cooperative research and development (R&D) spending, which was 6 percent of overall R&D investment in 2020, far below the EDA’s 20 percent target and another record low. Figure 1 shows these trends.

▲ Figure 1: Defense Investment and Collaborative Spending in European Defense.

The EDA summarizes the situation in plain language: “Despite the increase in total defence expenditure, defence investments and defence equipment procurement, spending for collaborative projects does not seem to be a priority for the majority of MS [member states].”

European defense cooperation is in a sorry state. Worse still, it is not for want of trying: several transformational efforts have failed to improve European defense cooperation since the end of the Cold War.

The initial transformation of European defense forces after 1989 — through NATO and, from 1993, the European Union — fell short in Bosnia and Kosovo, where Europe relied heavily on the U.S. military. This led to further transformation efforts over the next decade, both through NATO and based on a new, dedicated European Security and Defense Policy (ESDP). Several flagship NATO and EU initiatives focused on developing capabilities through cooperation and collaboration.

However, operations over Libya in 2011 again revealed European shortfalls and continued reliance on the United States for strategic capabilities. Combined with the fallout from the 2008 global financial crisis, this led to another transformation attempt through two flagship cooperation initiatives: EU Pooling and Sharing, established at a 2010 EU Council meeting on defense, and NATO’s Smart Defence, launched at the 2012 Chicago summit.

When Russia seized Crimea in 2014, European nations realized they needed to refocus on collective defense, committing to drastically increase spending at NATO’s 2014 Wales summit. This imperative — combined with the United Kingdom’s departure from the European Union — provided an opportunity to roll out several new initiatives to transform EU defense cooperation, including the European Defence Fund (EDF) and Permanent Structured Cooperation (PESCO) projects.

The impact of three decades of political impetus and flagship initiatives on European defense cooperation is difficult to judge. While there have been several successful examples of defense cooperation — for example, in strategic lift and air-to-air refueling, a critical Libya shortfall — and long lists of NATO and EU projects, there are too many examples where European cooperation did not emerge where it could have, such as in the naval sector.

Ultimately, the EDA’s figures tell the story: cooperation within the European Union has markedly declined over the last decade, and the prospects are not good. This dilemma could not come at a worse time for Europe. Russia’s invasion of Ukraine requires stepping up defense on several counts: to continue supporting Ukraine, to bolster its own defenses to deter Russia from wider aggression, and to make up for the inevitable reduction in U.S. forward presence as American forces are required to deter an increasingly capable and belligerent China in the Indo-Pacific.

Yet while European defense spending has skyrocketed, most of it has gone toward urgent, off-the-shelf U.S. equipment, from ammunition to air defense. Continuing with this policy will not address the fragmented and piecemeal nature of Europe’s defense industrial base and defense forces. As one analyst puts it, Europe is “missing its moment” to embed cooperation and fix its fragmentation problem.

In summary, Europe has a dilemma: it is spending more on defense but cooperating less. The track record of European defense cooperation invites two questions:

1. Why is European defense cooperation so difficult?

2. How can it be made easier?

This report addresses these questions in two parts. It first shows that challenges to European defense cooperation are rooted in a deep-seated collective action problem with political, economic, and military dimensions. It then uses insights from collective action theory to identify several principles for solving Europe’s defense cooperation problem.

The Collective Action Problem in European Defense Cooperation

Tomas Valasek, 2011

“There is a great contrast between the co-operative way in which European countries fight wars, and the insular manner in which most prepare for them. . . . Yet in peacetime EU militaries revert to their national ways. . . . This is a very wasteful way to build armed forces.”

The basic challenge to European defense cooperation is known in economic and political theory as the collective action problem. This problem arises in groups where actors would be better off cooperating but are discouraged from doing so by individual incentives that work against joint action. The tragedy of the collective action problem is that all parties are worse off than they would have been had they been able to overcome the barriers to cooperation. These challenges to European defense cooperation have three dimensions: political, economic, and military (Figure 2).

▲ Figure 2: The Collective Action Problem in European Defense Cooperation. Source: Author’s analysis.

Political Challenges

Political factors are often judged the most important for success in defense cooperation. There are three basic political challenges to European defense cooperation: the strategic cacophony problem, the strategic fit problem, and the specialization dilemma.

