Allyconomy: Towards a European industrial strategy

There is little doubt that Europe today needs greater manufacturing autonomy, the ability to rapidly mobilise industrial capacity, its own critical technologies, and resilient supply chains. This applies not only to arms production, but also to semiconductors, artificial intelligence, digital infrastructure, cybersecurity, and the space sector. After years of enthusiasm for cheap Chinese imports and „subscription-based security” from the United States, Europe is beginning to realise that technological dependence can become just as dangerous as economic and energy dependence.

Europe wants its own technologies, its own production capabilities, and its own security – but without paying the price of autarky. Is that even possible? How can autonomy be built without falling into costly self-isolation? „Buy European” sounds admirable until the bills for security and technology begin to rise dramatically.

What Europe currently has is improvisation and desperate, fragmented attempts to patch its „technological gaps”. Initiatives such as the European Chips Act aim to revive European semiconductor manufacturing. The European Defence Fund finances joint defence projects. Permanent Structured Cooperation is yet another attempt to integrate military-industrial capabilities. The Net-Zero Industry Act supports green transition technologies. European space projects around the European Space Agency continue to develop, while debates over economic security, de-risking, and strategic autonomy grow increasingly intense.

Yet what is still missing is a genuine strategy linking industry, security, technology, and transatlantic cooperation. The question for Europe today is no longer whether it needs an industrial policy. What it needs is resilience – not merely another slogan about „strategic autonomy”.

Poland: From a polite consumer of security to an ambitious co-producer

Poland may play a unique role as a frontline NATO state and one of the largest defence manufacturing hubs in the region. The country is increasingly becoming a kind of „industrial bridge” between the United States and Europe – a place where American technology and capital meet European bureaucracy, regulation, and a fairly solid industrial base. The side effect? Poland is no longer merely a customer in the „security supermarket”; it is beginning to aspire to co-managing the shop itself.

Several parallel developments support this transformation. Poland has one of the largest military modernisation programmes in Europe, rising defence spending, an increasingly prestigious role as NATO’s logistical hub on the eastern flank, and is gradually building its own industrial and technological capabilities. Slowly but consistently, it is moving beyond the role of a mere end-user.

In practice, this means attempting to shift from a „we buy finished products” model toward a more ambitious „we co-develop, co-produce, and would also appreciate the editable source code” approach. Offsets, technology transfer, joint ventures, and localisation of component production have become the magic words meant to transform imports into co-authorship.

More broadly, the goal is for Polish companies to stop being mere subcontractors within foreign supply chains and gradually move toward helping design those supply chains themselves. In other words, Poland has a chance to move from „build this for us” to „let’s build this together – and this time, genuinely together”.

Defence and digital technologies: Increasingly indivisible

One of the most important trends in Europe’s industrial transformation is the deepening convergence between the defence sector and digital technologies. The line between civilian and military spheres is becoming increasingly blurred – and in many cases, it has effectively disappeared altogether.

Technologies such as artificial intelligence, cloud computing, cybersecurity, semiconductors, satellite systems, quantum technologies, and data infrastructure have become both the foundation of the modern digital economy and a crucial element of defence capabilities. The same technology that drives civilian innovation increasingly determines military advantage as well. In other words, an algorithm used to analyse consumer behaviour or optimise global supply chains may simultaneously support reconnaissance systems, military logistics, or autonomous weapons. Welcome to the era of dual-use technologies, where little now separates Excel spreadsheets from the battlefield.

As a result, the future industrial base of defence will, at its core, be digital. Military competitiveness is becoming inseparable from technological competitiveness. States that fail to develop their own capabilities in data, algorithms, cloud infrastructure, or semiconductor production risk not only technological backwardness, but also strategic dependence in matters of security.

It is also becoming increasingly clear that the defence industry of the future will above all be a digital industry. Tanks still matter, but increasingly the decisive factor is who controls data, algorithms, computing power, and access to semiconductors. Without chips, even the most patriotic security strategy ends up as a very expensive PowerPoint presentation. Already today, the Lockheed Martin F-35 Lightning II is, in practice, a flying computer with enormous digital processing capabilities. The same applies to tanks, warships, and missile launchers, all of them packed with electronics.

What matters today is sovereignty in artificial intelligence, cloud sovereignty, cyber resilience, and the security of semiconductor supply chains. These are no longer merely technological or regulatory issues, but fundamental components of the national security strategies of European states. These areas are no longer the exclusive domain of computer nerds and regulatory experts. Today, this is hard geopolitics. In the twenty-first century, a data centre appears to be just as strategic as an aircraft carrier – which, in any case, contains its own „data centre”. States that lack their own capabilities in these areas will sooner or later discover that their „strategic autonomy” functions mainly in conference presentations.

