Navigating a Strategic Dilemma: Germany's Defense Procurement amid Transatlantic Uncertainty
The Trump administration's confrontational approach has shattered trust in the United States as a security partner, forcing Europe and Germany to re-evaluate defense dependencies. Since Russia's 2022 invasion of Ukraine, Germany has continued to rely on U.S. suppliers to meet urgent capability gaps, but given the recent dramatic political shifts this approach seems less and less tenable. The defense technology sector—including drones, anti-drone systems and software-defined and AI-powered systems—has become critical to modern warfare and represents a pivotal area where Germany must reconsider its procurement strategy. While a dynamic defense tech ecosystem has begun developing in Germany and other European states with innovative start-ups, U.S. companies are positioning themselves to increase their presence in Europe’s defense market as well.
This paper argues that Germany must adopt a consistent "Buy European" approach, particularly in defense technology, a sector that is likely to grow and will become more relevant in defense procurement. With new fiscal flexibility, Germany has a window of opportunity to strengthen European capabilities through joint procurement projects, systematic risk assessments of critical dependencies, and reduced bureaucratic barriers in procurement. The paper recommends institutionalizing geopolitical risk reviews before major procurement decisions and closely coordinating with European partners to build a competitive, innovative defense industry that reduces external reliance while maintaining NATO resilience.
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Table of contents
Introduction
1. European Efforts to De-escalate Tensions with the Trump Administration
1.1 Germany's Exposure to Pressure from the Trump Administration
2. Trends in Transatlantic Defense Industrial Relations since 2022
2.1 Diverging Assessments about the Urgency to Advance European Strategic Autonomy
2.2 Co-Production Arrangements in U.S.-German Defense Industrial Relations
2.3 German Defense and Procurement Policy under the New Government
3. EU Defense Industry Initiatives to Promote «Buy European» in Procurement
3.1 Efforts to Incentivize Defense Investments through Regulatory Reforms
4. The Growing Relevance of Defense Tech in the Security and Defense Realm
4.1 The Defense Tech Sector in the United States
4.2 The Defense Tech Ecosystem and Procurement Policies in Germany
4.3 The Role of Venture Capital in German Defense Tech
4.4 European Efforts to Promote Defense Innovation and Defense Tech Start-ups
4.5 The Increasing Relevance of Defense Tech for European Security
5. Conclusion with Policy Recommendations
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