The Strategic Cacophony Problem

The most significant challenge to defense cooperation is posed by sovereign imperatives that work against cooperation. In the European context, Hugo Meijer and Stephen G. Brooks have referred to this as the “strategic cacophony” problem, which they define as “profound, continent-wide divergences across all the domains of national defense policies, most notably threat perceptions.” Their analysis suggests this problem is so deeply embedded that overcoming it “would require a long-term, sustained and coordinated effort.” The practical results are described in the EDA’s 2022 CARD report: “Member States implement their [defense] plans to a large extent nationally. . . . Key drivers remain primarily nationally defined requirements.”

For EU member states, political factors are a double-edged sword as they work in both directions: cacophony and integration. The political imperative to make the EU project succeed provides a powerful incentive to cooperate with fellow travelers. At the same time, national sovereignty works in the opposite direction and may prevent a natural ceiling to ever closer cooperation, though both effects vary in potency between member states.

A different dynamic is present in NATO, which has focused more pragmatically on coordination and interoperability over the years rather than on cooperation and integration as an end in itself. By one assessment, NATO is “the only institutional framework that has fostered some degree of coordination in Europe (at the strategic, doctrinal, and capability levels) and partly contained Europe’s strategic cacophony.”

The Strategic Fit Problem

The political factors that influence multinational defense cooperation include shared goals, strategic culture, geography, and history. These boil down to the same problem: strategic fit. As one study on defense cooperation puts this:

In a [business] environment, a lack of “strategic fit” may lead to the reluctance of one company to procure demand objects with its competitors. . . . In the context of [cooperative] purchasing in defence, the requirement for a “fit” is more complex.

These factors may include political and ethical issues about the use of force in certain situations or trust and reliance on other nations. Furthermore, “as trust and ethical alignment is not static, this results in a dynamic development of cooperation in defence.”

In practice, this makes defense cooperation politically demanding and doubly difficult: not only must the stars align for two or more nations to decide that defense cooperation is viable to begin with, but they must work to maintain their strategic fit in the face of resistance and changing circumstances.

The Specialization Dilemma

Specialization — focusing on one product or domain to enhance efficiency — is the bedrock of economic theory and practice. Yet this principle is less prevalent in defense and security, which as a public good is less amenable to market principles.

The strategic cacophony problem also limits the extent to which nations can give up capabilities (or rely on others to specialize for them), which creates the specialization dilemma: national capitals know specialization would bring benefits, but they cannot follow through. Worse still, nations often end up limiting or removing some aspect of their forces by default rather than design due to national political or industrial issues.

Economic Challenges

All things being equal, defense cooperation should give European nations more bang for their euro. However, two main challenges have prevented the economic benefits of cooperation from being realized in practice: the fragmented nature of European defense and a defense spending bias toward short-term gains.

Fragmentation

The first part of the problem is fragmentation. When it comes to European defense, all things are not equal. The European defense landscape and market are heterogenous and economically inefficient due to strategic cacophony, which fragments demand and supply by favoring national defense forces and defense industries. Where cooperation emerges, fragmentation also contributes to inefficient work share, duplication of facilities, and multinational management structures that add friction and cost.

The result of fragmentation is incoherence and capability gaps. Europe’s military forces are not designed to fit together neatly like a jigsaw puzzle. A 2017 assessment showed EU militaries have 178 different types of weapon systems — 148 more than the United States, despite having half the budget. Several assessments have also revealed Europe’s high-end capability gaps in deterrence and defense.

Efforts to date have seen little progress or promise to overcome fragmentation:

No improved coherence of the EU defence landscape has yet been observed. . . . It remains to be seen whether pMS will follow a coordinated approach which would ensure greater efficiency and interoperability of armed forces, and avoid further fragmentation.

Short-Termism

Over the last decade, according to EDA figures, spending has gone up while cooperation has gone down. This indicates European nations favor spending on national or off-the-shelf equipment from non-EU countries over cooperation — especially equipment made in the United States.

