European Defence Readiness Explained: How Prepared Is Europe for Future Conflicts?

2025/11/02 General Economics

About the Research & Authors

This summary is a simplified educational interpretation of the author’s original work. All scientific conclusions are taken directly from the paper.

“European Defence Readiness”
by d’Artis Kancs
Affiliations: as stated in the paper.
Published on arXiv (January 2025) — economics & security focus

Note: This is an independent, educational overview meant to make the original study accessible to a wider audience. It simplifies terminology while preserving the intent and conclusions of the author. For the full technical paper, visit the official arXiv entry.

Is Europe Ready for a Long Crisis? A Simple Guide to “European Defence Readiness”

The paper asks a blunt question: Can Europe keep its defence and society running during a long conflict or a major global shock? It uses an economic model to test a worst-case scenario and compares two ways Europe could react.

TL;DR: Short-term pain is almost certain if Europe suddenly loses access to key imports. Acting early to diversify suppliers hurts now but reduces losses later. Waiting feels cheaper at first but costs more over time.

The Thought Experiment: A “Total Trade War”

The study simulates a complete stop in trade between Europe (and its allies) and a group of countries called CRINK: China, Russia, Iran, North Korea, and Belarus. That means no components, no raw materials, no final goods across those borders.

Two policy choices are compared:

  • Rapid diversification: move fast to find new suppliers and partners.
  • Moderate adjustment: change slowly, assuming the shock might be temporary.

What the Model Says

  • 1 In the first 1–3 years, Europe’s defence industry output could drop by about 7% per year.
  • 2 Over 5–10 years, losses shrink to roughly 2–5% as new supply chains form.
  • 3 The biggest vulnerabilities: electronics and critical materials (rare earths, magnesium, gallium, etc.).
  • 4 Rapid diversification hurts more at the start, but outperforms in the long run. Waiting helps a bit early on, but locks in bigger losses later.

Defence Production: Short vs. Mid vs. Long Term

The study measures how Europe’s defence output could react if it suddenly lost access to critical imports from the so-called CRINK bloc (China, Russia, Iran, North Korea, and Belarus). The simulation compares two different responses: moving fast to rebuild supply chains (rapid diversification) or adapting slowly and cautiously (moderate adjustment).

Each approach comes with trade-offs. Rapid diversification demands more resources early on, but it helps industries stabilize sooner. A moderate approach delays costs at first — yet risks deeper, longer-lasting damage to production capacity.

The chart below visualizes how defence manufacturing output could change under both strategies. The values are indicative: they show the average percentage loss in total production compared to a no-crisis baseline.

Estimated Defence Output Loss (%) Bars comparing Rapid vs Moderate strategies in short, mid, and long term. 0% -2% -4% -6% -8% Short (1–3y) Mid (5–10y) Long (10–15y) Rapid diversification Moderate adjustment -7.7% -7.3% -4.1% -6.3% -2.4% -5.2%

In the short term (1–3 years), both strategies show heavy disruption — a nearly 7% drop in total defence output. This reflects the shock of suddenly losing imported components, metals, and chemicals essential for manufacturing.

By the mid term (5–10 years), the picture begins to diverge: countries that pursue rapid diversification recover faster, limiting losses to about 4%, while those that adapt slowly could still face declines near 6%.

Over the long term (10–15 years), the payoff of early action becomes clear. Fast-moving economies nearly return to baseline levels (–2.4%), whereas delayed responders still suffer from lasting structural gaps (–5.2%).

Source: Simulation results reported in the paper (aggregated European defence production under a CRINK decoupling scenario).

Why Supply Chains Matter: Critical Inputs Heavily Sourced Abroad

Many defence products rely on materials where Europe faces high import dependence. The paper cites large shares for items like rare earths and magnesium—key for sensors, magnets, chips, armour, and energetics.

Illustrative Import Dependence on Critical Materials (%) Horizontal bars showing indicative dependency shares mentioned in the paper. 0% 25% 50% 75% 100% Rare earths 91% Tungsten 83% Magnesium 81% Germanium 76% Gallium 63% Indium 57%

These dependencies explain why sudden trade breaks hit defence production hard: many parts and materials have few short-term substitutes.

So, What Should Europe Do?

Act early on supply chains

Diversify critical inputs now (even if it costs more). It lowers long-run risks and speeds up recovery after shocks.

Coordinate defence industry

Reduce market fragmentation, share capacity, and prioritise bottleneck components across allies.

Invest in resilience

Build stockpiles, dual-use manufacturing, and faster certification to switch lines in a crisis.

Plan for worst-case

Run stress tests for 6–18 months of disruption, not just weeks. Assume multiple shocks, not one.

Bottom Line

The study’s message is straightforward: Europe is vulnerable to long disruptions today, but it doesn’t have to be tomorrow. Moving fast to de-risk supply chains is painful upfront, yet it pays off with smaller long-term losses and stronger readiness.

Source: d’Artis Kancs, “European Defence Readiness,” arXiv (2025). Full text: https://arxiv.org/abs/2501.00058.