Against the backdrop of Russia’s war in Ukraine and rising aggression across the globe, allies and partners are ramping up defense investment, but increased spending is only part of the equation. Both the United States and Europe are failing to match defense priorities with industrial output. US and European efforts to increase munition production fall drastically short of the needed quantity to both sustain Ukraine’s war effort and replenish allied stockpiles. Russia is producing nearly three times more artillery munitions than allied industries. 

Allies are finding that scaling up industrial production is more difficult than expected. Decades of slashed defense budgets have left allied defense industrial bases vulnerable. As war rages in Europe and allies face increasingly depleted stocks, allies should use the NATO Summit next week in Washington as an opportunity to send clear demand signals to industry and develop more coordinated, effective industrial strategies.  

In light of growing vulnerabilities, US and European policymakers alike are courting stronger relationships with industry—evidenced by the United States and European Union advancing their own, first-ever defense industrial strategies in 2024. However, these strategies do not fully address the critical vulnerabilities facing allied militaries. The European Defense Industrial Strategy (EDIS) is a positive step in strengthening Europe’s fragmented defense industrial bases, but this go-at-it-alone approach alienates Europe’s closest ally, the United States, and fails to tap into needed industrial capacity across the Alliance.

Instead, the United States and Europe should turn to NATO to bridge the gap and produce coordinated efforts toward defense production, in line with preexisting NATO policies and procedures designed to do just this, such as the Defense Production Action Plan. Current NATO efforts underscore the Alliance’s prioritization of defense industry issues, but due in part to insufficient buy-in from some allies, these plans fall short of orchestrating the cooperation necessary to address critical allied vulnerabilities.

Greater NATO involvement in allied industrial strategies could strike a balance between mitigating potential vulnerabilities in defense capacity, while improving defense industrial competency in the long term. This approach should: 

• Increase joint procurement efforts. NATO should orchestrate more allied defense cooperation agreements, such as the European Sky Shield Initiative, which seeks to coordinate European air defense purchases into one common approach. Such initiatives encourage greater interoperability and allow for specialization across allied defense industrial bases. For example, NATO could coordinate a broader joint procurement effort to produce more critical military equipment, such as unmanned aerial vehicles, across the Alliance.

• Encourage multiyear procurement and acquisition contracts. The United States and European allies must match means to ends, convincing industry that rhetoric and spending pledges will manifest into long-term investments. Allies, under the direction of the NATO Defense Planning Process and the Conference of National Armaments Directors, should invest more heavily in multiyear procurement and acquisition contracts to increase demand signals needed to support the current shift in defense prioritization.

• Enhance allied partnerships on defense production. Rather than focusing on economic competition, allies should look for ways to reduce bureaucratic hurdles to transatlantic defense industrial cooperation. NATO’s Defense Industrial Production Board should look for ways to match industrial synergies across the Alliance to maintain its warfighting edge. In order to achieve this aim, allies should seek to reduce national requirements that make it difficult for allied companies to break into national markets.

• Eliminate onerous export controls between allies. The United States should seek to eliminate export controls and licensing requirements for exports and transfers on select defense equipment and technology for certain NATO allies. The National Defense Authorization Act for Fiscal Year 2024 shifted US policy on export controls and the International Traffic in Arms Regulations (ITAR) regulatory regime to provide more flexibility for London and Canberra under the Australia-United Kingdom-United States partnership known as AUKUS. In line with this recent shift, the United States should also seek to expand exemptions to ITAR for NATO allies such as France, Germany, and Sweden.

• Invest in next-generation technologies. The Alliance must invest in integrating new technologies into its military assets. Allies should look to foster deeper research and development partnerships that cut across the Atlantic. In the short term, allies should look to NATO’s Defence Innovation Accelerator for the North Atlantic and Innovation Fund to prioritize research partnerships that promulgate technological advancement and deepen industrial connections. In addition, allies should seek to deepen cooperation on military innovation projects to harness the unique skills of individual allies.

The United States and Europe should undoubtedly invest more in their own defense industrial bases in the long term. However, in the short term, allies and partners should prioritize integrating crucial efforts to address critical vulnerabilities, ramp up defense industrial capacity to speed and scale, and reduce bureaucratic hurdles and protectionist measures. As the United States and Europe court industry executives, allies and partners would do well to prioritize greater investment in NATO’s industrial policies and procedures as an important deliverable at the Washington summit to mitigate critical vulnerabilities that place the Alliance at a disadvantage to its adversaries.

Kristen Taylor is a program assistant with the Transatlantic Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security.

NATO’s seventy-fifth anniversary is a milestone in a remarkable story of reinvention, adaptation, and unity. However, as the Alliance seeks to secure its future for the next seventy-five years, it faces the revanchism of old rivals, escalating strategic competition, and uncertainties over the future of the rules-based international order.

With partners and allies turning attention from celebrations to challenges, the Atlantic Council’s Transatlantic Security Initiative invited contributors to engage with the most pressing concerns ahead of the historic Washington summit and chart a path for the Alliance’s future. This series will feature seven essays focused on concrete issues that NATO must address at the Washington summit and five essays that examine longer-term challenges the Alliance must confront to ensure transatlantic security.

Further reading

Tue, Jun 25, 2024

Four steps that NATO’s southern flank strategy needs to succeed

New Atlanticist By Jason Davidson

NATO’s first southern flank strategy is coming together for the upcoming Washington summit. But additional spending in four specific areas is needed, too.

Europe & Eurasia Italy

Thu, Jun 20, 2024

Rethinking the NATO burden-sharing debate

New Atlanticist By Valbona Zeneli, Philippe Dickinson

As more allies cross the threshold of spending 2 percent of their gross domestic product on defense, it’s time for the conversation to evolve.

Europe & Eurasia NATO

Mon, Jun 3, 2024

National resilience is a crucial part of defense. Here are the countries doing it right.

New Atlanticist By Elisabeth Braw

Learning from the allies that are already taking action will give other NATO members that decide to enhance their resilience a leg up.

Europe & Eurasia National Security

Image: Lithuanian army infantry fighting vehicles Vilkas are displayed during presentation in Pabrade military field, Lithuania September 6, 2022. Vilkas infantry fighting vehicles (IFVs) have been made by a German manufacturer ARTEC, according to the requirements of the Lithuanian Land Force. Vilkas are Boxer-based and equipped with Israeli-made turrets, US-made 30 mm MK-44S cannons and Israeli-made anti-armor Spike LR missiles. REUTERS/Ints Kalnins