When I recently asked a high-ranking European diplomat what, to him, was the most important takeaway from the meeting of NATO leaders in Ankara, Turkey, on July 7 and 8, he said without hesitation: “This was the first time all European leaders acted as one group, without some of them breaking ranks and bending over backward trying to please Donald Trump.”

This may sound as if European countries, long addicted to U.S. military protection, are finally getting their act together. However, this newfound unity does not mean that they are ready to work on a strong European defense with joint determination.

Europe’s most trans-Atlantic-oriented countries may finally come to terms with the United States’ gradual withdrawal from Europe’s defense responsibilities. But for now, European countries continue to rely heavily on American defense companies; in 2024 they spent 68 billion dollars on defense products in the US, against just 11 billion on average between 2017 and 2021. Worse still, a major rift has appeared between Europe’s two largest economies: Trust between Germany and France, which should be at the heart of any European defense structure, is in the process of breaking down.

This is a problem for all of Europe. European integration started in 1952—with “no more war” as its motto—when France and West Germany (plus Italy, as well as Belgium, the Netherlands, and Luxembourg) placed their national defense industries under supranational authority. They did this with a sole purpose: to make another world war impossible. Now, after a period of long peace and decades of military neglect, increasingly faced with hybrid and military threats from Russia, Europe’s former warmongers have started to invest in their national industries again—not together this time, but increasingly alone. In the past couple of months, one Franco-German defense project collapsed with a loud bang while others stalled.

First, the collapse. Conceived as a showcase project of European defense integration, the Future Combat Air System (FCAS) project was supposed to symbolize Europe’s ability to replace national industrial rivalries with a common objective—a Franco-German fighter jet. Its failure, announced in early June, shows that industrial fragmentation is back in Europe, hampering cooperation on a common defense initiative just when it is needed most.

FCAS, in which Spain also participated, ran aground for one main reason: FCAS, in which Spain also participated, ran aground for one main reason: The two lead contractors failed to work together. French company Dassault, originally the prime contractor, insisted on taking the lead while reportedly barely letting its German partner Airbus Defense in on it. Airbus executives had described difficulties coming to agreement on intellectual property (IP) and patents.

This was a clear case of industrial nationalism undermining defense cooperation. It spiraled out of control because in Europe, no framework exists for the division of labor in defense projects and, just as importantly, for the distribution of future (including nonmilitary) gains from know-how and international property. In the absence of rules and regulation, the one with the strongest muscles takes it all. This has happened before to previously unregulated (or badly regulated) sectors such as banks and pharmaceutical companies.

The collapse of the FCAS debacle shows that European rules on fair sharing of labor and IP for the defense industry are needed fast: Given the Russian threat and the U.S. withdrawal from Europe, countries and companies are feverishly investing in defense, setting up joint projects.

For example, France, Germany, Italy, and Spain are working on a Eurodrone. Several countries are building a space shield, either assisting Ukraine or producing with Ukraine. And just this month, an “antiballistic coalition” made up of Germany, Spain, France, Italy, Norway, the Netherlands, Sweden, the United Kingdom and Ukraine convened in Paris on the eve of France’s National Day to coordinate their countries’ and industries’ efforts to produce anti-missile systems capable of intercepting Russian weapons targeting Ukrainian civilians. On July 14, foreign troops marched through Paris to show European resolve—including troops from Ukraine.

The German chancellor, Friedrich Merz, was present. But instead of France and Germany pooling resources to buy or produce weapons together, like in the 1950s, it is now smaller countries doing this. With funding from the European Union, they place joint purchases. Unable to produce the weapons that they need all on their own, combined projects are their cheapest and most efficient option.

Everything is moving at breakneck speed. The sums involved are astronomical: European countries have cut defense spending since the Berlin Wall came down in the 1990s and are now restarting from almost scratch. According to recent NATO figures, among European member countries and Canada, defense spending in 2025 was 20 percent higher than in 2024. While this hyperactivity creates opportunities, the danger is that it will turn into a jungle wherein the largest companies, backed by national governments, elbow others out of the market.

This is why the Franco-German fighter jet project collapsed. Germany and France have powerful arms manufacturers that seem to ignore decisions by their political leaders to cooperate at a European level. While French President Emmanuel Macron wanted to turn FCAS into a showcase of Franco-German co-production, symbolizing Europe’s newfound strategic autonomy and sovereignty, Dassault began to cut its German partners out of everything. The Germans, who footed half of the bill, complained bitterly. The issue was brought up several times at the highest political level—until Merz finally had enough and pulled the plug in June. The Spaniards were not even informed.

If France and Germany now rebuild their defense capabilities mostly nationally, Europe will come full circle. After all, pooling national war machines combined with U.S. protection ensured 80 years of peace on the continent. If European countries will soon be able to wage war against each another again for the first time in eight decades, then the only course of action should be to regulate national defense industries and place them under supranational authority again.

That does not mean that defense cannot be national. As long as countries order and produce weapons and equipment from one another on a well-regulated EU defense market and coordinate purchases (so they can help one another with weapons systems that have compatible software), there is little to worry about. Smaller countries are increasingly doing this now. The problem begins when there is no overarching European master plan and, therefore, Germany places orders almost exclusively with German factories and France with French factories.

Have the Germans learnt from the FCAS debacle? The statement by Airbus boss Michael Schoellhorn that “we want German industry to have a central role” suggests that they have not. Some had hoped Germany’s response would be to form a truly European consortium with non-German companies. Having become a victim of industrial nationalism, they reasoned, Berlin would not inflict this on others and would instead go for a pan-European solution.

Well, it did not: It has launched a new fighter jet program, Team Gen 6, with Airbus in the lead, flanked by several German partner companies. In short, Germany may well be taking revenge by forming a national champion able to compete with Dassault.

The KNDS tank project, co-owned by French and German firms, is not flourishing, either. Here, too, Germany is reportedly dissatisfied with the co-ownership and have started to develop its own tank. The new tank consortium includes some other European companies, but it is German-led, excluding French companies. Meanwhile, the Franco-German Maritime Airborne Warfare System, a maritime patrol program, has also withered away. And for a space and satellites project (involving a constellation of as many as 1,000 satellites for reconnaissance and communication), Germany has just cut out the French partner that it had originally planned to work with.

With France and Germany—the traditional motors of European integration—at loggerheads on defense projects or even out for revenge, the task is now on others to nip vindictiveness in the bud and push for European rules for the distribution of work and IP in the sector.

Here, perhaps the Nordics could step in. In the eye of the global geopolitical storm, countries such as Sweden, Denmark, and Finland, flanked by the Baltic states, the Benelux, Poland and non-EU-member Norway, feel the urgency of joint projects and are—for the first time—beginning to speak up and take initiative in Brussels. Sweden in particular, with its substantial defense industry, “may emerge as a European defence aggregator,” writes Shahin Vallée, the head of the geoeconomics program at the German Council on Foreign Relations, a think tank based in Berlin. Instead of being a “well-armed neutral on the margins,” Vallée writes that it is now moving to center stage in Europe, signing contracts with several companies and countries—including France and Germany, but never those two together.

Can smaller countries in Europe’s north form a sort of anchor for European defense, or in any case, provide sufficient counterweight to the dysfunctional Franco-German defense axis? And how toxic could this dysfunctionality become for Europe if the far right takes power in France or Germany?

Many questions remain. One thing is for sure: The answers will eventually show whether Europeans have learned anything from their own recent history—or not.