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Where wars are no longer won by who has the most boots on the ground, but by who deploys the fastest drone swarm, who can protect their critical energy grid from cyberattacks, and who processes intelligence at machine speed – not ministerial pace.
In this world, every power outage, water failure or disrupted satellite signal is not just an inconvenience, it could be an act of war. In this world, Europe is falling behind.
And yet, his is also a world where Europe holds a secret weapon: our industrial strength, our tech talent and a unique position at the intersection of civil innovation and strategic security.
Europe’s strategic sweet Spot
Dual-use technologies – those serving both civilian and military purposes – are Europe’s strategic sweet spot. They sit at the crossroads of innovation and security, but without the market scale needed to win the tech race.
A digitally modernised and secure energy grid is efficient and good for the environment, but it is also resilient to cyberattacks. High-speed 5G and satellite communication is as vital for battlefield communication as it is for data driven businesses. Drones and anti-drone equipment can prevent cyber-attacks on water or energy facilities, but they can also defend soldiers at the frontline in war. Over 80% of targets in Ukraine are hit by cheap drones connected to the AI and earth ground control planform Delta.
Drone Tech, green tech, cyber defence tools, satellites, applied AI – these are areas where Europe excels and but lacks demand and therefore companies are looking for other markets to scale and innovate. The EU is facing a major opportunity to build the future defence, but not through loans to traditional defence-equipment and spending county by country.
This time around we do this right, let spend 50% of the EU defence fund building EU dual-use capabilities utilising the European market scale, not national nitty-gritty budget.
Speed over tradition
The war in Ukraine has shown that military advantage is no longer determined by the biggest spenders but by the most agile innovators. Billion-euro tanks and warships are being neutralised by €5,000 drones. Innovation cycles have shrunk from years to weeks.
Yet Europe still defaults to traditional models. Germany’s €100 billion defence package went largely to tanks and planes, whilst Quantum Systems – a Bavarian drone, satellite an AI platform firm and winner of the DIGITALEUROPE Future Unicorn – delivered over 1,000 drones to Ukraine. Germany’s own army ordered just 14.
Companies like Quantum need scale and faster procurement, not more paperwork, and unless they get it in EU, they need to go to US. Success today depends on speed, scale and client references, we do not need R&D funding, unless connected to procurement and real business deals – we do innovation for a living.
Escaping the regulation trap
Europe is world-class at regulation – but regulation doesn’t build tech champions.
The Draghi report estimates €200 billion in annual compliance costs from EU rules. For tech firms, the true burden is likely far greater. Excessive complexity stifles speed and scalability – essential ingredients in today’s global markets.
Positive steps are underway. The Commission is working on a ‘digital package’ to simplify compliance with the EU’s digital rules, including importantly on cyber. But we must go further – we must look at both the Data Act and the AI Act to avoid a compliance cliff for companies. A delay in the application of these laws is necessary so that we can seriously streamline these rules to make sure they don’t hurt our most promising European digital champions, from medical devices to energy and industrial manufacturing.
From spending to building
Europe’s public sector spends nearly €9 trillion annually – half our GDP. But spending alone is not enough. How we spend is what matters.
Fragmentation across 27 countries weakens our impact. As Enrico Letta and Sauli Niinistö rightly observed in their reports, we need cross-border, mission-driven programmes that consolidate efforts and protect critical infrastructure – our energy, water, data centres, transport and hospitals.
This is where dual-use tech can shine: protecting European Citisens whilst building up scalable markets for European dual use and defence capabilities. In short, let us address the second battlefield and the thousands of hybrid attacks on critical infrastructure whilst building the capabilities that will define winning or losing at the physical battlefield at war.
Strategic Openness
Some call for ‘Buy European’ policies. But shutting others out won’t make us stronger. The US ‘Buy American’ model, in place since 1933, doesn’t exclude foreign ownership – it incentivises building and scaling innovations in America.
Europe should adopt a similar approach: ‘Built in Europe.’ Let’s attract European and allies’ investment, encourage European and foreign companies to manufacture and share know-how here, and ensure that public contracts go to firms that contribute to European resilience – regardless of nationality.
This is not about protectionism. It’s about strategic industry capacity.
Five steps to reclaim tech leadership
1. Streamline regulation – Eliminate duplication, simplify implementation, and harmonise across Member States.
2. Turn research into revenue – demand commercialisation strategy and industry involvement in R&D funding – only a third of European inventions are commercialised here. That must change.
3. Make dual-use tech our launchpad – Focus EU funds on 10 cross-tech procurement and innovation projects that protect critical infrastructure.
4. Fix procurement – Reward security, innovation and speed over price and solidity.
5. Adopt ‘Buy Built in Europe’ – Build strategic scale whilst remaining open and globally competitive.
Europe’s defining opportunity
Europe has the talent, innovation and values to lead. What we need now is direction and urgency.
We won’t build tech champions through isolation. Nor will regulation alone protect us. Our best chance lies in embracing dual-use and defence technologies – where Europe already has capabilities, and where market demand is growing fast.
By investing in technologies that protect our societies and drive our economies, we can simultaneously enhance security, create jobs, attract investment and build globally competitive firms and get ready and build capacity for the war frontline.
This is Europe’s sweet spot where they do not need to fight old doctrines of national sovereignty on defence – large-scale pan-European procurements and investments on dual use tech for protection of civil critical infrastructures. Let’s act decisively – and lead with it.
Cecilia Bonefeld-Dahl is the Director-General of DIGITALEUROPE.
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