Ιt was billed as the answer to high-tech U.S. stealth fighters. Instead, an ambitious pan-European project has become a case study into some of what has gone wrong with the region’s defense push.
The French, German and Spanish Future Combat Air System project was meant to build a next-generation aircraft to catch up with the latest U.S., Chinese and Russian models. Now the venture has devolved into bickering between defense companies Airbus and Dassault Aviation —and between Berlin and Paris—over who gets to lead its development, with all sides now questioning its future.
The unraveling collaboration is a symptom of one of Europe’s biggest problems when it comes to defense: While European countries’ spending on the military collectively dwarfs Russia’s and has overtaken China’s, the whole is somewhat less than the sum of its parts. With capitals often giving priority to contracts with national companies, Europe’s armed forces suffer from overlaps and incompatibilities, high prices due to low economies of scale, and a fragmented industry.
One solution has been for several countries to join forces in developing new systems. They have teamed up to build tanks, frigates and missiles. There is also a separate British, Italian and Japanese stealth fighter that could be delivered within 10 years.
“It’s more than essential to have more joint collaboration, it’s a matter of efficient spending of tax money and the credibility of European defense versus the threats that we face,” said Jean-Paul Alary , the CEO of KNDS, which was created through the merger of French and German defense giants.
The FCAS project, which has gone through various iterations for more than two decades, was conceived as a sixth-generation jet fighter, potentially surpassing the U.S. F-35. In addition to advanced stealth, making it much more difficult to detect by the enemy, it is meant to incorporate artificial intelligence and fly connected with a swarm of drones.
The venture, though, took a wrong turn last year, when French plane maker Dassault Aviation, a key partner, said it had to lead the development and construction of the aircraft. Chief Executive Eric Trappier argued that the project needed clear leadership, that Dassault should be able to select its subcontractors, and that it had the best record of developing combat aircraft.
Airbus, a cross-European company—much of whose defense business sits in Germany—has pushed back. German politicians and labor unions are increasingly impatient with the French demands.
“The Germans want to cooperate but are fed up with being pushed around by the French,” said Nick Cunningham , a defense analyst at Agency Partners.
Airbus said it remains committed to the FCAS program. Dassault declined to comment.
On Wednesday, after this article was first published, German Chancellor Friedrich Merz said that Germany and France don’t share the same requirements for a jet fighter. “If we can’t solve that, then we can’t keep the project going,” he said on the German political podcast Machtwechsel. The Élysée Palace responded that the military needs of the three participating states haven’t changed.
Some cross-border projects succeed. But too often, they have descended into acrimony as companies and governments argued over specs or who would get the bulk of the contracts. France has dropped out of an earlier joint jet fighter project, the Eurofighter , while collective efforts to develop a long-range drone and a tank have been delayed.
Military spending by European Union member states, the U.K. and Norway could reach up to about $890 billion to $1 trillion in 2030, compared with the $832.3 billion the U.S. spent last year, according to a study by the Milken Institute think tank and Oliver Wyman, a management consulting firm.
Much of this spending is purely national. In 2022, collaborative procurement accounted for less than a fifth of the total spent on defense equipment in the EU, according to the study.
Development costs for weapon projects are vast. For Europe, this means a lot of redundant military spending and less going into research than other regions. In the U.S., research and development accounted for 16% of total military spending in 2023, according to the Milken study, against 4.5% in Europe a year earlier.
There is also a lack of standardization in a region whose militaries may have to fight together. European nations have supplied Ukraine with 11 different types of howitzer firing one caliber, the 155mm shell.
Jet fighters are among the most expensive weapons to develop and are seen as an example of where Europe should but isn’t coming together enough. There are currently three different jet fighters produced in Europe—all a generation behind what the U.S., China and Russia offer.
FCAS was one project that could have filled this gap.
There is something of a pattern for France, the world’s second-largest defense exporter after the U.S., getting blamed for disrupting joint ventures. Italy’s Leonardo abandoned a deal to make a tank with KNDS after the Franco-German company failed to offer enough of a share in the project’s development, according to a person familiar with the matter.
There were many reasons why Leonardo didn’t join, but the company and others are always welcome, said KNDS’s Alary, who added that his company is working on a separate artillery project with the Italian company.
French opposition also nixed an attempt to invite German satellite maker OHB to join the Bromo project—a proposed merger of space activities of Leonardo, Airbus and France’s Thales—a person familiar with the discussions said.
For all the bickering, defense analysts say Europe has little choice but to make such joint projects work if it is to step up as a pillar of NATO and more effectively deter threats from Russia. Some projects have been quietly ticking along, including a tank project and several collaborations aimed at producing long-range missiles.
“We need to combine the special technical and industrial capabilities of our two nations,” U.K. Defense Minister John Healey said on Friday, referring to Britain and Germany cooperating on a long-range hypersonic missile—a field Europe is behind on.
Another way to go is multinational companies. Missile maker MBDA is often touted as the European defense company that works. Britain’s BAE Systems and Airbus each own 35.5% of it, with Leonardo holding the balance. Yet like Airbus, MBDA is based in France and has a French CEO.
European governments are also likely to increase projects where they pool their development budgets and have their national companies produce the resulting weapon. Italian naval shipbuilder Fincantieri and Naval Group in France codesigned a frigate that is made in their own yards and are working on a patrol boat together.
This wouldn’t lead to consolidation but would still generate efficiency, said Pierroberto Folgiero, Fincantieri’s CEO. “What should be here is defragmentation,” he said.
Write to Alistair MacDonald at Alistair.Macdonald@wsj.com , Cristina Gallardo at cristina.gallardo@wsj.com and Robbie Gramer at robbie.gramer@wsj.com
