Assessment of Progress and Shortcomings in European Defense

Key Chapter Title List

1. Assessing European Defense
2. Addressing Europe's Hardware Gaps
3. Bridging the Software Gap
4. European Integrated Air and Missile Defense: Slow Progress
5. Transforming European Defense Procurement and Industry
6. Defense Financing
7. Capability Profile: Russia's Military Threat to Europe
8. Capability Profile: Improving Recruitment, Retention, and Force Size
9. Capability Profile: Europe's Military Mobility
10. Capability Profile: Filling the Gaps: Europe's Non-NATO Suppliers
11. Capability Profile: Growing Focus on Supply Chains and Critical Raw Materials
12. Conclusion: Towards a European Defense Roadmap

Document Overview

This report, published by the International Institute for Strategic Studies (IISS) in September 2025, aims to comprehensively assess the progress and persistent critical shortfalls of NATO's European allies in strengthening their own defense capabilities. The backdrop is set against the dual pressures of Russia's ongoing war against Ukraine causing a dramatic shift in the security environment and the second term of the U.S. Trump administration pressuring Europe to shoulder a greater defense burden. Europe faces the urgent challenge of countering the Russian military threat in the short term (potentially as early as 2027) while simultaneously reducing its traditional security dependence on the United States. To this end, although European nations have initiated processes to increase defense spending and launch new initiatives (such as the European Sky Shield Initiative, the ELSA long-range strike project), the report points out that systemic obstacles must still be overcome to establish genuine strategic autonomy.

The report's structure revolves around an in-depth analysis of five core capability areas. Chapter 1 focuses on hardware gaps, noting severe European shortfalls in intelligence, surveillance, and reconnaissance (ISR) platforms, space launch capabilities, and long-range conventional ground-attack weapons, particularly the lack of ISR assets survivable in contested airspace and independent heavy-lift space launch capabilities. Chapter 2 explores the software gap, revealing Europe's deep dependence on U.S. suppliers in the field of military cloud computing (especially hyperscale cloud computing), as well as challenges arising from a lack of interoperability standards, despite Europe's relative advantage in command and control software.

Chapter 3 assesses the slow progress of European integrated air and missile defense capabilities, pointing out the lack of sufficient systems and numbers to cover the full threat spectrum, particularly against hypersonic threats, and the continued primary reliance on the United States for terminal-phase missile defense capabilities. Chapter 4 examines the transformation of European defense procurement and industry. Based on IISS data, the report indicates that approximately 53% of defense contracts signed by European nations since February 2022 have gone to European systems, but the aerospace sector remains dominated by U.S. equipment (accounting for about 64% of contract value). Countries are attempting to accelerate procurement and support domestic industry by reforming procurement processes, strengthening intergovernmental agreements, and utilizing new EU tools (such as EDIRPA, SAFE), but issues of national priorities and industrial fragmentation persist.

Chapter 5 analyzes defense financing, noting that despite significant increases in defense spending (nominal expenditure in 2025 is over 50% higher than in 2022), many allies still face difficulties in meeting NATO's new spending target (3.5% of GDP on defense), and long-term funding commitments and contracts are needed to incentivize industry to invest in expanding production capacity.

The report intersperses several capability profiles, each providing a detailed analysis of the specific composition of Russia's military threat, the recruitment and retention challenges facing Europe, the logistical and infrastructure challenges of military mobility, the role of non-NATO suppliers, and the focus on supply chains and critical raw materials. The concluding section emphasizes that developing a clear roadmap for European defense is crucial. This requires sustained and sufficient funding, coordinated efforts, procurement reform, and political will to systematically address capability gaps, gradually building a more autonomous European defense capability while maintaining NATO unity.