Donald Trump’s U.S. administration shows signs of halting its role as “world police,” and as security threats escalate around the globe, an arms race is ongoing worldwide. In this context, advanced defense industrial technologies armed with artificial intelligence (AI) have changed the dynamics of the battlefield. Let’s take a look at the rapidly changing global arms landscape. [Editor's note]
Europe is strengthening its military capabilities following Donald Trump’s re-election. This is because President Trump has shown pro-Russian behavior and has even threatened to withdraw from the North Atlantic Treaty Organization (NATO). As the perception grows that Europe must protect its security independently, European countries are hastening their arms buildup.
The European Union (EU) announced the "ReArm Europe Plan/Readiness 2030" in March, which includes a policy to strengthen its defense capabilities by investing 800 billion euros (about 1.3 trillion won) by 2030. The core is to increase investment in the defense sector and enhance the EU defense industry. This aims to respond to ongoing military threats from Russia following the outbreak of the Russia-Ukraine war and to rebuild a weakened European defense industry to reduce dependency on U.S. weapons.
Of the 800 billion euros, the EU has required that 650 billion euros (approximately 1,057 trillion won) be arranged individually by the 27 member states. The remaining 150 billion euros (approximately 243 trillion won) will be raised by the European Commission to lend to member states for arms purchases. The lending condition is that at least two countries must jointly purchase weapons to lower the purchasing price, and products must be bought from corporations established in designated areas such as the EU or Ukraine.
A condition for purchasing "Buy European" is also attached. The parts must be sourced from the EU or Ukraine, accounting for 65% of the total expense of the finished goods. This clause carries the influence of member countries with strong defense industries, such as France.
However, a pathway has been opened for non-EU countries, including South Korea, that have established Security and Defence Partnerships with the EU to also make purchases. South Korea and the EU adopted a partnership agreement last November to cooperate in 15 defense areas, including defense and maritime security.
A representative from a domestic defense corporation in South Korea noted, "While exceptions are made for partner countries, fundamentally this is a policy requiring the purchase of 'Made in EU' products with EU funds, so we are keeping a close eye on the situation."
Each European country is also individually pushing for increased defense expenditures, separate from the EU’s joint response. This is due to President Trump warning that NATO’s collective defense principle (which considers an attack on any member as an attack on all, prompting a collective response) would not be upheld if NATO member states do not meet the requirement of spending at least 2% of their GDP on defense expenditures.
Currently, of the 27 EU member states, 23, excluding Austria, Cyprus, Ireland, and Malta, are NATO members (a total of 32 countries). With the U.S. covering two-thirds of NATO's defense expenditure, President Trump is highly dissatisfied with Europe's reliance on security without contributing.
Germany has maintained a disarmament policy by limiting defense expenditures to less than 2% of GDP for over 30 years since the fall of the Berlin Wall, but for the first time last year, it exceeded NATO's 2% standard. The German parliament amended laws to effectively exempt defense spending from a so-called liability brake regulation, limiting new annual debt to no more than 0.35% of GDP. Germany is also planning to create a fund of 500 billion euros (approximately 815 trillion won) to invest in defense infrastructure.
France, Sweden, Denmark, Spain, and Croatia have also decided to increase their defense expenditures, and the number of countries reconsidering or reintroducing conscription is also rising. French President Emmanuel Macron has expressed willingness to replace the U.S. nuclear umbrella with France’s own nuclear umbrella for the protection of European allies.
Increased military expenditure in Europe has provided a boost to European defense corporations. According to the Stockholm International Peace Research Institute (SIPRI), 27 out of the top 100 global arms sales companies in 2023 were European. Among them, Rheinmetall, Germany’s largest defense corporation, which manufactures Leopard tanks for the German military, reported a revenue of 9.751 billion euros (approximately 16 trillion won) last year, an increase of 36% from the previous year.
Europe’s self-defense is both an opportunity and a crisis for South Korean defense companies. Europe has become a key export market for domestic defense corporations like Hanwha Aerospace, Hyundai Rotem, and Korea Aerospace Industries as it increasingly purchases South Korean weapons.
If European countries increase purchases of South Korean weapons as partner countries, a larger market may open; however, if barriers to purchasing European goods are raised, the market could close. Companies like Hanwha Aerospace are responding by establishing production facilities within Europe to localize production.