This week's in-depth: Katarina Engberg and Thomas Engevall talk defense industry
Here is a more detailed text with media that highlights a central topic for the Academy's project activities from several different perspectives.
The article is intended to provide a basis for conversation and debate, both within academia and in the wider public.
Royal Swedish Academy of War Sciences | Project SV-AR 2.0 | June 9, 2026
This is the Academy's second podcast in a new series on European security and defense. In this conversation, the participants tackle one of the most misunderstood questions in security policy: what do the figures circulating about European rearmament really mean — and is the money being converted into actual military capability in time?
Background image: what happens to the 800 billion?
Since Russia’s full-scale invasion of Ukraine on 24 February 2022, Europe has undergone its fastest defence build-up since the Cold War. Defence spending has risen from €218 billion to €392 billion. All NATO countries reached the two percent target by the end of 2025 — for the first time in the alliance’s history. Germany has decided on a defence spending level that will reach 3,5 percent of GDP by 2029. Poland is already at 4,5 percent.
The numbers behind the headlines
The ReArm Europe package, launched barely a year ago, was launched with the political umbrella term “800 billion euros.” That figure is real — but it is not a coherent investment plan. It consists of three parts with fundamentally different natures:
SAFE instrument (Security Action for Europe): €150 billion. This is the truly controllable part. SAFE means that the EU budget is used as collateral to give member states the opportunity to borrow on the market at better terms than they would otherwise have received. For countries with high levels of debt — and these are the countries that need to rearm the most — it is a meaningful lever. SAFE is managed by a Directorate-General for Defence and Space (DG DEFIS), not by the intergovernmentally managed European Defence Agency (EDA). The conditions are that purchases should be targeted at the critical military capability gaps defined by NATO, and that joint procurement should be prioritized.
Ukraine loan: 90 billion euros, of which 60 billion are earmarked for defense equipment. In practice, a parallel SAFE structure for Ukraine — loans against the EU budget as collateral. Planned Gripen deliveries to Ukraine are to be financed within this framework.
The remaining approximately 650 billion: changed budget rules. This relaxes the rules of the Stability and Growth Pact, which means that indebted countries can increase defense spending without risking EU sanctions. The effect is still largely impossible to measure. How much of this financial elasticity is actually translated into orders — and which orders — we do not yet know.
The result is that the EU in practice controls about a third of public investment in the European defence industry. Two thirds take place outside the EU framework, bilaterally or nationally.
The grenade promise and what actually happened
In March 2023, the EU promised Ukraine one million artillery shells within twelve months. The promise was politically bold — and industrially impossible. European production capacity at the time was a few hundred thousand shells per year.
What happened next is one of the more remarkable examples of industrial policy during this period. Through the ASAP and EDIRPA instruments — a total of just under €800 million in direct EU funding — the Commission shared the investment risk with industry. This was enough to trigger a chain reaction of private investment. European production of artillery shells now amounts to around two million per year.
It's still not enough. But it's double what it was — and it showed that the model works.
The real steering problem
The Commission has thus shown that it can drive consolidation and stimulate joint procurement. What it cannot do is force Member States to buy what is needed.
It is a crucial distinction. NATO defines the critical capability gaps. The EU can finance acquisitions — but cannot dictate what countries buy. And in practice, nation-states largely buy what they intend to buy anyway, reflecting national industrial interests and political compromises as much as common capability needs.
Germany now spends more on defense than France — and over 90 percent of the investment goes to its own industry. It's a rational national choice. But it obviously doesn't add up to a cohesive European capability.
The time gap that worries analysts
The bottleneck is no longer the willingness to spend. It is time and production capacity.
The investments in production lines being made now take two to five years to mature into actual delivery capacity. This means that Europe is most vulnerable right now — in the window that analysts identify as 2027–2029 — and that the capacities that are most urgently needed cannot be delivered until around 2030–2032.
The Americans are simultaneously recalculating their reinforcement capacity. The message they are signaling — and which is partly expected to be concretized at the NATO summit in Ankara in July — is that a new defense planning cycle will be carried out until 2027. The United States intends to cooperate on the handover until then. What happens after that is open.
It sets a concrete deadline. Europe must not only invest more — but invest right, and quickly.
About the podcast
On June 9, 2026, KKrVA's project SV-AR 2.0 recorded a conversation about the European defense industry, EU financial instruments, and the real implementation gap. The conversation takes place against the backdrop of Russia's ongoing war against Ukraine, the Trump administration's new stance, and a situation where Europe, for the first time in decades, must take a decisive role in its own security.
The conversation is the third in the academy's podcast series and is held as an analytical basis — not a final word, but an open and ongoing debate on the issues that shape the security policy of our time.
Participant
Lars Erik Lundin
Moderator and project manager
Ambassador, former Head of the European External Action Service's Security and Defence Policy Unit. Project Manager for SV-AR 2.0 at the Royal Swedish Academy of War Sciences. Fifteen years of experience from EU-NATO cooperation.