While this approach has short-term merit in addressing the immediate threat cost efficiently, it also exacerbates the fragmentation problem. As the EDA summarizes:

There is overall a strong prioritisation of off-the-shelf equipment procurement in most MS which could be further reinforced by the current security context. If off-the-shelf procurements are conducted in an uncoordinated manner, this could negatively impact the coherence of the EU defence landscape and curtail European cooperation in the future.

Military Challenges

The challenges of defense cooperation in the military and defense acquisition context are threefold: defense planning, joint procurement, and multinational operations.

Defense Planning Alignment

One implication of the strategic cacophony problem is that national military requirements and defense procurement cycles are rarely aligned, which makes cooperative solutions even more difficult. The sheer variety in the size, scale, and capabilities of national defense forces across Europe compounds the already invidious problem of multinational defense planning.

Defense planning alignment is the key to unlocking the deepest forms of cooperation. The most significant multinational capability development projects — from the A400M transporter to the Eurofighter Typhoon — have occurred when several nations have prioritized the same requirements at the same time.

Joint Procurement

The increasing complexity of modern defense capabilities makes procurement in the national context highly challenging. However, CSIS’s Greg Sanders and Andrew Hunter note, “While single-nation acquisition programs are hard, international joint acquisition is harder.”

There are three main challenges to joint procurement. The first is the added complexity of managing international actors, which requires multinational organizations and structures that introduce cost and friction. The second is divergent national preferences regarding requirements, work share, and incentives for joint procurements, which are difficult to align. The third is the specificity dilemma. This arises because it is easier for nations to cooperate on low-specificity items that many of them could use (such as clothing, medical supplies, or small arms) rather than bespoke, high-specificity objects and systems (such as missiles, ships, and aircraft). Yet the gains from cooperation on high-specificity items far outweigh those in the low-specificity realm.

Multinational Operations

Modern military operations are also becoming increasingly complex and challenging as they integrate new technologies and doctrine, such as multidomain operations. These challenges are multiplied in the context of multinational operations for two main reasons.

The first is command and control (C2) of multinational operations, which incur setup and running costs that can be prohibitive, as shown by the European Union’s experience with battle groups and operational headquarters. In practice, multinational units also suffer from frictions related to language, strategic culture, sovereignty, and interoperability.

The second challenge to multinational military operations is the growing complexity of modern warfare. The natural conservatism of military organizations poses a serious challenge for European military cooperation in particular, given the disparities in technology and capability among them and with key allies (e.g., the United States).

Overcoming the Challenges to European Defense Cooperation

Letter signed by 10 European defense experts, November 7, 2022

“If Europeans really . . . want to become a credible player in the international security arena, they must do and spend more together. And they must do it now.”

The previous section showed that the challenges to European defense cooperation are rooted in a deep-seated collective action problem with political, economic, and military dimensions. This section considers how to overcome those challenges and solve — or at least improve — Europe’s defense cooperation problem.

It proceeds in three parts. First, it identifies three principles for overcoming the cooperation challenges above. These principles are based on the theory of resolving collective action problems. Second, it identifies key factors for improving the prospects of cooperation. These factors are drawn from the literature on multinational cooperation. Third, it identifies several different types of cooperation — all of which can be used to expand the options for European defense.

Key Principles

Principle 1: Use the power of small groups

Using the power of small groups may be the best way to enhance European defense cooperation and mitigate the political challenges in European defense. Collective action problems are less prevalent in small groups where free riders cannot hide, members are more inclined to trust each other, identification and enforcement are easier, and group identity or solidarity may be stronger.

The promise of small groups in European defense is not new, with several examples in NATO and the European Union (e.g., the Framework Nations Concept and PESCO). Several studies in recent years have highlighted the untapped potential of “country clusters,” “islands of cooperation,” “core groups,” and “differentiated cooperation” in European defense. Moreover, bilateral relationships and small groups are already widespread, as “the essence of defense cooperation in Europe is a web of hundreds of bilateral and minilateral collaborations.”

However, the full power and potential of small groups to transform European defense cooperation has not been realized. Existing small groups either emerge ad hoc or are not designed with defense cooperation in mind. Instead, small groups should become an organizing principle of European defense, taking advantage of the subregional dynamics that already exist across Europe. Small groups also have the potential to specialize and exploit division-of-labor benefits within them.

