Europe faces two uncomfortable awakenings. The first is geopolitical. American support can no longer be treated as a permanent and unconditional part of the European security architecture, regardless of who occupies the White House after the 2028 election. The second is economic: Europe has less fiscal room, weaker productivity growth and a larger gap with the US than when the peace dividend began.
For three decades, Europe behaved as though the peace dividend were permanent income. The American security umbrella made it possible to spend less on defence, while European budgets increasingly reflected the priorities of the social state. It helped sustain a model European value, but the dividend was treated largely as a flow rather than as an opportunity to strengthen the balance sheet. Too little was converted into the productive infrastructure, industrial depth and military capacity that would have made Europe richer, more resilient and less dependent.
Europe therefore arrives at the present crisis with a widening economic gap with the US and continued military dependence on it. The obvious response is higher defence spending, but if every additional requirement must be met through higher taxes, borrowing or cuts elsewhere, the political and fiscal limits will quickly become apparent. Europe is trying to solve a balance-sheet problem through the budget alone.
Strategic sufficiency over strategic autonomy
For decades, Europe treated American military support almost as an asset it owned. In reality, it was a contingent resource controlled by someone else. Intelligence, communications, strategic lift, logistics, command systems and the integration of national forces were assumed to be available when needed, even though Europe neither owned those capabilities nor had to reproduce them.
The objective should not be complete strategic autonomy. Europe does not need to, and could not sensibly, duplicate America’s global military reach. It needs strategic sufficiency: enough independent capacity to prevent a hostile power from achieving its objectives in Europe when significant American assistance is delayed, restricted or absent. Building that capacity is not a bet against America. It is the basis for a more balanced and durable transatlantic relationship.
European defence spending has already risen sharply since 2022. But what useable capacity has the additional expenditure actually created? Spending and equipment are inputs. The outcome is useable capacity: what the system of personnel, ammunition, intelligence, communications, maintenance, infrastructure, logistics and industry can generate, sustain and regenerate when required.
A useful test for determining the limited number of military effects Europe regards as essential is to ask what could still be delivered if significant US support were unavailable for the first 90 days of a crisis. That would reveal the real gaps, many of which lie outside defence ministries.
Hidden in plain sight
Ports move forces, railways sustain reinforcement and energy networks keep industry operating. Telecommunications carry command and intelligence. Airports, warehouses, repair facilities and industrial sites determine endurance. Much of the infrastructure on which military capacity depends already sits on public balance sheets, normally treated as civilian infrastructure or commercial property.
European governments collectively control vast portfolios of land, transport systems, utilities and public companies. Yet these assets remain fragmented across ministries, municipalities, regions and state-owned enterprises. They are rarely seen as coherent economic portfolios and almost never as part of a strategic one. This is not an argument for selling public assets to buy weapons. Some strategic assets should never be sold and instead require hardening, redundancy or new investment. Others can generate better returns or attract private capital while remaining under public control.
Europe needs to identify the outcomes it must be able to produce, expose the dependencies that threaten them and map the assets and institutions capable of closing the gaps. Individual countries can own different components, regional coalitions can lead capabilities and European institutions can provide finance, standards and market scale. What matters is agreement on a limited number of outcomes Europe must collectively produce and clarity over responsibility for each part.
Europe is not short of wealth, industry or assets. What it lacks is a mechanism for turning those fragmented resources into the capacity it needs to defend itself. Defence spending as a share of gross domestic product is an input, not an outcome. The real test is what useable capacity Europe can generate and sustain when American support is constrained. In the next crisis, that distinction may determine whether Europe can act before others decide the terms.
Dag Detter is Principal of Detter & Co, advising governments on strengthening public finances through better management of public commercial assets. He previously led the restructuring of Sweden’s state-owned commercial portfolio and is co-author of Public Net Worth.
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