Consequently, a holistic European industrial strategy is no longer optional. Rebuilding traditional manufacturing capabilities alone will not suffice. Modern defence cannot be built solely on steel, concrete, and nostalgic memories of heavy industry. Digital capabilities are equally essential, because strategic autonomy increasingly begins not in the steel mill, but in the data centre.

The question, however, remains: does Europe actually possess the technological and industrial capabilities required to achieve such autonomy? Are European states ready to compete with the United States and China in space, AI, cloud infrastructure, semiconductors, and data systems – or will they remain primarily consumers of foreign technologies?

Europe will not win alone

The debate over Europe’s industrial strategy increasingly resembles an attempt to win a war using press releases and well-formatted regulation alone. Europe certainly has strengths: a huge market, a strong industrial base, and an almost supernatural ability to produce regulations, directives, and standards that the rest of the world is eventually forced to read. The problem is that regulations alone do not design processors, launch rockets into space, build hyperscale cloud systems, or train AI models worth hundreds of billions of dollars.

And those are precisely the areas where real economic and military power is now decided. In space technologies, global cloud services, artificial intelligence, semiconductors, venture capital, and dual-use technologies, Europe clearly lags behind both the United States and China. Any discussion of Europe’s industrial strategy must therefore begin with geopolitical realism. Another ambitious strategic document accompanied by a grand slogan will not change that reality.

The greatest mistake would be to confuse strategic autonomy with technological solitude. Europe lacks the scale, resources, and capital to compete independently against both Washington and Beijing across every critical sector. Attempting full self-sufficiency would most likely leave Europe as the world leader in conferences about its own marginalisation.

Realism requires something else entirely: building Europe’s own strategic capabilities while simultaneously maintaining close transatlantic cooperation. NATO interoperability, common technological standards, integrated supply chains, and industrial partnerships with the United States are not signs of weakness. They are conditions for Europe’s continued relevance in the global balance of power.

Europe’s strength will not come from disconnecting itself from the global technological economy and retreating into a „regulatory aquarium”. Its future relevance depends on the ability to co-create critical technologies together with partners who still know not only how to regulate the future, but also how to finance, manufacture, and defend it.

Europe needs scale

The greatest problem facing European industry today is not a lack of money. Europe is perfectly capable of spending enormous sums, organising funds, strategies, instruments, and support programmes with names so long they could qualify as infrastructure projects themselves. The problem is that all this potential remains fragmented.

In practice, Europe still functions more as a collection of national ambitions than as a single economic organism. Every country wants its own national champion, its own procurement system, its own standards, and preferably its own „strategic autonomy” – ideally financed partly by everyone else. The result is a mosaic of parallel mini-markets that rarely function together coherently and often resemble an expensive collection of national peculiarities when viewed globally.

This fragmentation has very concrete consequences. Production runs are often so small that they resemble limited editions rather than serious defence manufacturing. Costs rise, procurement procedures drag on for years, and decision-making moves at a pace fundamentally incompatible with modern defence or AI industries. Meanwhile, Europe’s competitors are not endlessly debating the harmonisation of procurement forms – they are building at scale, reducing unit costs, spreading R&D expenditure across large production volumes, and optimising factories and logistics.

Europe therefore does not suffer from a shortage of capital. It suffers from a chronic inability to act collectively.

The real challenge is thus building European scale: joint procurement, greater consolidation of the defence sector, harmonised technical standards, and a genuine single market for strategic technologies and production. In other words, less national ego wrapped in flags and more genuine European operational capability. Obvious as this may sound, in European legislative practice it sometimes resembles science fiction.

Equally important is accelerating the transition from research to production. Europe excels at funding pilot programmes, demonstrators, and conceptual projects. It performs far worse when something must actually be manufactured quickly, at scale, and competitively. Too many European innovations end their lives as elegantly presented conference slides before eventually being commercialised by American or Chinese firms instead.

Without achieving European scale, genuine competitiveness against global technological powers will remain elusive. In the twenty-first century, advantage comes not merely from capital, but from the ability to act rapidly, collectively, and at scale. Europe has spent years debating precisely this issue – with rather limited practical outcomes.

Ultimately, Europe’s problem is not that it is too small. The problem is that it behaves as though scale itself were a suspicious concept requiring additional consultations, ideally in twenty-seven languages and with separate procurement procedures attached.

