Accelerating European Rearmament and U.S. Pressure on Defense Burden-Sharing: Response Strategies for a NATO Dual-Axis Transition

Executive Summary

As the war in Ukraine enters its fifth year and coincides with the Trump administration's "America First 2.0," NATO finds itself in a transitional phase, shifting from a U.S.-centered single-axis structure to a U.S.-Europe dual-axis structure. The U.S. Department of Defense is simultaneously pressuring allies to expand their defense spending and force contributions while demanding that its own defense industry accelerate production speed, and the dismissal of the commander of the U.S. Army V Corps stationed in Europe illustrates the friction inherent in this readjustment process. Europe is accelerating its self-strengthening efforts amid Russian hybrid threats and stalled ceasefire negotiations, but structural constraints—such as vulnerabilities in raw material supply chains and tightening export controls on dual-use technologies—make it difficult to escape dependence on the United States in the short term. Among the three scenarios, the baseline scenario (55% probability), in which U.S. pressure and European self-strengthening continue in parallel amid persistent friction, is the most likely to materialize. The South Korean government and defense industry need to phase in a dual-track strategy that does not bet on a single path, but rather combines Baltic-style startup partnerships, integration into subsystem supply chains, and participation in NATO 3.0 discussions.

I. Situational Analysis of the Issue

Accelerating European Rearmament and U.S. Pressure on Defense Burden-Sharing

1. Background and Developments

As the war in Ukraine enters its fifth year, Europe's security calculus has fundamentally changed. EAI's New Year Special Commentary characterizes Europe as currently "besieged on all sides." The diagnosis is that Russia's westward ambitions continue amid stalled ceasefire negotiations[2]. Compounding this is the Trump administration's readjustment of alliance policy. EAI analyzes that the second Trump administration is realigning its alliance network under the banner of "America First 2.0"[15]. It is pointed out that this process is triggering both the weakening of NATO and Europe's self-strengthening movements[15].

The Baltic states stand at the forefront of this trend. As the war in Ukraine has unfolded as the world's first drone war, the lesson that conventional forces struggle to achieve battlefield success has spread widely[1]. Accordingly, defense startups in the three Baltic states are experimenting with rapid innovation models to counter Russian hybrid threats[1]. At the same time, national- and EU-level rearmament and military modernization plans are accelerating across Europe. SIPRI points out that European countries are expanding "dual-use by design" research that integrates private-sector research and innovation into defense[4]. This is a trend that draws actors outside traditional defense firms—universities, research institutions, and spin-off companies—into the defense ecosystem[4].

This self-strengthening movement is also taking concrete shape at the industrial level. The UK's BAE Systems unveiled the uncrewed combat aircraft "Brontanax" at the Farnborough Airshow last August, targeting a test flight next year[9]. Discussions are also underway concerning the issue of raw material procurement for the European aerospace and defense supply chain. Roland Berger diagnoses that securing key raw materials is an essential condition for the resilience of Europe's defense industry[3].

2. Current Situation

The U.S. Department of Defense continues to pressure allies to expand their defense burden-sharing. Brookings Institution analyzes that the Trump administration's National Defense Strategy is premised on the logic that "the United States has hit its limits, and simultaneous multiple threats are becoming a reality"[8]. This is a demand that allies spend more, deploy more forces, and shoulder greater responsibility within their regions[8]. The Pentagon is issuing the same call for acceleration to the defense industry. The Department of Defense has notified industry to submit plans for "significantly faster" weapons production within 21 days[18].

Amid this backdrop, the dismissal of the commander of the U.S. Army V Corps stationed in Europe has emerged as a source of unease within the alliance. The U.S. Army confirmed on Friday, August 7, that it had abruptly removed Lieutenant General Charles Costanza just weeks before the end of his term[5][14]. Lt. Gen. Costanza had originally been scheduled to depart in October[14]. The U.S. Army did not specify the reason for the dismissal[14]. The Beninese outlet La Nouvelle Tribune reported the incident as one in which "the United States abruptly dismissed the commander stationed in Europe," pointing to the opacity of the circumstances itself as a problem[14].

Warnings regarding Russian hybrid threats have also continued to emerge. General Carsten Breuer, the top commander of the German armed forces (Bundeswehr), stated that Russia is carrying out hybrid attacks against NATO member states—particularly countries on the eastern front—on a daily basis[16]. His assessment is that drone-based probing of air defense networks is being conducted systematically[16]. Indeed, an incident occurred at Leipzig/Halle Airport in Germany in which a drone carrying explosives was discovered in the cargo area[12]. There were also subsequent incidents in which cargo aircraft sustained minor damage after colliding with unidentified flying objects[12].

3. Analysis of Key Actors

The U.S. Department of Defense/Pentagonis the axis consistently pressuring allies to expand their defense burden-sharing. The Trump administration's defense strategy starts from the premise that the United States cannot shoulder the entire burden alone[8]. This is the logic behind demanding substantive contributions from allies for rapid force generation and sustainable coalition operations[8]. However, as seen in the Costanza dismissal case, there are also signs that the very stability of the U.S. military chain of command in Europe is being shaken[5][14].

