‘Buy European’ for Defence, Too Soon or Too Late?

Hello! Today is February 10, 2026, and here is your EU news summary for the week. Feel free to share this newsletter with friends and colleagues, and follow us on LinkedIn.

An event in Brussels. On February 26, at the Institute for European Studies and the Centre for European Law at Université Libre de Bruxelles will host a discussion around direct effect in EU law with Prof. Daniele Gallo (LUISS University). The discussion will be moderated by our friend Paul Dermine. Register here.

This week’s expert is Benoit Cormier. Benoit is a Managing Director at Teneo in Brussels, specializing in EU and international affairs, defense, competition, and communications. As a French diplomat, he was previously posted in Washington, Hong Kong, and Brussels, and worked for the World Bank and the European Commission.

On February 1, internal market commissioner Stéphane Séjourné teamed up with 1,141 business leaders to publish an op-ed in major newspapers across the continent calling for a “Buy European” turn in EU public spending, whether in industry, digital, or defence. This shows that while not a given, the concept of a “European preference”, the idea that EU money should first go to European actors, is gaining ground.

This comes as the European Commission is due to present the Industrial Accelerator Act (IAA) in the course of February. The IAA aims to the decarbonisation and competitiveness of energy‑intensive industries and to prop up industry’s share of the EU’s GDP from 16% to 20%. It will include “Made in Europe” requirements in public spending to support clean investment.

Shifting Mood?

The conversation is of particular relevance in the security field. In 2022, EU Member States procured 78% of their defence equipment outside the EU.. The EU’s own version of the “Buy American” act has not materialized yet.

In recent weeks, the debate has sharpened since Brussels unveiled a €90 billion loan facility for Ukraine in 2026–27 that introduces a “cascading” rule to predominantly favour equipment made in Ukraine, the EU or associated EEA countries, while allowing flexibility if local supply falls short.

Why it matters is twofold.

Financially, Europe is trying to re‑arm with limited fiscal space at the Member State-level and an EU long‑term budget now being defined for the 2028–34 period.

Politically, Member States diverge over how hard to pull the “Buy European” lever, especially when US systems can be delivered faster in volume, but risk losing their independence forever if they don’t decide fast enough.

A Clever Slogan Meeting Financial Limitations

Financial constraints are simple. Europe quickly needs more kit with minimal strain on already depleted national budgets. That is why the Commission’s long-term budget proposal promises a leaner architecture and new EU own resources while keeping national contributions broadly stable, pushing defense to be funded with loans and innovative instruments rather than grants.

That logic sits behind the Ukraine loan design — two-thirds (€60 billion) earmarked for military needs, one-third (€30 billion) for budget support — coupled with “European preference” that bends procurement toward EU and EEA suppliers without making it absolute. The framing is industrial policy through demand, not just subsidies, and it is explicitly linked to competitiveness and security.

Similarly, the SAFE (Security Action for Europe) instrument, adopted in May 2025 and worth €150 billion, was created to finance joint defense investments via low‑interest loans and co‑financing. SAFE’s design makes “buy European” the default while preserving flexibility where EU production cannot yet meet volumes.

SAFE steers spending to close critical capability gaps and, crucially, embeds a preference for sourcing in Europe. Demand is already significant: 18 Member States have filed expressions of interest, with Poland alone seeking around €45 billion for air defence, drones and artillery.

If SAFE encourages purchases, the European Defence Industry Programme (EDIP) strengthens supply. Finalized in December 2025, it was created as a short-term fix before the long-term budget is adopted. It provides €1.5 billion in 2025–27 grants to boost common procurement, expand production lines and fix bottlenecks.

A dedicated €300 million Ukraine Support Instrument aims to integrate Ukrainian firms into Europe’s defence ecosystem — another practical form of “preference” that is as much about future interoperability as near‑term capacity.

Member States Remain Divided — and Pragmatic

The politics are messier. France has championed a robust “buy European” stance, while Germany — the only European nation with consequential means to spend on defence, but still reluctant to do so — and other “frugal” Member States argued during the Ukraine loan talks for explicit flexibility so Kyiv can still buy non‑European systems it cannot source quickly in Europe.

The Commission split the difference: a predominance of European procurement, with a safety valve for urgent needs. That compromise reflects frontline realities: Europe’s industry is scaling up but cannot yet meet all demand, especially in areas where it lacks domestic capabilities.

Now, all eyes turn to the Commission’s long-term budget proposal, which recasts headings, streamlines programs and elevates competitiveness and security as core pillars.