Without industry, there is no real strategic sovereignty

Strategic sovereignty is not a political slogan or a regulatory category. It is a very practical capability: can you design, manufacture, and scale what you need when circumstances become truly difficult? If not, then what exists is not sovereignty, but outsourcing under a more attractive name.

This applies equally to traditional defence sectors – ammunition, heavy industry, energy systems – and to semiconductors, artificial intelligence, cybersecurity, and digital infrastructure. Digital infrastructure is increasingly emerging as a new layer of strategic infrastructure without which neither economic nor military superiority can be maintained.

Industry is therefore not simply one pillar of security. It is the foundation upon which those pillars stand. Without it, states can merely manage dependency while calling it „international cooperation”.

That is why the real question is no longer whether Europe needs an industrial policy. The real question is whether it can build one without suffocating innovation, openness, and allied cooperation in the process. Otherwise, Europe risks producing yet another impressive strategic document that functions perfectly – right up until the moment something actually needs to be manufactured.

How to be independent while remaining dependent

The debate over Europe’s industrial strategy has long since ceased to concern whether Europe wants strategic autonomy. It now concerns how long Europe can continue declaring it before someone asks about costs, production capacity, and actual supply chains.

In defence, Europe faces a classic choice without a real choice. Should it prioritise „European solutions”, even if they are more expensive and scale more slowly, or should it continue relying on NATO systems that work efficiently but fail to satisfy the political narrative of autonomy? At the same time, Europe must avoid duplicating NATO capabilities – a difficult task given how fragmented its defence industry remains.

In technology, the stakes are even higher. Sovereignty in AI, semiconductor control, and supply chain security sound like ambitious geopolitical projects until one confronts the reality that the crucial layers of infrastructure are largely built elsewhere. Europe has become a world leader in regulating innovation, but regulation alone offers limited influence over a game in which Europe is not the principal player.

Does the impact of EU regulation on the competitiveness of Europe’s innovation ecosystem genuinely strengthen Europe’s position – or does it paradoxically weaken it? It cannot be acceptable for others to operate freely within Europe’s market while simultaneously closing their own markets to external actors. Yet excessive regulatory protection also leads to protectionism and isolationism. Equally problematic is any situation in which external powers attempt to dictate what Europe may or may not regulate. Likewise, forcing favourable tariffs, taxes, or trade arrangements for one’s own benefit alone cannot form the basis of a balanced partnership. Genuine cooperation is not about the strong making the weak dependent upon them, but about building relationships in which both sides have a genuine stake in one another’s success.

Against this backdrop, Poland emerges simultaneously as both beneficiary and hostage of current geopolitical shifts. Can Poland use the present defence boom to achieve lasting industrialisation? Can this momentum be transformed into long-term development of a defence-technology sector and establish Poland as a regional hub for defence innovation? Or will this become yet another „lost strategic opportunity”?

Meanwhile, Europe’s pursuit of independence remains a highly flexible and highly risky project: realistic enough to finance, yet elusive enough to perpetually postpone completion.

Dependent autonomy

In practice, strategic autonomy increasingly appears not as a project of independence, but as the art of managing dependency in a way that sounds like independence. Europe does not face a binary choice between sovereignty and cooperation. Strategic autonomy should mean the ability to act – not the obligation to act in isolation.

The transatlantic economy remains one of Europe’s most important strategic assets. Industrial policy must therefore be intelligent, precisely targeted, and compatible with alliances. Alliances are not a limitation on autonomy; they are its technical precondition. Ambitions for complete European industrial self-sufficiency belong more to the realm of fantasy than realistic policy.

Europe needs resilient supply chains, but resilience cannot come at the expense of innovation and competitiveness. In the twenty-first century, industrial policy in defence and digital policy increasingly resemble not two separate domains, but a single integrated process.

Europe today possesses the beginnings of an industrial strategy, but it still lacks one coherent framework combining security, technology, energy, and defence into a unified geopolitical project. What currently exists is more a mosaic of instruments, funds, and exceptions to previous free-market rules than a fully developed European model of industrial mobilisation.

Europe therefore needs not a traditional twentieth-century industrial strategy, but a new model of a security economy – one that combines economic competitiveness with strategic resilience. The problem is that resilience is expensive. Energy security costs more than Russian gas. Manufacturing chips in Europe costs more than producing them in Asia. European defence systems are often more expensive than imported alternatives. The question, then, is whether Europe can afford not to have an industrial strategy.

As for Poland, a European Poland is not merely a frontline military state, but also an industrial and technological frontier. The question of whether it can fully exploit these advantages remains open – as always depending on whether favourable conditions can be transformed into lasting capability rather than merely a favourable moment in history.