The EU has redefined its deterrence strategy through the Ukrainian factory. This approach also applies to the southern flank

The focal points of European security and the war economy have undergone a structural shift that no longer allows for rhetorical shortcuts: Europe is ceasing to be Washington’s logistical auxiliary and is becoming – out of necessity rather than doctrinal design – the financial, industrial and strategic guarantor of Ukraine’s defence and of its own conventional deterrence. This transition is not the result of academic planning, but of the stark realisation that the transatlantic balance has shifted irreversibly. With the United States absorbed by the strategic contest in the Indo-Pacific and by domestic legislative dynamics that render budgetary flows intermittent, the governments of the Old Continent have been called upon to fill a void amounting to billions of euros, millions of rounds of ammunition and a radical reconfiguration of manufacturing supply chains. The shift from emergency donations of stock-piled equipment to integrated multi-year planning represents the true turning point of this historic phase. Between 2024 and 2026, the European Union has had to transform its regulatory framework into an instrument of defence industrial policy. Regulation (EU) 2024/792 of 29 February 2024, establishing the Ukraine Facility, has earmarked 50 billion euros until 2027 – divided between 33 billion in sovereign loans and 17 billion in non-repayable grants – to ensure Kyiv’s macro-fiscal stability. But it was in the realm of extraordinary finance that the most significant rift occurred: at the G7 summit in Borgo Egnazia in June 2024, under the Italian presidency, the $50 billion Extraordinary Revenue Acceleration (ERA) mechanism was launched, to which the European Union is contributing up to $35 billion, as approved by the Regulation on the Loan Cooperation Mechanism of October 2024. Debt servicing does not place a burden on European taxpayers, but instead capitalises on the extraordinary net income generated by the approximately €210 billion in sovereign assets of the Central Bank of the Russian Federation held at the central depository Euroclear in Belgium, thereby transforming a lever under international financial law into a steady flow of between 2.5 and 3 billion euros per year for military procurement and reconstruction.

This multilateral framework is underpinned by the four major European economies – Germany, France, the United Kingdom and Italia – which have progressively anchored their support to ten-year bilateral treaties signed within the framework of the G7 Joint Declaration of Vilnius. London, moving ahead of the continental capitals in January 2024, formalised its bilateral agreement by allocating annual packages totalling over 3 billion pounds, focusing on Storm Shadow long-range cruise missiles, maritime drones and guided munitions. In February 2024, Berlin and Paris marked a decisive turning point: Germany allocated over 7 billion euros annually in bilateral military aid, consolidating the supply of IRIS-T SLM air defence systems and Panzerhaubitze 2000 self-propelled howitzers, whilst France formalised commitments totalling 3 billion euros for the delivery of Mirage 2000-5 fighter aircraft, SCALP-EG missiles and CAESAR wheeled self-propelled howitzers. At the same time, on 24 February 2024, Italia signed the Security Cooperation Agreement in Kyiv, committing national support to the supply of advanced SAMP/T surface-to-air missile systems in coordination with Paris, radar technologies and electro-optical sensors, and paving the way for industrial agreements led by national champions such as Leonardo and Fincantieri to restore naval capabilities, cyber security and secure components.

However, the effectiveness of financial leverage is hampered by the rigidity of the manufacturing sector. For three decades, the European Defence Technological and Industrial Base (EDTIB) has been geared towards low-intensity expeditionary operations, resulting in a chronic shortage of hot-forming presses, automated assembly lines and, above all, essential chemical precursors such as nitrocellulose, exogen (RDX) and octogen (HMX). Prior to 2022, Europe’s total production capacity for standard NATO 155 mm artillery shells did not exceed 300,000 units per year. Through the ASAP (Act in Support of Ammunition Production) instrument – funded with €513 million from the EU budget and capable of mobilising over €1.4 billion in total investment across the value chain – and the EDIS/EDIP strategy approved at EU level, the continent’s industrial giants – Rheinmetall, KNDS, BAE Systems, Saab and Leonardo – have launched an expansion plan that has increased Europe’s nominal capacity to over 2 million rounds per year, with the aim of achieving strategic self-sufficiency by 2027.

However, the most significant change from a tactical and logistical perspective is not taking place on the firing ranges of northern Germany or in the French valleys, but directly within Ukraine’s sovereign borders. The inherent vulnerability of cross-border lines of communication passing through sorting hubs in Poland, Slovakia and Romania has necessitated an advanced relocation: European manufacturers no longer merely ship finished hardware, but are establishing operational joint ventures in underground and bunkerised facilities on Ukrainian territory. Rheinmetall Ukrainian Defence Industry LLC, KNDS’s technical hubs and BAE Systems’ forward workshops have taken on in-house the repair and licensed assembly of Lynx infantry fighting vehicles, CV90 hulls and Leopard armoured platforms, reducing the downtime of combat units from months to a few days and transforming Ukraine into a forward hub for European military manufacturing. On the tactical combat front, the war of position along the more than 1,000-kilometre front line has accelerated an unprecedented technological evolution. The saturation of the airwaves by Russian electronic warfare systems, such as the Zhitel, Borisoglebsk-2 and the Volnorez omnidirectional jamming devices, has neutralised the effectiveness of commercial drones operating on standard radio frequencies (868–915 MHz and 2.4–5.8 GHz). The European and Ukrainian technological response has given rise to two converging trends: the large-scale deployment of First Person View (FPV) drones guided via fibre-optic micro-cables – capable of transmitting uncompressed 4K video signals and flight commands over cable lengths of up to 15–20 kilometres with zero electromagnetic emissions and total immunity to electronic jamming – and the integration of low-cost edge-AI microprocessors for autonomous visual tracking of the target’s silhouette during the terminal phase of the attack. Faced with these RF-signal-free threats, short-range air defence has been redefined through automated burst-fire systems with programmable 30 mm and 35 mm airburst munitions, such as Rheinmetall’s Skynex system, capable of creating walls of tungsten fragments that destroy the attacking swarm whilst preserving costly interceptor missiles for ballistic and cruise missile threats.

This combination of industrial, financial and technological transformations has a direct geopolitical impact on the Kremlin’s stance. Beyond the constant attacks, Moscow’s doctrine – historically based on the assumption that the political fragmentation of Western democracies and the depletion of NATO’s reserves would inevitably pave the way for a surrender by attrition – is now confronted with a European industrial landscape that has been stabilised over many years, complemented by a network of legally binding bilateral agreements between London, Berlin, Paris, Rome and Kyiv. Any future negotiating table or attempt to freeze the conflict cannot ignore this new reality: Europe’s eastern borders are guarded by an integrated conventional deterrent structure, underpinned by flows of sovereign capital and an autonomous production capacity that cannot be dismantled by a single electoral cycle. For Europe, the challenge over the next five years is not to decide whether to take the lead on its own security, but to demonstrate the fiscal discipline and political cohesion necessary to consolidate that leadership. Which – it must be said – will be needed not only on the eastern flank, but also on the southern one. It remains to be seen how tensions in the Middle East will develop and whether these tensions will bring further instability to Africa. Should this happen, the model adopted in the East will need to be replicated.