Key Takeaways
- American stakeholders are criticising the lack of openness of the European arms market, especially since the European Commission has been pushing for European strategic autonomy
- However, this EU strategy does not prevent European states from acquiring American capabilities, the Foreign Military Sales (FMS) programme being the preferred approach, with a surge of notifications since 2022
- This choice reflects economic advantages, since using the FMS reduces transaction costs and uncertainty, particularly for countries that do not have a strong and comprehensive procurement organisation
- For the European Union, the stake consists not in opening more of the market, but in reducing internal transaction costs and increasing the understanding of European offerings for a real level playing field with American competition
By Renaud Bellais, Associate Researcher, CESICE, University of Grenoble Alpes (France), co-head of the Defence Observatory, Fondation Jean Jaurès (Paris)
Introduction
Does Europe exclude American companies from its arms markets? According to US policymakers, this seems to be an issue. The European Commission is supposedly transforming the continent into a “fortress” to the unique benefit of European industry. However, statistics reveal quite a different picture: the predominance of contracts with American suppliers through the FMS programme.
The Myth of “Fortress Europe” in Defence and FMS Sales
The dependence of European countries on American military equipment is a contentious issue on both sides of the Atlantic. While some European stakeholders criticise the over-dependence on American capabilities, the Trump administration has consistently accused the European Union of erecting protectionist barriers to favour European companies at the expense of American ones. This is reminiscent of the idea of “Fortress Europe” in the arms industry, already discussed by some think-tanks in Washington, DC, at the turn of the century (1).
On the contrary, the European market is far from being closed to American capabilities. The transatlantic arms trade seemed to be balancing out a few years ago; however, American deliveries to Europe have skyrocketed since 2018, while European deliveries to the US have stagnated (and they are mainly composed of intermediate products). One of the major factors explaining this appetite for American capabilities is undoubtedly the Foreign Military Sales (FMS) programme.
Even though other export channels exist for American companies (Foreign Military Financing, Direct Commercial Sales, etc.), the bulk of US exports goes through this program. Brussels-based think tank Bruegel recently released an in-depth analysis (2) of FMS sales in Europe between 2008 and 2025, providing an objective assessment of arms flows between both sides of the Atlantic. It gives a good approximation of the scale of American deliveries to Europe. The Bruegel study is therefore invaluable… and revealing.
While for many years FMS sales were primarily concentrated in the Middle East and Asia-Pacific, European countries were leading customers even before the Russian invasion of Ukraine. According to Bruegel, Europe accounted for only 8% (by value) of FMS notifications for 2008-13. This figure rose to 29% for 2014-21 and nearly 50% for 2022-25, with a total of $190 billion in orders out of $383 billion during this third period.
These orders are disproportionate not only to European deliveries to the US but also to the size of the European arms market. The ratio calculated by Bruegel is telling: Europe is flooded with American weapons, especially in recent years. It is far from being an impenetrable fortress for American companies. FMS notifications for NATO Europe, as a share of NATO Europe equipment spending, were below 20% in 2014-16, but they rose to 33% in the early 2020s and more than 50% today.
The Russian threat partly explains the increase in FMS contracts in Europe. Recent orders also result from a re-equipment cycle in military capabilities. Indeed, the F-35s are replacing F-16s and F-18s purchased from the 1970s onward, or ageing Soviet capabilities in Central and Eastern European countries. However, this factor is insufficient to understand the size of FMS contracts signed in recent years.
How can we explain the widespread use of FMS by European countries even if European alternative capabilities exist? Beyond political reasons linked to the strategic partnership with the US, there are economic factors at play. Through the FMS programme, procurement management is simplified since the acquiring country transfers the management of arms purchases to the Pentagon.
It is important to remember that most European countries lack a comprehensive defence procurement agency comparable to those in Germany, the United Kingdom or France. These agencies provide the expertise required to manage complex armament programs. Many countries lack the technical, administrative, or financial resources or expertise to conduct complex weapons operations. The FMS program allows these countries to leverage the Pentagon’s resources.
Countries send an expression of interest for equipment to the Pentagon, which must be submitted to Congress for approval. Then, the Pentagon negotiates with the producer and simultaneously signs a letter of offer and acceptance with the purchasing country. The FMS programme allows the purchasing country to reduce transaction risks and costs, which are borne by the Pentagon, potentially resulting in economies of scale when international orders are added to US acquisitions (which can be advantageous given the volume of the Pentagon’s orders).
Using the FMS programme allows purchasing countries to reduce their transaction costs, that is, all expenses necessary to analyse bids, negotiate the contract, and monitor its implementation. For a large producing country, these costs represent 1% to 3% of the total value of procurement, but they can be proportionally much higher for a country making only small purchases. Therefore, using an FMS offering appears to be a great opportunity for a small European country.
Nevertheless, this programme is not without risk for the purchasing country. Indeed, initially negotiated prices are not guaranteed. They serve as a reference point and can change substantially once delivery actually takes place. As a result, many European countries have had the unpleasant surprise in recent years of seeing their bills skyrocket, without the US bearing the associated risk.
The US administration also has the power to cancel an FMS contract at any time, without notice or compensation, and without providing justification. Therefore, there is a hidden risk that many countries do not consider, as its likelihood is considered low among European countries. However, this risk still exists and depends on the goodwill of the administration and POTUS. How, then, can we explain why European countries are not seeking to purchase this equipment from neighbouring countries?
There is an asymmetry between American offerings and European alternatives. American equipment is well-known, and American companies are easily identifiable. Conversely, finding a European solution is complex because companies are smaller and their offerings are less well-known. It is costly for purchasing countries to identify relevant offers in Europe, and there is a risk of making the wrong choice, especially if a country has limited resources to make its decision. Paradoxically, there are barriers to entry for European solutions within Europe itself, even though the region is a major exporter of arms to the rest of the world.
The lack of transparency inside the European market is therefore part of the problem. This explains why, in its European Defence Industry Strategy (EDIS) released in 2024, the European Commission proposed creating a “European FMS.” This would cover transaction costs and provide expertise for countries lacking the necessary capabilities, thus lowering transaction costs for intra-European purchases. Should this new mechanism frighten American stakeholders? This is unlikely. A European FMS would only allow for a “level playing field” with its American offerings.
Contrary to what American decision-makers claim, European countries are not protectionist in the arms market. They buy American equipment in large quantities. The reverse is not true: if there is a fortress mentality, it concerns the US due to the “Buy American Act.” FMS figures speak for themselves and, as is often the case, allow for an objective analysis that goes beyond mere pronouncements.
(1) Jeffrey Bialos et al. (ed.), Fortresses and Icebergs, The Evolution of the Transatlantic Defense Market and the Implications for US National Security Policy, Johns Hopkins University, 2009.
(2) J. Mejino -López, J. Ospital and G. Wolff, Understanding US Foreign Military Sales globally since 2008: an analysis of a new dataset, WP 27/2025, Brussels, Bruegel.