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FIREPOWER: Why European arms makers are in Ukraine
FIREPOWER: Why European arms makers are in Ukraine

Euractiv

time2 days ago

  • Euractiv

FIREPOWER: Why European arms makers are in Ukraine

In today's edition: SAFE second chance, NATO dilemmas, fighter jet season. Euractiv is part of the Trust Project Take a free trial of Euractiv Pro to get FIREPOWER in your inbox. Good afternoon and welcome back to Firepower, SToday we're taking a look at the issues and top topics that policymakers and senior leaders are facing this month, as everyone in the Brussels bubble takes time off and prepares for end-of-summer rentrée announcements. Scroll down to read about what's brewing inside the EU's grey offices and NATO's glass-walled HQ in Brussels this month. Discussion points include getting more weapons to Ukraine, key decisions on high-end fighter jets, a new soft 15 August deadline to put in for EU defence loans, and a NATO rethink of several pieces of its air-defence plans. A programming note: Firepower will be taking a break over the next three weeks and will return on 29 August . Until then, we've got you covered with the latest defence news here. Firepower's team wishes you a great summer. German arms makers see opportunity in Ukraine Seemingly every big defence company has set up an office in innovative Ukraine, and some – such as industry giant Rheinmetall – have launched full production sites in the country. Sales to Ukraine's embattled military aren't the only thing driving interest. Europe's defence contractors have also realised that the country is well on its way to becoming an important arms exporter, as Reiner Perau, the chairman of the German Chamber of Industry and Commerce in Ukraine, told Firepower. Once the war is over, Ukraine appears likely to turn into a significant defence vendor and not only a voracious consumer, and firms are looking to be of it. EU-based arms makers and officials usually cite access to real-life battle testing and advanced technological knowledge when discussing their expansion into Ukraine. Rheinmetall launched a joint venture with a Ukrainian firm in 2023 and secured a contract to build an ammunition factory. Britain's BAE Systems founded a similar joint enterprise shortly before. The industry – more embedded in the Ukrainian defence sector than ever before – is now looking ahead. For now, though, Kyiv is only considering easing strict arms export restrictions in order to attract cash from Europe's new military rearmament spending spree. 'It makes a lot of sense that if this war will eventually come to an end, to be part of this [national] ecosystem and then to grow together with Ukrainian partners to export systems from Ukraine again,' Perau said. [Roman Chop/Global Images Ukraine via Getty Images] SAFE's new 'soft' deadline: The Commission has given the nine remaining countries that haven't asked for loans from the EU's €150 billion SAFE programme until 15 August to put in requests, two sources close to the file told Firepower. We first reported that Brussels sent a letter to capitals last Friday urging them to join the scheme. Ireland could be among the late joiners. Denmark and Slovenia are still considering opting in. First shopping lists unveiled: Details about what EU countries will buy with the SAFE money aren't due until November, but Firepower has already caught wind of some preliminary plans. Bulgaria's shopping list includes buying IRIS-T medium and long-range missiles through an existing agreement with Germany. The country also plans to buy French-made Caesar artillery systems under another existing deal with France, Croatia and Estonia. Another item on the list: 155mm artillery shells for Ukraine, to be purchased along with several other EU countries. Latvia, meanwhile, wants to channel the money into existing defence procurement deals and is also eyeing dual-use projects with the country's interior, transport and health ministries. Portugal wants to use SAFE loans to buy ammunition, land and naval systems, and upgrade cyber capabilities. SAFE cash for arming Ukraine: A number of EU capitals also hope to use SAFE funds to replenish Ukraine's military stocks. The clock is ticking, and a coalition of Ukrainian defence manufacturers known as Tech Force Ukraine is hoping to persuade EU countries to include Ukraine in their SAFE borrowing plans. The industry group will host a forum on 28 August with EU governments, the UK and Norway, and defence companies to foster new joint defence projects involving Kyiv. For EU defence ministers, the summer break might be a short one. They're also expected to discuss other ways to pay for military aid for Ukraine at the end of August in Copenhagen. This month, the NATO military alliance is more directly and openly coordinating the movement of arms to Ukraine than ever before, in particular by sending some of the Europeans' few remaining billion-dollar Patriot air defence systems. Canada and others are expected to follow suit after the Nordic countries and the Netherlands promised to send US-made military kit to Ukraine. That comes as Trump tries to pressure Russia into a ceasefire, which remains elusive. But shipping Patriots to Kyiv has a downside: Worsening Europe's large air-defence gap, since getting replacements will take months if not years. Keep an eye out for who else gets bumped down the waiting list to prioritise Kyiv; Switzerland took the first hit. Lithuania and Latvia have again pleaded for stronger air defences in the Baltic region as drone threats increase. NATO chief Mark Rutte is tasked with finding an answer. In the meantime, top NATO officials suggested that governments invest in new weaponry like drones and focus on