In response to shifting U.S. policies and rising threats from Russia, Europe is investing €800 billion to rapidly rearm and build defense autonomy, including a €150 billion loan package and fiscal reforms to boost military spending. Traditional European defense firms like Rheinmetall and Thales have seen their stocks soar, but the Ukraine war has revealed a new kind of warfare dominated by cheap, effective drones rather than tanks or heavy systems. This shift is fueling a boom in European defense-tech startups, such as Quantum Systems and Helsing AI, which are developing AI-powered drones and other cost-effective battlefield technologies. The European Commission is pushing for “made in Europe” defense spending, while new startups argue they can deliver weapons faster and cheaper than legacy contractors, though bureaucratic procurement systems and fragmented markets remain a challenge. Experts warn that Europe must act urgently, as future wars may prioritize quantity and adaptability over expensive, complex systems, emphasizing a war of attrition rather than technological superiority.
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