Europe takes radical steps to boost production; ‘There is no other option’
FLAMANVILLE, France—Early this year, a top European Union official made an eye-catching proposal: A €100 billion public fund that would curb Europe’s reliance on U.S. defense manufacturers, who make nearly two-thirds of Europe’s military hardware. The cash could subsidize European companies to develop and manufacture more weapons at home at a time when the continent faces a growing threat from Russia.
Many officials were skeptical. For decades, the EU had been fighting European governments to limit state support for domestic companies. Now, one of its leaders was calling for taxpayers’ money to finance them.
The idea of such large-scale funding for the defense industry is still under discussion. But in March, the bloc unveiled a €1.5 billion plan aimed at buying more of its defense equipment domestically. And when European leaders met soon after for a summit in Brussels, a central topic of their talks was how to boost funding further for the continent’s defense industry, and whether to do that through debt.
The effort for the defense industry is just one example of Europe’s new willingness to break longstanding taboos in a bid to build up domestic businesses. The EU is aiming to keep the continent’s industrial base competitive with the U.S. and China, whose governments are lavishing firms with hefty subsidies.
At stake is Europe’s manufacturing sector, the bedrock of its economy, which is losing ground in the race to build the industries of the future. Chinese electric-car companies are starting to flood Europe with affordable EVs. Europe’s share of global semiconductor production, critical for high-tech products including cars, is a fraction of that of the U.S.
or China. And the U.S. is expected to surpass Europe in
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