At the Ankara Summit, Europe gears up its defence spending

Allied leaders arrived in Ankara prepared to demonstrate the tangible progress they had achieved in boosting defence spending since the Hague Summit a year earlier, where they agreed to allocate 5% of their gross domestic product (GDP) to defence and defence-related expenditure by 2035. The summit, held from 7 to 8 July, marked an important point in Europe’s evolving security identity. This came at a critical juncture amid doubts regarding the durability and future trajectory of the transatlantic relationship.

According to NATO data on defence expenditure, Germany, Poland, and the Baltic states are leading in defence spending in Europe. Typically, one observes how the European Commission’s Rearm Initiative and Safe highlight Europe’s institutional response. German chancellor Friedrich Merz promised a more European alliance, while the Trump administration has added pressure on Europeans to increase defence budgets and reduce their dependence on US technology.

Notice how the European allies pledged hundreds of billions in new defence commitments across the continent. Secretary General of NATO, Mark Rutte announced new deals and partnerships across allies and industrial bases, unveiling new multinational partnerships in surveillance, space, command and control, air platforms, submarines, and a massive drone and counter-drone marketplace. These are valued at $50 billion. Still, the question remains: is Europe actually building an independent defence industrial base or just paying more for American weapons assembled on European soil?

Let us start by examining what Germany is doing to beef up its arsenal. Its acquisition and deployment of the Israeli Arrow 3 system is the flagship contribution. It was launched on 13 October 2022 by then-chancellor Olaf Scholz in the wake of Russia’s full-scale invasion of Ukraine. Its four main goals comprise:

• Rapidly fill capability gaps in European air and missile defence;
• Enable joint procurement of systems for cost savings and faster delivery;
• Improve interoperability, training, maintenance, and logistics; and
• Strengthen the European contribution to NATO’s Integrated Air and Missile Defence (IAMD).

Moving on, let us discuss the European Sky Shield Initiative (ESSI) concept. This promotes a layered approach using existing or near-term systems. It is a Germany-led multinational framework launched in October 2022 to strengthen Europe’s ground-based air and missile defence capabilities through joint procurement and coordination.

The primary goal is to create a multi-layered, integrated European air defence network that fills capability gaps, enables faster and more cost-effective acquisitions, and reinforces NATO’s Integrated Air and Missile Defence system. By comparison, Israel’s multi-layered Arrow 3 defence concept intercepts intruder missiles outside the atmosphere. Arrow 3 was acquired by Germany as a cornerstone of the initiative’s upper tier. ESSI is complementary to, but distinct from other efforts, such as more recent European discussions on developing indigenous interceptors or broader anti-ballistic coalitions involving Ukraine. It remains primarily a pragmatic procurement and cooperation vehicle rather than a fully integrated single-command system.

Many have praised Germany’s commercial link to Israel, particularly the acquisition of the Arrow 3 system in late 2023, valued at approximately €3.5-4 billion:

1. Shared training, maintenance, and logistics;
2. Integration into broader NATO structures while allowing national flexibility in contributions; and
3. Concrete steps include coordinated Patriot missile purchases, with individual nations ordering IRIS-T SLM units through the framework.

It provides Germany, and by extension parts of Europe, with interception capability against medium- and intermediate-range ballistic missiles. Its sole contractor is Israel Aerospace Industries (IAI), with US involvement through Boeing and Israeli subcontractors, including Elbit and Rafael. Recently, three sites have been planned in Germany for nationwide coverage, with full operational capability targeted around 2030.

As a background note, Germany acquired Arrow 3 as a direct response to the ballistic missile threat demonstrated by Russia’s war against Ukraine and as a major contribution to the European Sky Shield Initiative (ESSI). It sits as the upper layer above medium- and long-range systems such as IRIS-T SLM and Patriot.

In conclusion, the Ankara Summit this year demonstrated beyond doubt that NATO remains resilient despite recent disagreements among its members. Europe is gradually evolving into a stronger and more capable security actor within NATO, contributing to collective defence and thereby reinforcing the Alliance. Rather than pursuing strategic autonomy, most European nations are pursuing greater strategic responsibility, developing their military, industrial, and technological capabilities to shoulder a greater share of regional security while preserving the transatlantic alliance.

This year, the Ankara Forum focused on Allied progress towards reaching NATO’s historic 5% defence investment plan and on how this money is being put into action to generate increased defence production, cooperation, and joint procurement. Private capital providers are being sought to enable non-traditional suppliers, including small and medium-sized enterprises, to scale operations by financing product development and production. Private capital providers can act as force multipliers for Allied defence spending by attracting additional capital to grow defence industrial capacity, increase production across the Alliance, and meet Allied capability requirements.