Katarina Engberg
Fact box — Katarina Engberg
Member of KKrVA.Fil. dr. in peace and conflict research with a thesis on EU military operations. Educated at Harvard's Kennedy School. Former ministerial advisor in the Prime Minister's Office and the Ministry of Defence. Served in Brussels with close contacts with both NATO and EU structures. Established her knowledge of defence planning at the Swedish Defence Forces Headquarters — “It was on the workshop floor in the Swedish Defence Forces that I learned the basics”, as she put it during the conversation. Active analyst and frequent media commentator with a recognized analytical record. Recently conducted updated interviews at senior level in Brussels. See also her Sieps analysis ReArming Europe: What is the current state of affairs? (Sieps, March 2026).
Katarina Engberg takes her starting point from the logic of the EU institutions: what tools the Commission actually has, where they work and where they are not enough. Her analysis of the SAFE instrument and the 800 billion is one of the clearest contributions to the public debate about what Europeans can actually do and do.
During the conversation, she emphasized that the lack of a centralized European defense planning process — neither in NATO nor in the EU — is the single most serious structural problem. And that materiel is only one component: “It is a concoction of different components. Of which personnel is perhaps the biggest shortage on the European level.”
Thomas Engevall
Fact box — Thomas Engevall
Member of KKrVA. Rear Admiral and naval engineer with a Master of Science degree in shipbuilding technology from Chalmers University of Technology. Educated in security policy and strategy at the US Naval War College. He has previously been, among other things, the Swedish Armed Forces' CIO and Materiel and Logistics Manager. He ended his active career as FMV's Chief of Staff and then also held the role of Deputy NAD (National Armaments Director). Currently works as a reserve officer and as a strategic advisor in the medium-sized defense industry. Has contributed chapters to the SV-AR project's research reports.
Thomas Engevall introduces perspective from the inside of the defense industry: what production lines actually require, where the bottlenecks lie and why political decisions and industrial realities often live in parallel timelines.
During the conversation, he was the one who most clearly argued for a European “Apollo program” — a grand strategic goal with a hard deadline for strategic enablers, including European ISR capabilities and command systems: “Just like Kennedy said: now we are going to put a man on the moon and bring him back safely before the end of the decade. Something similar is needed.”
The main themes of the conversation
1. The grenade issue — and what it illustrates
The scaling up from just under half a million to two million artillery shells per year in Europe is an important success. Thomas Engevall identified three interacting factors: the increased sense of urgency following the US's changed stance, the realization of how low stocks actually were, and the fact that politics was finally communicating clear financial signals. This reduced the industry's risk of investing in new production capacity.
Katarina Engberg added the institutional context: the model is taken directly from pandemic management. Just as the EU jointly procured vaccines and shared the investment risk with the pharmaceutical industry, the same logic is now being applied to defense equipment. And it works — “for smaller amounts,” as Engberg noted. The question is whether the model holds up when the amounts multiply and the complexity increases.
2. What Russia is reading into this — and what actually deters
One of the discussions during the conversation was about the psychology of deterrence. Thomas Engevall was convinced that Russia had been impressed: “They were very surprised how quickly it was at the beginning that the West presented a fairly united front.” Sweden had made the decision to donate armor-piercing shells in less than a week.
However, it is based on a classic distinction — rhetoric versus actual action. “It is one influence and real action gives another,” as Engevall put it. It is actual capabilities, not promises, that determine whether Russia considers a military adventure.
Katarina Engberg added: Ukraine's resilience has also surprised Russia. And the Ukrainian defense industry — now an innovation center with direct investments from European players — is increasingly integrated with the European base.
3. AI and the erosion of the rules-based system
Lars-Erik Lundin highlighted a report from UI on military AI. It is not just the technology that is escalating, but the parallel erosion of international law. Katarina Engberg put it this way: “A combination of the possibilities of technology and the erosion of international law — where people make conscious decisions to let this go.”
Ukraine, Israel and Iran are already testbeds for autonomous weaponry at a level that no peace conference has regulated. The debate about when and whether Europe should regulate military AI is intensifying. — but as Engberg noted: The Trump administration has now exercised power on that issue due to domestic political pressures.
4. The Time Gap — the Harsh Industrial Reality
The most central area of tension in the conversation concerned time-to-delivery. Engevall was clear: What is ordered now will not be delivered until around 2030 and beyond. In the immediate time window 27–29, it is important to maximize the benefit of what already exists and has been ordered, where delivery takes place in the near future.
This includes drones, which Engevall assessed could be scaled up significantly faster than heavier systems.
Katarina Engberg added the institutional dimension: the Americans are now signaling that a new NATO defense planning cycle will be completed by 2027, and that the US will participate in the handover until then. What happens after that is unclear. “It will impose a very big new condition on the Europeans,” she noted.
A key capacity shortage is strategic enablers — ISR satellites, command and control systems, strategic intelligence. These are the capabilities that are currently almost exclusively controlled by the United States. Europe lacks them. And these are the capabilities that take the longest to build.
