Ukraine will use a new €90bn ($104bn) EU loan to purchase Chinese components for drone production, according to a report published this week by the Financial Times.
Brussels is therefore effectively admitting that, even after more than four years of war, Europe remains unable to produce certain key components of modern warfare in the required quantities, at an acceptable price and within the necessary timeframe.
The problem lies not in sophisticated fighter jets, missiles or radar systems, but in far more basic components like electric motors, batteries, permanent magnets, camera modules, control electronics and optical fibers. Europe’s dependence is clearest in these standardized goods: its industry lacks the manufacturing ecosystem that China has spent two decades building.
Brussels is thus formally accepting a situation in which Chinese industry supplies components to both sides of the Russia-Ukraine war. Russia has long relied systematically on Chinese supplies. Ukraine, meanwhile, will now be able to finance some of its purchases of Chinese components through a European defense loan. It is an exceptionally revealing paradox of European industrial policy.
The arrangement is a sobering reflection of the state of European industry. A continent that speaks of strategic autonomy and geopolitical power is unable to expand production quickly enough even in relatively inexpensive components commonly used in consumer electronics, which have become essential to some of the war’s most consequential weapons. The European Commission must therefore grant an exemption from its own rules because European production capacity is simply insufficient.
The Cost of Europe’s Industrial Retreat
Several factors have contributed to this predicament. European industry has long been burdened by high energy prices, the high cost of capital, complex permitting procedures and overregulation. At the same time, Europe spent decades moving much of its standardized production to Asia while concentrating on higher-value goods. That model worked in peacetime, but in wartime it is proving to be a strategic weakness.
The bankruptcy of Sweden’s Northvolt is an emblematic example. The company was intended to serve as a showcase for the EU’s Green Deal and Europe’s answer to Chinese dominance in battery production. Instead of strengthening the continent’s technological self-sufficiency, its collapse demonstrated how difficult it is to compete with Asia’s industrial ecosystem without an integrated supply chain.
The European Union therefore faces an uncomfortable reality. It wants to reduce its strategic dependence on China, yet acknowledges that it cannot currently produce equipment essential to Ukraine’s defense without Chinese components. If Europe remains unable to respond flexibly even during the continent’s largest armed conflict since World War II, the implications extend far beyond defense.
Originally published on the author's personal website lukaskovanda.cz.