European defense firmsare the biggest beneficiaries of the self-strengthening phase. BAE Systems has entered the uncrewed combat aircraft market, one of the most fiercely competitive segments of the defense industry[9]. American companies such as General Dynamics are also directly penetrating the European defense ecosystem, showcasing at Eurosatory 2026 a tank combining a French turret with a German Leopard 2 chassis[17]. A pattern of both cooperation and competition between Europe's own defense firms and American companies is deepening simultaneously.

Baltic governments and startupsare positioning themselves as testbeds for self-strengthening. Judging that conventional forces alone cannot adequately counter Russian hybrid threats, they are pursuing deterrence through rapid technological innovation[1]. The very situation of civilian drones becoming weaponized represents for them both a security threat and an industrial opportunity[1].

The leadership of the German armed forces (Bundeswehr)is publicly playing the role of warning against Russian gray-zone provocations. General Breuer's remarks can be read as an intent to imprint threat awareness on domestic public opinion and political circles in Germany[16]. This is also intertwined with the logic used to justify Germany's rearmament.

The EU and national governmentsface the dual challenge of securing rearmament funding and restructuring supply chains. The issue of securing key raw materials is identified as a structural vulnerability of Europe's defense industry[3]. The expansion of dual-use research, while blurring the civil-military boundary, is also generating a new point of contention in the form of export control risk[4].

4. Key Issues

The first issue is the mismatch in pace between the pressure for defense burden-sharing and Europe's self-strengthening movement. The United States demands an immediate expansion of burden-sharing, but Europe's rearmament is proceeding amid structural constraints related to supply chains, raw materials, and workforce[3][8]. This time lag has the potential to translate into a trust problem within NATO.

The second issue is the impact of opacity in U.S. military leadership personnel decisions on alliance trust. The very fact that the reason for Lt. Gen. Costanza's dismissal was not disclosed, and that it occurred just before the end of his term, raises questions about the predictability of the command structure of forces stationed in Europe[5][14]. For European allies, this could feed into concerns that America's security commitments to Europe are exposed to political volatility.

The third issue concerns the resetting of export controls and the civil-military boundary as a result of the proliferation of dual-use technology. The Baltic startups' rapid innovation model and the EU-wide expansion of dual-use research contribute to expanding defense capabilities, but they also inherently carry the potential for conflict with existing export control regimes[1][4]. This could function as a new regulatory risk for extraterritorial companies and governments seeking to participate in the European defense ecosystem.

II. In-Depth Analysis of the Issue

Accelerating European Rearmament and U.S. Pressure on Defense Burden-Sharing: In-Depth Analysis

1. Analysis of Root Causes

The root cause of this issue is the reallocation of U.S. strategic priorities. Brookings Institution analyzes that the Trump administration's National Defense Strategy proceeds from the premise that "the United States has hit its limits, and simultaneous multiple threats are becoming a reality"[8]. The logic is that allies must spend more, deploy more forces, and take on regional responsibility themselves[8]. This is not merely rhetorical pressure. The Department of Defense has also notified the defense industry to submit plans for "significantly faster" weapons production within 21 days[18]. This means that pressure on allies for burden-sharing and pressure on domestic industry for faster production are proceeding simultaneously.

Behind this pressure lies the structural condition of the relative dispersion of U.S. national power. EAI assesses that the second Trump administration, under the banner of "America First 2.0," is actively pursuing a realignment of its alliance network and a resetting of its foreign relations[15]. This realignment is identified as a factor triggering both the weakening of NATO and Europe's self-strengthening movements[15]. In other words, Europe's rearmament is heavily characterized as a reaction to signals of strategic U.S. disengagement, rather than as a voluntary choice.

The cause on the European side is the persistent perception of the Russian threat. EAI's New Year Special Commentary diagnoses that although the war in Ukraine has entered its fifth year, ceasefire negotiations remain stalled and Russia's territorial ambitions to the west continue[2]. This diagnosis characterizes Europe as "besieged on all sides"[2]. Added to this is the new variable of hybrid threats. General Carsten Breuer, the top commander of the German armed forces, stated that Russia is systematically using drones to probe weaknesses in NATO's air defense networks. He noted that hybrid attacks are occurring "every day" against NATO member states, particularly countries on the eastern front[16]. The incident in which a drone carrying explosives was discovered at Leipzig/Halle Airport also occurred within this trend[12]. Europe's rearmament is the result of the combination of these two causes: the erosion of trust in the U.S. security commitment and the persistent Russian threat.

2. Structural Context

In terms of security structure, NATO is, for the first time since the Cold War, at a stage of transitioning from a U.S.-centered unified command and deterrence structure to a multipolar self-strengthening structure. At the NATO-IP4 Forum hosted by EAI, three questions from the European perspective were raised: how Europe views a changing NATO, how it perceives the "NATO 3.0" concept raised by the Trump administration, and how it seeks to explore linkages with Indo-Pacific countries amid the Russia-Ukraine war[6]. These very questions show that a shift in NATO's character—that is, a move from a U.S.-led single axis to a European axis of its own—is already on the discussion table.

