Europe's Defense Paradigm Shift: Building the Industrial Landscape for Strategic Autonomy

Session: European Defence: Creating the Industrial Landscape We Need

Speaker: Michael Schöllhorn (CEO of Airbus Defence and Space; President of the German Aerospace Industries Association / BDLI)

Session Summary: Michael Schöllhorn emphasizes that Europe must urgently transition from a security consumer to a sovereign producer by accelerating defense manufacturing and prioritizing a "Made in Europe" strategy. To build this resilient industrial base, he argues that the defense sector requires long-term funding commitments, agile procurement, and rapid surge capacity to counter modern hybrid threats. Finally, he outlines four critical technological priorities for achieving strategic autonomy: multi-domain combat clouds, sovereign space-based intelligence, ethical applied AI, and robust dual-use aeronautics.

The era of viewing European security as an eternal "peace dividend" has definitively ended, demanding an urgent transition from strategy declarations to accelerated industrial production. Speaking at Hannover Messe, Michael Schöllhorn, CEO of Airbus Defence and Space and President of the BDLI (German Aerospace Industries Association), outlined a transformative vision for the future of European security. He emphasized that the continent must evolve from being a net safety consumer into a sovereign producer and guarantor of its own defense.

The Urgent Reality of Modern Conflict

Europe is currently navigating a world defined by geopolitical volatility and sophisticated hybrid warfare. Adversaries are actively leveraging advanced technologies, seen in Russia's relentless disinformation campaigns and the surge in AI-generated propaganda from Iran, aiming to destabilize democratic structures. To counter these algorithmic aggressions, Europe must establish sovereign capabilities in cyber defense and artificial intelligence.

However, a digital shield requires a robust industrial base. While European defense budgets are projected to reach a record 400 billion euros in 2025, the continent's industrial ramp-up remains hindered by fragmented procurement and a bureaucratic pursuit of "gold-plated perfection". In stark contrast, Russia has already transitioned to a full-scale conflict economy, dedicating approximately 10% of its GDP to defense, which equates to roughly 462 billion US dollars in purchasing power parity—surpassing the combined spending of all European nations.

Three Pillars of Strategic Sovereignty

To bridge this critical gap, Schöllhorn proposed three non-negotiable pillars for industrial success.

First, the industry urgently requires long-term funding commitments. Rather than relying on election-driven fiscal cycles, defense contractors need multi-year guarantees to invest in production lines, digital infrastructure, and skilled talent. The EU's Defense Readiness Roadmap 2030 must be supported by real financial backing to bridge the "valley of death" where innovation stalls. Initiatives like the new defense equity facility from the European Investment Bank (EIB), praised alongside co-panelist Robert Dröge, are essential steps toward normalizing defense in financial markets.

Second, Europe needs clear military ambition and "surge capacity". Echoing sentiments from Minister Boris Pistorius, Schöllhorn noted that security is a shared task requiring the industrial ability to instantly multiply production if the current "gray zone" escalates into open conflict. This necessitates pre-installed tooling and stockpiles of critical materials, a financial risk that the industry cannot shoulder independently.

Third, a long-term industrial strategy based on rapid innovation is imperative. The defense sector must adopt the tech industry's "spiral development" model—building, flying, crashing, and fixing prototypes to move at the speed of emerging threats. Current procurement rules that separate end-users from the industry stifle this agility. Quoting General George Patton, Schöllhorn reminded the audience that a good plan violently executed now is far superior to a perfect plan executed next week.

The Economic Imperative of "Made in Europe"

For true strategic autonomy, European design and production must become the industrial north star. Currently, roughly 50% of European defense spending flows to providers outside the European Union, essentially exporting the continent's wealth and cementing long-term strategic dependencies. According to the Kiel Institute for the World Economy, every euro invested in the European defense industry generates a fiscal multiplier of up to 1.6. By prioritizing "Made in Europe" procurement, the continent ensures that the keys to its defense remain firmly in European hands.

Four Technological Priorities

To operationalize this vision, Europe must focus its development on four critical domains.

1. The Combat Cloud: The future of air power relies on a digital nervous system connecting isolated platforms—such as the F-35, the Eurofighter Typhoon, satellites, and drones—into an integrated tactical network across all military domains.

   
   

2. Space-Based Intelligence: Space has become a highly contested arena characterized by signal jamming and hybrid attacks. Europe suffers a severe deficit in sovereign space access, managing only eight orbital launches last year compared to over 180 by the US and over 90 by China. Europe must urgently develop independent launching systems and redundant multi-orbit mesh networks to avoid a digital blackout.

   
   

3. Applied Artificial Intelligence: AI serves as a critical force multiplier. By forging closer ties between academic research institutions and the military, Europe can develop ethical, accountable AI systems that offer a reliable strategic advantage over the unchecked algorithms of adversaries.

   
   

4. Resilient Aeronautics: The defense sector is inextricably linked to civil aviation. Airbus's success demonstrates this dual-use synergy; military transport aircraft like the A400M and the MRTT tanker fleet rely on the robust commercial backbone of the A320 program. Conversely, civil aircraft have deeply benefited from military heritage technologies like fly-by-wire and head-up displays.

Ultimately, building this resilient industrial landscape goes beyond defense companies. It demands a seamless unification of scientific excellence, financial mobilization, agile innovation, and profound societal resilience to ensure Europe can independently protect its future.