Summarize this content to 2000 words in 6 paragraphs in Arabic For the first time in more than 30 years, Europe’s defence sector is hot property. After decades in which European military budgets were squeezed to fund other commitments, US President Donald Trump’s hardline approach towards Ukraine and calls on allies to shoulder more of their security burden have forced the region’s leaders into action. Governments are promising to unlock hundreds of billions of euros to mobilise their industrial base and plug gaps in their arsenals. The region’s defence groups have benefited from higher spending following Russia’s full-blown invasion of Ukraine three years ago, with new government orders boosting backlogs to record highs. Trump’s return to the White House, however, has turbocharged Europe’s rearmament effort and with it, the industry’s prospects. Company valuations soared to all-time highs this week, with shares in some groups up more than 40 per cent since the start of the year.“Geopolitical tensions, including Russia’s invasion of Ukraine . . . are fuelling a new global defence supercycle,” said Loredana Muharremi, analyst at Morningstar.The potential end of US military support for Europe has raised questions about the continent’s capability gaps — and which companies might benefit from the urgent need to fill them. The war in Ukraine has exposed vulnerabilities in areas including intelligence and surveillance, air and missile protection systems, heavy-lift transport aircraft and air-to-air refuelling. The US this week dealt a blow to Ukraine’s ability to target Russian forces by cutting off intelligence-sharing with Kyiv. Estimates by the Stockholm International Peace Research Institute show the US accounted for 55 per cent of Europe’s defence equipment imports between 2019 and 2023 — up from 35 per cent in the previous five years.America’s shift in policy towards Europe is “pretty fundamental” and “the biggest change since World War II”, according to Guntram Wolff, senior fellow at Brussels-based think-tank Bruegel.“It is comparable to the end of the cold war,” he said, “but with a negative side because western Europe has been under the US umbrella [and] also under US strategic leadership for the last 80 years.”Industry executives have said they are ready to boost investment but stressed they need governments to follow through on their spending pledges with long-term contracts.Europe has the “necessary technology to produce the full spectrum of defence equipment it needs”, Patrice Caine, chief executive of French defence electronics group Thales, said this week. Key, however, was whether the declarations would be “backed by extra contracts . . . If the orders come, we will be ready”.US defence companies could also benefit from European governments’ increased spending unless countries move to deliberately exclude American equipment. Several European nations have bought the Lockheed Martin-built F-35, the world’s most-advanced fighter jet. Land warfare and munitionsEurope’s production capacity for ammunition and armoured vehicles is severely stretched, which could also provide an opportunity for US manufacturers such as General Dynamics to keep providing equipment.However, the immediate European beneficiaries of any uplift in spending are expected to be the small group of national defence champions such as Germany’s Rheinmetall and Britain’s BAE Systems, which have benefited from orders for land vehicles, ammunition and munitions. KNDS, an alliance of France’s Nexter and Germany’s Krauss-Maffei Wegmann, is another likely winner. Rheinmetall, BAE, Nexter and Finnish-Norwegian government-owned Nammo would benefit from more investment in ammunition. Suppliers of explosives and propellants such as Britain’s Chemring and France’s Eurenco will also continue to be winners. Air defence and missile systemsMore funding is also expected to flow into air defence and missile systems. Ukraine has until now benefited from the US-made Patriot system, Washington’s most advanced air defence weapon, which is also used by several allies. It consists of a radar system and mobile launchers that can fire interceptor missiles at incoming projectiles or aircraft. Analysts said Europe could instead send Kyiv more of its SAMP-T missiles. The system, made by Eurosam, a joint venture between pan-European missile champion MBDA and Thales, is also in use by the Italian and French armed forces. Thales on Sunday secured a £1.6bn deal from the UK government to build more of its lightweight multirole missiles (LMMs) which Ukraine’s forces are using. Sweden’s Saab, which makes the shoulder-fired anti-tank NLAWs, could also win more orders. Intelligence and surveillanceAnother vital area where Europe needs to boost investment is in intelligence, surveillance and reconnaissance. Douglas Barrie, senior fellow for military aerospace at the International Institute for Strategic Studies, said the war in Ukraine had underlined the importance of ISR and America’s critical role in providing it. Europe only counts on three “big wing” signals intelligence aircraft, including the Boeing RC-135 Rivet Joint aircraft used by the UK.One potential beneficiary is Munich-based Hensoldt, according to analysts, which is working on an airborne surveillance system called Pegasus for Germany’s armed forces. Sweden’s Saab also has capabilities in early warning and control systems.Space and satellite communicationsSatellite communication and the integration of data on the battlefield are key areas where Europe has relied on help from the US. The “integration of digital, data management, satellite intelligence and then linking all of that back to the troops on the ground — that is a big gap where we have to do a big investment”, Wolff said.Eutelsat, the French satellite operator and owner of OneWeb, this week said it was in talks with European governments about providing additional satellite connectivity in Ukraine. The company is well-placed if Elon Musk’s Starlink, which has played a critical role in helping Kyiv improve its battlefield communications, were to withdraw its services. Eutelsat’s share price is up more than 500 per cent since Friday’s close.AI and autonomous systemsEurope’s governments are expected to earmark significant sums for new growth areas such as artificial intelligence, cyber security and autonomy, which are set to play huge roles in future warfare. The shift will benefit some existing players — Thales is a leader in cyber security, while Italy’s Leonardo has decades of expertise in sensors and radar. Leonardo is also in talks about a production partnership with Turkey-based drone maker Baykar to boost the continent’s production capabilities.Newer entrants, however, are also expected to benefit, as is Ukraine’s burgeoning drone industry. Robert Stallard, analyst at Vertical Research Partners, said Europe had an “opportunity to do things differently . . . to bring in more of the commercial technology companies into defence”.“If you are going to increase defence spending by 50 per cent — there is an opportunity for defence start-ups in Europe.”German defence AI start-up Helsing, seen as Europe’s answer to Peter Thiel’s US data intelligence business Palantir Technologies, announced last year it would move into drone manufacturing to capitalise on the rising demand for autonomous weapons. The company has pledged to deliver 6,000 of its HX-2 attack drones to Ukraine. The drones are electrically propelled with a range of up to 100km. Advanced on-board AI enables full resistance to electronic warfare.Additional reporting by Leila Abboud in Paris and Ray Douglas in LondonVideo: ‘Film me!’: Russia’s executions of Ukrainian POWs point to a policy | FT Film