combat efficiency rather than legacy weapons systems. But experts warn those expensive systems can't be replaced by drones. Senior NATO military officers and diplomats know they'll need to rethink current alliance defence plans to keep them up to the challenge once Washington unveils in the autumn how many of its roughly 80,000 US troops currently stationed in Europe will be heading elsewhere. For this, they are counting on everyone ramping up spending towards 5% of GDP to buy the kind of military hardware needed to replace the Americans. Another review is already ongoing: Allies and the NSPA, NATO's procurement arm, are rethinking their choice of new surveillance aircraft to replace the current fleet of AWACS after the Pentagon announced plans to pull the plug on its orders. The goal for the alliance in all the shuffling, or at least how several leaders have framed it: Make NATO More Lethal. That also means reshuffling top positions Big year for fighter jet news [Nicolas Economou/NurPhoto via Getty Images] The future of one of Europe's biggest defence development projects – the FCAS next-generation fighter programme, plagued by years of industry infighting – will likely be decided at a meeting of top French and German ministers on 28 August . Neither Berlin nor Paris have much leeway to negotiate beyond getting the top aerospace contractors in line and pushing forward with the programme (look for more on this from Euractiv soon). Fighter jets have been big news so far in 2025, especially since Trump returned to the White House. Concerns about a possible 'kill-switch' on the F-35, or the prospects for a future 'toned-down' export of the just-launched American stealth F-47 jet programme, made waves in Europe. FCAS drama burst back into public view earlier this spring. Just this week, Spain opted out of acquiring F-35s in favour of buying more Eurofighters and future FCAS jets. Spain is a partner in the FCAS programme alongside France and Germany. In July, Portugal's defence minister said that his country is looking to join one of Europe's two next-generation fighter jet projects – FCAS or the UK-led GCAP programme. The Swiss, already caught off guard by an unexpected price hike on their F-35 order, are now contemplating whether more Trump tariffs will make the jets financially (and politically) unfeasible. Others were quick to appease Trump by placing orders for additional F-35s, including Belgium, Romania and the UK. For Ukraine, quick delivery of F-35s is important, since Belgium has promised its current F-16s once the new aircraft arrive. Grinding war in Ukraine Changes on the frontline could only happen with a 'shift in international support or domestic political developments', Juraj Majcin, an analyst at the EPC told Firepower. And neither Juraj Majcin, an analyst at the European Policy Centre, nor Matthew Savill, director of military sciences at the RUSI, expect a breakthrough in the coming weeks. Trump's initiative for European allies to cover the cost of US defence equipment sent to Kyiv could close some gaps in Ukraine's air defences. But it's unclear whether $500 million packages of military equipment pledgedto Ukraine by Denmark, the Netherlands, Norway and Sweden comes on top of existing European commitments, or is a redirection of aid already pledged to Ukraine. The dynamics of the air war have tilted against Ukraine. Kyiv is facing intensifying waves of rocket-powered, Iranian-designed Shahed drones, and Ukraine can't afford to waste expensive Patriot interceptors to counter the attacks, Savill noted. Ceasefire talks going nowhere? Trump and Putin are expected to meet in the 'coming days', Kremlin aide Yuri Ushakov said on Thursday. But experts remain sceptical about any progress. Majcin said the talks could be a 'tactical move' by Putin to convince Trump that he's re-engaged in ceasefire negotiations, and to allow the US president to present the meeting as a 'diplomatic success'. Savill, meanwhile, said that Trump's tariff threats could push Russia to make some concessions. But neither expect any tangible changes, given that Putin has shown no intention of ending – or even just pausing – the war. UKRAINE's anti-corruption agencies have arrested a lawmaker and former officials over an alleged defence procurement kickback scheme, just days after parliament restored the independence of key anti-graft bodies. After the arrests, Zelenskyy wrote on Telegram that he was 'grateful to the anti-corruption bodies for their work". While visiting POLAND, Ukrainian Foreign Minister Andriy Sybiha announced that Kyiv has requested a €120 million loan from Poland to buy Polish-made military equipment, including Piorun missile launchers and Krab self-propelled howitzers. After 50 years of back and forth, ITALY finally plans to build a bridge to Sicily from the Italian mainland. Why the sudden new impetus in the project? Italy hopes to classify the cost of the bridge as defence spending under the new NATO's 5% of GDP target, which includes transport infrastructure for military purposes. Guess what's conveniently located in Sicily: a NATO base. GERMANY is expected to launch a new National Security Council at the end of August, according to reports. Chancellor Friedrich Merz pledged to create the council in order to centralise foreign and security policy at the top. Chaired by Merz, the new council is supposed to have three core jobs: long-term strategic planning, integrating intelligence into comprehensive situational awareness, and crisis management. We want to hear from you: tell us what you think and what you know! We're at defence@ , and each team member is available at . Have a nice weekend and enjoy the rest of summer!

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