In terms of political structure, opacity in personnel decisions within the U.S. administration is functioning as a variable that undermines the predictability of alliance management. Lieutenant General Charles Costanza, commander of the U.S. Army V Corps stationed in Europe, was scheduled to depart in October but was abruptly dismissed on August 7[14]. The U.S. Army did not specifically disclose the reason for the dismissal[5][14]. The very fact that the Beninese outlet La Nouvelle Tribune separately reported on this incident suggests that the ripple effects of this personnel action were unusual enough to draw attention beyond Europe, even from African and non-Western media[14]. The instability in the leadership of forces stationed in Europe is a matter directly connected to how NATO member states assess the sustainability of U.S. military forces.

In terms of economic and industrial structure, Europe's defense industry carries the vulnerability of raw material dependence. Roland Berger identifies securing raw materials—which underpin all military and civilian platforms—as a key challenge for the aerospace and defense sector[3]. This means Europe is not in a position to determine the pace of its own rearmament entirely on its own. At the same time, SIPRI analyzes that European countries and the EU are expanding "dual-use by design" research that draws universities, research institutions, and spin-off companies outside traditional defense firms into the defense research and innovation ecosystem[4]. This represents both an attempt to accelerate the pace of rearmament and, simultaneously, a structure that newly generates export control risks stemming from the militarization of civilian technology[4].

3. Comparison with Historical Precedents and Similar Cases

The closest historical analogy is the hegemonic vacuum situation during the Great Depression of the 1930s. A joint project by EAI and JoongAng SUNDAY, citing Charles Kindleberger's analysis, condenses the situation at the time into a single phrase: "Britain could not, and America would not"[10]. The diagnosis is that Britain no longer had the strength to serve as lender of last resort, while the United States was unwilling to take up that responsibility[10]. A similar pattern is observable in the current NATO structure. The United States still possesses overwhelming military power, but it is demanding burden-sharing to respond to simultaneous multiple threats[8], while Europe remains in a transitional period in which it has not yet completed its self-strengthening capabilities. There is a structural similarity in that this is a vacuum arising at a moment when the hegemon is stepping back from its order-providing role.

Another point of reference is the U.S.-led extended deterrence model at the time of NATO's founding in the early Cold War. EAI's analysis on extended deterrence points out that the second Trump administration's alliance policy is triggering "the weakening of NATO and Europe's self-strengthening movements," analyzing that this is being pursued on the basis of a broad consensus within the Trump administration favoring an early end to the Russia-Ukraine war, a redefinition of U.S.-Russia relations, and the prioritization of U.S. national interests through Europe's self-strengthening[15]. Whereas Cold War-era NATO was established on the foundation of the U.S. nuclear umbrella and permanently stationed forces, the current situation is closer to a structural break in that the very foundation itself is now subject to reconsideration.

The case of regional asymmetry in missile defense policy is also worth referencing. EAI's analysis of ballistic missile defense policy points out that although Europe had always been the strategic focus of U.S. security policy since World War II, the growing strategic importance of Asia due to changes in geopolitics, economics, and demographic structure led the Obama administration to announce its pivot to Asia strategy in late 2011[13]. The current pressure on European defense burden-sharing can be viewed as a phase in which this rebalancing trend is being reprised with greater intensity under the Trump administration. However, there is a difference in that this time the expansion of allies' own burden-sharing is at the forefront, rather than a reallocation of resources toward Asia.

4. Key Variables in the Development of the Issue

The first variable is the pace gap between the U.S. Department of Defense's demands for defense burden-sharing and Europe's defense industrial production capacity. Just as the Department of Defense demanded that industry submit production plans within 21 days[18], the United States is likely to expect a similarly rapid pace of force buildup from its allies. However, Europe faces the bottleneck of raw material procurement[3]. If this gap is not narrowed, the time lag between pledges to expand defense spending and actual force generation could continue to reproduce distrust within the alliance.

The second variable is the stability of the command structure of U.S. forces stationed in Europe. Whether the abrupt dismissal of the V Corps commander is a one-off personnel action or a signal of a broader restructuring of the command structure of U.S. forces in Europe will determine the level of trust NATO member states place in the United States going forward[5][14]. If the reason for the dismissal continues to remain undisclosed, allies' perceptions of uncertainty are likely to accumulate[14].

The third variable is the balance between the intensity of Russian hybrid threats and Europe's response capacity. Which side gains the upper hand—the daily hybrid attacks pointed out by General Breuer[16] or the rapid innovation experiments of Baltic defense startups[1]—will determine the effectiveness of the discourse on European self-strengthening. If the Baltic states' experiments fail to translate into actual deterrent effects, the credibility of the European self-strengthening argument itself could be shaken.

The fourth variable is the direction of NATO's institutional redefinition. A key inflection point is whether the "NATO 3.0" discussions raised by EAI will result in merely expanding Europe's role while maintaining the U.S.-led extended deterrence structure, or in a restructuring in which Europe holds independent command and planning authority[6]. Depending on which direction this takes, the investment incentives for European defense firms and the priorities national governments place in allocating their defense budgets will differ.