European defense contractors are currently navigating a tumultuous environment, defined by systemic challenges in procurement and a rising dependence on U.S. alternatives for vital military equipment and systems. One of the most prominent recent examples is Norway’s ongoing lawsuit against the NHIndustries (NHI) consortium for the failed NH90 helicopter program. This high-profile legal move underscores the significant financial and operational risks that European defense firms like Leonardo and Airbus face when multinational defense ventures falter. The Norwegian Ministry of Defence has revealed that the NH90 fleet, intended to serve its military operations efficiently, only delivered a meager 700 flight hours annually—a stark contrast to the contractual requirement of 3,900 hours. The resultant costs in maintenance, replacements, and lost capability have triggered a court battle, with claims amounting to nearly 20% of Leonardo’s yearly defense revenue.

This debacle is not an isolated event; it has triggered a continent-wide reassessment of procurement strategies. Following similar disappointments, Australia and Sweden have also decided to phase out their NH90 fleets in favor of U.S. platforms such as the MH-60R Seahawk and UH-60M Black Hawk. This trend is rapidly shifting market share away from European suppliers, as both national governments and institutional investors seek reliability and proven performance, often associated with established U.S. defense systems. The challenges in Europe are deep-rooted: fragmented procurement policies, bureaucratic obstacles, and a lack of economies of scale have long hindered European defense manufacturing and innovation.

The EU’s “ReArm Europe” initiative, a bold €800 billion plan, aims to reverse this trend by ensuring that 55% of all military purchases originate from European or Ukrainian suppliers by the year 2030. Yet, this plan has encountered significant roadblocks. Europe currently lacks homegrown equivalents to key American technologies—most notably advanced stealth fighters like the F-35—making it difficult for the EU to achieve its goal of strategic autonomy in defense. As a result, U.S. companies continue to gain a significant foothold: according to recent studies, U.S. firms supplied 64% of military imports for European NATO members between 2020 and 2024, with Poland alone accounting for $55 billion in Foreign Military Sales notifications over the past two years.

The increasing exposure to U.S. suppliers brings its own set of risks. European leaders are becoming acutely aware of the geopolitical leverage this gives Washington—potentially resulting in conditional security guarantees or targeted trade restrictions at critical moments. This dependency is at odds with the EU’s policy ambitions and long-term regional sovereignty, creating an environment of regulatory and geopolitical uncertainty for investors and contractors alike. As European companies struggle with regulatory disputes and the fallout from failed projects, reputational damage and financial instability threaten to erode their ability to compete globally.

Meanwhile, U.S. defense giants like Lockheed Martin and Boeing are positioning themselves to capitalize further, leveraging their reputations for reliability and joint development capacity. However, the EU’s commitment to rebalancing its defense industrial base remains, and national governments are exploring ways to encourage innovation, streamline procurement, and address technological gaps. The next five years will prove critical as Europe attempts to navigate its desire for autonomy against the backdrop of practical limitations and entrenched interests. The outcomes of the NH90 legal dispute, as well as broader procurement reforms, will set the tone for the future of Europe’s defense industry and its relationships with global partners.