To go further, previous studies have identified areas where new or existing small groups could address capability gaps or adopt a regional focus. As small groups can form across a range of cooperation types (see figure 3), existing groups such as the European Air Transport Command (EATC) or the Joint Expeditionary Force (JEF) could also build on the strategic fit they have established to expand cooperation into other areas (e.g., codevelopment or procurement).

Principle 2: Normalize cooperation

Another way to overcome collective action problems is to normalize desired behavior among groups. Developing group norms, social solidarity, group identity, and reciprocity also encourages cooperation.

Treating cooperation as the default setting, rather than the exception, would mitigate many of the political, economic, and military obstacles to cooperation by aligning incentives and introducing a common strategic culture of cooperation. Cooperation can be normalized in European defense in three main ways: political prioritization, championing success, and leadership.

Make Cooperation a Political Priority

First, European capitals and institutions should take every chance to make cooperation a political priority. The EU Versailles declaration in March and the raft of initiatives that followed are a good example, linking the need to embed cooperation in European defense with the continent’s response to war in Europe. As EDA chief executive Jiří Šedivý stated, “At EU level we must now work to shift the balance and make cooperation the norm.”

However, even with the winds of crisis in their sails, there is still a danger that “the EU’s new defense bureaucracy’s proposals remain just that.” Brussels and EU capitals must maintain a laser-like focus on enhanced cooperation as the means to address the worsening security environment — and an end in itself.

In contrast to the EU Strategic Compass and Versailles declaration, neither the June Madrid summit declaration nor the new NATO Strategic Concept mentions the need to enhance cooperation among members. This also stands in contrast to NATO’s first strategic concept in 1949, in which cooperation between allies was a central theme.

With the July Vilnius summit on the horizon — and a historic seventy-fifth anniversary summit in Washington in 2024 — NATO has an opportunity to make cooperation its center of gravity once again by making it a clear political priority. One model for this is the 2014 Wales summit, at which allies agreed to the Defence Investment Pledge to spend at least 2 percent of their GDP on defense by 2024. A new cooperation pledge may provide the same political impetus and accountability that contributed to increased spending levels.

NATO allies should put as much emphasis on the need for European defense cooperation as they have on European defense spending. This shift could be significant for the United States given its diplomatic clout and its traditional wariness of European defense industrial cooperation.

Champion Success, Name and Shame Failure

Another strategy for normalizing cooperation in European defense is championing success stories while naming and shaming failure. With 18 projects and new members joining regularly, this approach to NATO’s High Visibility Projects (HVPs) has seen some success. However, there is a difference between new projects and those that have delivered results: the latter should be the focus of any high-visibility campaigns. The success stories of European defense cooperation are not widely known, and in some cases the data do not exist.

Publicly reporting on defense spending data can also change norms by encouraging good behavior and calling out bad. This makes nations more accountable to each other and their citizens. Both NATO and the European Union already do so annually, but their approach is limited in three ways.

First, the EDA’s figures are anonymized in its annual defense data report, which undermines their utility to both champion success and name and shame failure. Considering the attributed data can be accessed elsewhere on the EDA’s website and that NATO already attributes much of the same data annually, this anachronism should be corrected to unlock the benefits of sharing performance data and enhance transparency.

Second, both the European Union and NATO should report accurately on cooperative spending. EU figures are misleading because only half of the member states report their data. NATO should adopt the same practice as the EDA and report on cooperative spending while maintaining attribution.

Third, both NATO and the European Union should be more creative when reporting on levels of cooperation: spending data are far from the only measure and may be misleading. Other indicators would complement spending data and give a fuller picture, such as national cooperation policies, cooperative treaties, participation in multinational formations, equipment standardization levels, and NATO standardization agreement compliance.

Encourage Cooperation through Leadership

Leadership is important in overcoming collective action problems. All groups have leaders who are willing to bear the costs for reasons of status, history, strategic culture, and so on. Leaders can encourage cooperation in two main ways: through demonstrative leadership or by removing the burdens of cooperation for others.

