WSJ reports on Europe’s defence bottlenecks as war threats intensify

In an article on 29 September, the Wall Street Journal highlighted the urgency for Europe to expand its defence capabilities in the face of increasing threats from Russia, and pointed to a number of strategic hurdles that are hampering the ability of European defence company’s to meet demand.

European countries have raised defence budgets to levels not seen since the Cold War, driven by Russia’s aggression in Ukraine. Danish Prime Minister Mette Frederiksen underscored the urgency, saying, “We are stuck in a mindset of peace, thinking that we have plenty of time. We must make the logic of war part of our own foundation and ask ourselves, ‘What do we need?’ and then produce it.” 

As the article highlights, this ambition faces significant challenges, even in countries leading the effort to support Ukraine. For example, a factory in Elling, Denmark, was bought in order to resurrect artillery shell production, but is still empty nearly a year later. Political wrangling over the tender process and bureaucratic delays have pushed back full production capacity until late 2026. 

Another example highlighted in the article is from ASD member, Diehl Defence, which has faced significant hurdles in expanding its German production facility for the Iris-T missile-defence system, a critical asset in Ukraine’s air defences. Helmut Rauch, Diehl’s CEO, criticised the slow approval process, saying, “Officials don’t understand … that we are in a critical political situation in Europe.”

The article also highlighted financial challenges faced by European defence companies, particularly smaller firms in the supply chain. Banks have been hesitant to lend to defence companies, further complicating efforts to ramp up production. Lorenzo Mariani, co-general manager of ASD member, Leonardo, emphasised the impact of these financial barriers, saying that “banks are damaging small and midsize companies.” Additionally, European environmental, social, and corporate governance regulations have made it more difficult for companies to secure investments, especially compared to the US. 

The Wall Street Journal article concludes with a warning about a "vicious cycle" precipitated by non-European defence procurement: "European defense companies, short of investment, struggle to deliver, prompting European governments to buy instead from American suppliers. That in turn means less money to European manufacturers, which risk falling even further behind in the race for new military and technological advances.

European Union countries directed 78% of their procurement spending to suppliers outside the bloc, including 63% to the US, according to the most recent EU statistics available, covering June 2022 to June 2023."