In practical terms, that means aligning research (Horizon), industrial scale‑up and external action into a more coherent defense‑and‑security envelope, with more flexibility to react to shocks.

Unanimity in Council and consent in Parliament are required to approve that proposal, and both institutions will haggle over size, governance and oversight. But the direction is clear: defence is no longer a niche line item; it is embedded in the long‑term budget’s strategic core.

Whether the final deal also anchors fresh EU‑level revenues to service debt and sustain defense spending is the other make‑or‑break financial question. Part of the answer is being tested in the case of Ukraine.

The EU’s two‑year, €90 billion package for Kyiv is where “European preference” meets wartime urgency. How Ukraine allocates orders and how quickly European producers can deliver will heavily influence whether European capitals double‑down on preference language in future EU instruments. It will also shape the political narrative about whether European preference slowed support or strengthened Europe’s ability to supply.

What to Watch Next

Two fault lines will decide the fate of “European preference.”

First, capacity. SAFE and EDIP can tip the balance toward EU suppliers, but only a sustained ramp‑up will convince sceptics that preference doesn’t mean delay or higher costs.

Second, geopolitics. If US deliveries remain faster in certain categories, Member States have to decide whether the Trump Administration can be trusted as a security guarantor right now.

The test for Brussels is to prove that an EU preference accelerates delivery over time by scaling up Europe’s defense base, making the strategic case that a stronger, more self‑reliant Europe is not just a principle, but a functioning plan in the practical case of a war to come.

SANCTIONS • On 6 February the Commission proposed a 20th sanctions package against Russia. It will potentially include a sweeping ban on European maritime services for any ship transporting Russian crude oil, whatever the sale price.

This means EU insurers, financiers and other service providers would no longer be allowed to work with tankers carrying Russian oil, effectively replacing the current G7 price‑cap system. The goal is to further squeeze Moscow’s oil revenues and limit its access to global shipping.

The package also widens financial and trade sanctions: around 20 more Russian banks and several foreign banks that help Moscow dodge restrictions would be blacklisted, new export bans would hit specific industrial goods and services, and new import bans would target metals, chemicals and critical raw materials.

Finally, dozens of additional vessels in Russia’s “shadow fleet” used to bypass sanctions would be listed. The package still needs unanimous approval by EU governments.

MAGA • The Financial Times reports that the US State Department is preparing to fund MAGA-aligned think-tanks and charities across Europe to promote Washington’s policy positions and challenge perceived threats to free speech, ahead of America’s 250th anniversary.

Sarah Rogers, under-secretary of state for public diplomacy, has met rightwing groups, including figures in Reform UK, to channel money into campaigns opposing the UK’s Online Safety Act and the EU’s Digital Services Act, which the Trump administration portrays as anti-free-speech and anti-US tech. The move is likely to alarm centre-left European governments.

ECB • The ECB left all three key rates unchanged at its February meeting, keeping the main refinancing rate at 2.15%, the deposit rate at 2.0% and the marginal lending facility at 2.4%.

That leaves eurozone policy rates well below those in the US, where the Federal Reserve is holding the federal funds target range at 3.5–3.75%, with an effective rate around 3.64%.

The decision comes as French central bank governor François Villeroy de Galhau announced he will step down in June, intensifying jockeying over top ECB posts and early positioning in the race to succeed Christine Lagarde when her term ends in 2027.

SUMMITRY • EU leaders will meet on 12 February at Alden Biesen castle in Belgium for an informal retreat on competitiveness, industrial policy and Europe’s response to US and Chinese subsidies, feeding into the longer-term agenda set by the Draghi and Letta reports.

Draghi and Letta have been invited to to “share their visions about European competitiveness and how they have evolved since the publication of their two groundbreaking reports”.

Against this backdrop, Ursula von der Leyen is using the summit to rally support for a “stronger, deeper Single Market” with visibly less red tape, pitching deregulation as key to boosting growth and investment.

She is expected to call for removing remaining national barriers in services and capital, simplifying EU rules for SMEs and advancing a genuine savings and investment union to channel European savings into green and digital projects, while warning that fragmented regulation leaves the EU strategically exposed.

• On their new Substack, The Two Cents, Hanno Lustig and Romain Wacziarg warn that issuing common EU debt without a binding fiscal framework risks eroding fiscal discipline, creating an unaccountable quasi-fiscal union.
• In a policy brief from the ECIPE, Fredrik Erixon and co-authors set out ten actions to deepen EU capital markets. Also at the ECIPE, Andrea Dugo and Dyuti Pandya show what lessons Europe can draw from Taiwan’s industrial strategy.