Demonstrative leadership requires nations to assume group leadership roles or lead by example. Exemplar behavior could be expanded or replicated. Examples of nations that have prioritized and implemented cooperation include the Franco-German brigade, German-Netherlands tank battalion, Belgian-Netherlands naval cooperation, Benelux joint air policing, UK-France Combined Joint Expeditionary Force (CJEF), and UK “international by design” policy.

In contrast to the European Union’s PESCO projects, NATO’s 18 HVPs do not have appointed leaders, only participants. NATO should appoint lead nations to realize the collective action benefits of leaders. Leadership effects can also be exploited within international institutions. For example, NATO and the European Union could appoint senior officials charged with increasing cooperation levels, while a European Centre of Excellence for cooperation could share best practices among nations.

Leadership can also remove the burden of cooperation from others to encourage cooperation or mitigate perceived risks, such as Baltic air policing or support to Ukraine. Provision of security assurances can also encourage nations to cooperate, while larger nations can help cover short-term gaps for smaller nations while cooperative solutions come to fruition. This form of leadership also helps solve the specialization dilemma and could unlock the division of labor potential in European defense.

Principle 3: Incentivize cooperation (or discourage fragmentation)

A third principle for overcoming the cooperation problem in European defense is to incentivize good behavior using carrots or deter bad behavior using sticks. These can be implemented by a central authority or by social mechanisms such as rules and norms. Carrots and sticks should be designed for two purposes: to consolidate either the fragmented supply or demand of European defense cooperation.

Consolidate Demand

Josep Borrell explains the need to consolidate demand: “We need a reliable production capacity. But a reliable production capacity in the field of defence requires also a reliable demand.” The main way to consolidate fragmented demand is through collective approaches to setting strategy and military requirements, such as through NATO and the European Union. However, current cooperation levels suggest the existing approaches to demand consolidation are not meeting their potential.

These could be improved in two ways: setting multinational targets and using small groups to catalyze cooperation. First, defense planning capability targets are currently set on a default national basis by NATO and the European Union. This misses the opportunity to bake in consolidated demand from the outset and should be reversed: capability targets should be multinational by default and national by exception. For NATO, these changes could be instigated at the forthcoming Vilnius summit in July.

Second, small groups may present an untapped resource for consolidating demand on a geographical or functional basis (see above). To take advantage of this potential, small groups should be made a focal point for cooperation, both within NATO and the European Union and through their own forums.

Other avenues for demand consolidation include finding ways to incentivize the following:

• the long-term benefits of defense cooperation

• national specialization in specific capabilities or industrial expertise

• pooling and sharing to realize economies of scale

• improvements in interoperability and standardization

Consolidate Supply

There are three main ways to consolidate supply on the European defense market. The simplest is to reduce the institutional friction involved in cooperation to make multinational solutions more viable through dedicated structures for joint procurement or multinational formations. The most demanding way to consolidate supply is to create a single market for defense equipment — an approach that is unlikely to become politically viable any time soon.

A third way to consolidate the fragmented supply in European defense is to design structural incentives and regulation to reduce market inefficiency. Both the European Union and NATO have unique tools to generate such incentives.

As a political and economic union with financial and regulatory levers at its disposal, the European Union is uniquely positioned to incentivize cooperative supply in Europe. Given the “limited or even non-existent impact” of previous regulation intended to discourage national sourcing, the European Union in recent years has turned to economic incentives, including the EDF and other new and prospective initiatives.

However, given the state of European defense cooperation, the only question is whether these new incentives will be enough to overcome the powerful political incentives that work against cooperation. Several expert assessments suggest not. A cursory look at the numbers supports their case. But how much is enough? According to think tank experts Max Bergmann and Benjamin Haddad, as much as €100 billion in EU borrowing is needed to overcome the severe obstacles to cooperation. This figure is around the same level as that already provided in emergency assistance for Ukraine.

NATO has two types of economic incentives to encourage cooperation among allies: joint funding and common funding. Joint funding enables groups of allies to set up frameworks or agencies that NATO has political oversight over and runs on their behalf. A recent example designed to incentivize R&D cooperation is the Defence Innovation Accelerator for the North Atlantic (DIANA), which is complemented by a €1 billion innovation fund. As with the European Union’s incentive schemes, the amount of funding is modest. Now that the model is established, NATO leaders should increase innovation funding at the Vilnius summit. The DIANA model could also be applied elsewhere, such as by incentivizing participation in HVPs, through a joint cooperation fund. The fund could also be designed with a bias toward initiatives that address European gaps with European solutions and could become a focal point for NATO-EU cooperation.