5. NB8, Sweden and what collaboration can actually deliver
Lars-Erik Lundin raised the question of the added value of Nordic-Baltic cooperation. The answers were nuanced.
Thomas Engevall was cautiously positive about tactical-operational cooperation, but skeptical about industrial formats that are forced upon us: “We don’t need cooperation for the sake of cooperation.” However, the Polish submarine decision — Saab submarines and a loaned Södermanland — provides concrete opportunities.
Katarina Engberg was more directly critical: the NB8 format is “too small to stand on its own”. Sweden is back in continental European defence cooperation after two hundred years. That is the big change – and it is in this context that the Nordic-Baltic should be understood, as an important sub-format in a much larger system, not as an independent solution.
6. What is needed: decisions, not plans
The final words of the conversation were formulated in unison but with different accents.
Thomas Engevall: “The most important thing is to act. To make decisions from the political level down.” He called for a European Apollo program for strategic enablers — with a concrete, aggressive time target, 2031–2032, and a commitment to push it hard. “If you decide you want to do something and are prepared to make the necessary decisions, we can look at what Ukraine has actually achieved in four years.”
Katarina Engberg: “What we need is a centralised European defence planning process under political leadership. We don’t have that today.” She also called for increased synergy between the EDA and the Commission — right now the relationship is characterised by a “ping-pong game” from which no one benefits. And she singled out air defence as the clearest urgent priority: from next-generation fighter jets to drones.
Fact box: Key concepts and instruments
ReArm Europe / White Paper on European Defence (March 2025) The EU's umbrella term for the rearmament package. The political framework price is 800 billion euros, but the concept contains factors of very different controllability.
SAFE (Security Action for Europe) €150 billion in lending capacity with EU budget as collateral. Conditions: joint procurement, focus on NATO-defined capability gaps. Managed by DG DEFIS, not EDA.
DG DEFIS European Commission Directorate-General for Defence and Space. Increasing role as the Commission takes a more active position in defence procurement and financing.
ASAP and EDIRPA Previous EU instruments to share investment risk with industry. Total of about €800 million — the direct catalyst for the scaling up of artillery shell manufacturing.
CON-VulnerabilityWindow Analysts' term for the capacity gap that will open in 2027–2029, before new industrial investments have had time to mature into actual delivery capacity.
Strategic enablers ISR (intelligence retrieval) satellites, strategic command systems, cyber capabilities and long-range aviation. Today almost exclusively US-controlled. The European weak link.
Fact box: Katarina's key argument
The EU can drive consolidation — but cannot control what countries buy. The Commission lacks the tools to force member states to invest in the capabilities that NATO has prioritized. This is a genuine governance problem that neither NATO nor the EU has solved.
Materials are just one component. Staffing is probably the single biggest shortfall in Europe. Effective deterrence requires trained personnel, practiced coordination, and integrated management systems — not just hardware.
One third EU, two thirds national. The EU accounts for around a third of public investment in the European defence industry. Fragmented national procurement risks not adding up to coherent capabilities.
Air defense is the most urgent priority. From next-generation fighter jets to drones, the combination of civilian and military systems requires political leadership that Europe does not have today.
Sweden should pursue synergy between the EDA and the Commission. Sweden has an industrial interest, broad NATO-EU expertise and a tradition of constructive institution building. Contributing to the synergy of these two EU institutions would be a concrete contribution.
Fact box: Thomas' key arguments
Production scaling up requires three things in combination. Financial signals, the willingness to invest, political clarity that the orders will be fulfilled and time.
Ordered now, delivered around 2030. In the immediate time window, it is important to maximize the benefit of existing equipment and capabilities. Drones are an exception — they can be scaled up significantly faster.
A European “Apollo program”. Europe needs a grand strategic goal — with a hard deadline — for strategic enablers. ISR, space capabilities, cyber and command systems. No later than 2031–2032. “It’s about deciding and acting.”
Industrial cooperation must be based on real needs. Nordic-Baltic industrial cooperation for the sake of cooperation does not create capability. The Polish submarine decision, on the other hand, is a case where actual needs and industrial policy logic coincide.
Sweden and Poland are natural partners in the maritime domain. The geography of the Baltic Sea, Saab's submarine expertise and the scale of Polish rearmament create a natural convergence point that is not found to the same extent in Nordic-Baltic formats.
Listen to the podcast
The podcast recording is published on the academy's website. The conversation lasts approximately 65 minutes.
Project SV-AR 2.0 is an ongoing analysis project at the Royal Swedish Academy of War Sciences. Conversations, reports and analyses are published on the academy's website and form the basis for the cumulative book manuscript SV-AR 2.0, which will be presented at the autumn symposium 2026.
Next conversation in the series: Lars Nylén talks with the Director General of Psychological Defense Magnus Hjort and Professor Wennström from Uppsala about the undermining of Swedish society.