The long-awaited report – ordered by Ursula Von der Leyen, the European Commission president – demanded a wider “industrial strategy for Europe”, involving €800 billion in annual investment to prevent the bloc from falling behind the US and China.
It is likely to set the agenda for Mrs von der Leyen’s next five years in office, which will be blighted by war and economic stagnation.
The report was authored by Mario Draghi, a former president of the European Central Bank and ex-Italian primer minister, who was largely credited with saving the euro during the financial crisis more than a decade ago.
“The safety of the US security umbrella freed up defence budgets to spend on other priorities,” he wrote. “In a world of stable geopolitics, we had no reason to be concerned about rising dependencies on countries we expected to remain our friends. But the foundations on which we build are now being shaken.”
Washington has slowly shifted its focus from the Euro-Atlantic area to the Indo-Pacific over the last two decades. The Trump White House further accelerated the transition by framing the rivalry with China as a great power competition.
Joe Biden, the US president, identified countering Beijing as his main foreign policy challenge at the start of his administration, although his efforts were made difficult by the Russian invasion of Ukraine in February 2022.
“US strategic doctrine is shifting away from Europe and towards the Pacific Rim – for example in the format of Aukus – driven by the perceived threat of China,” wrote Mr Draghi. “As a result, a growing demand for defence capability is being met by a shrinking supply – a gap which Europe itself must fill.”
The EU collectively is the world’s second-largest spender on defence, but it only forks out a third of Washington’s outlay, according to the report. Just 10 member states, which are also part of Nato, hit the two per cent spending goal set by the Western military alliance.