The second economic tool NATO has for incentivizing cooperation is common funding, through which allies pool resources to provide alliance-wide goods. Several in-service and capability development projects already prove the effectiveness of common funding to enable and encourage cooperation. However, there is only one commonly funded HVP: the Multinational Multirole Tanker Transport project. This commonly funded, “cooperative by design” approach should become the default option for addressing common capability gaps identified by the NATO defense planning process. This would require a much larger common funding budget and extensive negotiation given the disparate views on the matter. Nevertheless, it could be put on the table at Vilnius. In the meantime, allies could review which HVPs are candidates for common funding.

Success Factors

The previous section applied principles for solving collective action problems to help overcome the challenges of European defense cooperation. This section surveys lessons from the literature on past examples of cooperation to identify key factors for success. It is worth noting the issue of what makes European defense cooperation initiatives more or less likely to succeed has not been widely studied.

These success factors may be divided into two types: endogenous (internally caused) and exogenous (externally caused). Both are summarized in Figure 3.

▲ Figure 3: Endogenous and exogenous factors in European defense cooperation. Source: Author’s analysis.

Endogenous Factors

The following endogenous factors are divided into four core factors and three enabling factors. The core factors for successful defense cooperation are as follows:

• Trust and solidarity. Trust and solidarity are “the basis for success” but must be developed over time. The sovereignty barrier to cooperation is not insurmountable but does not give way easily. Practical measures can help generate both, such as the delegation of authority arrangements in the EATC, the legal basis of the UK-France CJEF, and the JEF’s common policy directive and opt-in model. Building trust and confidence is easier with fewer nations participating, though the number of participants is related to the type of cooperation.

• Shared strategic culture and like-mindedness. Strategic culture, geography, and linguistic and cultural proximity have also been shown to play a part in emerging clusters of cooperation — for example, within PESCO. Like-mindedness (shared conceptions, policies, and priorities) has played a role in several initiatives, including the JEF. However, this factor is “important, not crucial” because nations who do not share strategic cultures can still cooperate effectively together. In fact, cooperative initiatives — particularly joint military formations — often develop a shared mindset, or esprit de corps, of their own.

• Clear goals and serious intent. According to one study, “All case studies confirm the importance of this factor.” A CSIS study shows that successful projects can satisfy a range of goals, whether political, operational, or economic — as long as they are agreed to early on. If it is true “governments that take defence seriously . . . will be more inclined to co-operate than others,” those nations most committed to investing in their defense will be the best candidates for cooperative projects — and vice versa.

• Military-strategic symmetry. Having forces of similar size and quality is important for cooperation but is “not a golden rule.” This factor is related to establishing trust, being like-minded, and agreeing on shared goals. One important aspect of symmetry is defense planning alignment, which goes hand in hand with the deepest forms of cooperation. Regardless of symmetry, standardization and interoperability act as “multipliers for cooperation” through aligning concepts, doctrine, and equipment standards.

The following factors indirectly enable cooperation rather than secure success:

• A level playing field for defense industry. Defense industry protectionism undermines the prospects for cooperation because it reduces the chances of joint procurements or cross-border collaboration and erodes trust. Another challenge is the mixed role of the U.S. industry in European defense.

• The role of institutions. International institutions and regimes — whether formal (e.g., NATO or the European Union) or informal (e.g., minilateral groups) — are designed to overcome many of the barriers to cooperation. Institutions also enable the collective action benefits of large groups, such as increased resources or coalitions of the willing. However, bottom-up cooperative initiatives can be just as viable as top-down initiatives driven by institutions — both are needed.

• Cost savings. Economic factors are often critical to the political argument for justifying cooperation in the first place. This argument is generally one of cost savings and efficiency. For example, the European Sky Shield air defense initiative purports to offer “a flexible and scalable way for nations to strengthen their deterrence and defence in an efficient and cost-effective way.”

Exogenous Factors

Endogenous factors are an important limitation and enabler for the prospects of European defense cooperation. However, external factors often trump internal ones. History shows the power of exogenous forces and shocks in shaping the environment and the policies that result.

This point is made in the context of European defense in a RAND report on European strategic autonomy, which concludes that “EU-led initiatives in pursuit of European strategic autonomy in defence are important, but its shape will also be determined by external influences.” This effect can be seen in European defense spending levels, which rose significantly after Russia’s 2014 invasion of Crimea and in the context of an isolationist president in the United States.

Example exogenous factors that may influence the prospects for European defense cooperation over the next decade include the following:

• the global economic outlook

• the war in Ukraine

• levels of regional and global aggression and conflict

• the policies of revisionist actors, such as Russia and China

• the policy of key allies such as the United States (toward Europe and regarding European defense in particular), the United Kingdom, and Turkey (regarding EU defense)

• the credibility and policies of NATO

• unknown future shocks and surprises

Types of Defense Cooperation

There are many different types of defense cooperation. This final section outlines a typology for understanding the landscape of defense cooperation.

The wide variety of cooperation types gives European defense leaders a range of options to boost cooperation. Knowing this fact may help overcome the challenges of European defense cooperation as leaders may tailor initiatives to the specific situation and constraints of the participants.

The typology is based on four characteristics of cooperation, shown in Figure 4:

1. Form: Form refers to the structure of cooperation, from loose association to tight integration. Forms depend on the degree of participant interdependence.

2. Function: Function refers to the purpose of cooperation, from establishing joint military units to the joint procurement of capability.

3. Venue: Cooperation occurs through formal multilateral institutions (such as NATO and the European Union), small groups (minilateral), or bilateral relationships.

4. Benefit: Cooperation has political, economic, and military benefits. The benefits of defense cooperation depend on its nature and may provide various benefits. For example, multinational military units may provide more military or political than economic benefit, while joint procurements may yield more economic benefit.

▲ Figure 4: The Four Characteristics of Defense Cooperation. Source: Author’s analysis based on multiple sources.

Conclusion: Now or Never

Europe has a defense dilemma: it is spending more on defense but cooperating less. This is despite three decades of flagship political initiatives designed to improve European defense cooperation. There is no single reason for this failure. It is a result of a deep-seated collective action problem entrenched throughout the political, economic, and military dimensions of the European defense landscape.

Equally, there is no silver bullet. Even the radical change in the threat environment since Russia’s invasion of Ukraine may be counterproductive if new defense spending is not directed toward European cooperation.

Ultimately, the solution is simple: European capitals must prioritize cooperation over other objectives, though this is easier said than done. However, understanding the nature of the problem can inform the solutions in three ways.

First, conceptualizing European defense cooperation challenge as a collective action problem reveals three principles that European leaders and institutions can apply to overcome the challenges:

• Use the power of small groups

• Take steps to normalize cooperation

• Design mechanisms to incentivize cooperation and discourage fragmentation

Second, previous experience reveals internal and external factors that influence the prospects for cooperation. Endogenous factors include trust, like-mindedness, clear goals, and symmetry, alongside other enabling factors. Exogenous factors include external threats, the policies of key allies, and the unexpected shocks that so often shape international politics.

Finally, there are many different types of defense cooperation. Knowing this may help overcome the challenges of European defense cooperation, as initiatives can be tailored to the specific situation and constraints of the participants to provide European leaders with a range of options to boost cooperation.

Europe has solved collective action problems before. The success of the European Union in embedding cooperation across a wide swath of European life, from its origins in the coal and steel community to recent advances in digital services laws, demonstrates the power of shared identity to overcome the constraints of national polices and borders. The same goes for NATO, an organization founded on the power of cooperation for the common good.

Europe can solve its defense cooperation dilemma, but it needs to think big and act fast. Russia’s invasion of Ukraine has provided a wake-up call for European leaders and the imperative they need to transform European defense. They cannot miss their moment: it is now or never.

Sean Monaghan is a visiting fellow in the Europe, Russia, and Eurasia Program at the Center for Strategic and International Studies, where he focuses on NATO, European security, and defense. His career as a civil servant in the UK Ministry of Defence has focused on international defense policy, including NATO, the European Union, and the United States.