Europe is heading the wrong way in AI and R&D | 5 Jul 2025

The European Union (EU) was supposed to be an aggregate of diverse cultures and ideas, with different views but common values and overarching goals. Instead, it is now turning away from this prospect.

A scientific paper author (AI generated)

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Beginning from March 19, 2025, the European Commission (EC) officially announced its five-year masterplan in the “White Paper for European Defence and the ReArm Europe Plan/Readiness 2030”. It is a dramatic shift in central policies that will now focus on “an ambitious defence package providing financial levers to EU Member States to drive an investment surge in defence capabilities”.

Typically, the ReArm Europe plan “strengthens pan-European defence capabilities with new financial means”, but what this actually means is shifting a huge amount of the gross GDP of the EU, and the vast majority of R&D funding, towards weapons and weaponized technology. According to preliminary talks and “rebranding” after some blackslash, the programme aims at raising and distributing €150 billion in low-interest loans to “facilitate the purchase of advanced weapons and ammunition” — this will be the “SAFE” fund. At the same time, the EC will implement “targeted relaxation of fiscal rules to mobilise up to €650 billion”.

Some more economics

Essentially, this sums up to a total of €800 billion from EU state countries, in loans or fiscal adjustments, that will be directed to weapons, ammunition and defense spending within the next few years. Whatever the accounting rules will be, this is still national debt that will be added on top of EU countries, which have just recovered from a decade of deep economic depression and possibly at the beginning of another, due to the world-wide collapse of trade agreements after the USA tariffs have been imposed.

To have a comparative baseline, the EU GDP is roughly $20.287 trillion, relatively close to the $27.721 trillion of the USA GDP. For the EU, the ReArm Europe programme will provide a nominal 0.79% GDP, i.e., $160 billion for each of the next five years. In contrast, for USA the total defense spending is 3.4% GDP, i.e., close to $1 trillion. Someone would say, great, this is still very low for the EU, what is the problem?

Well, here it is: According to the National Center for Science and Engineering Statistics (NCSES) in the National Science Foundatio (NSF), USA spends almost $900 billion in Research and Development (R&D), with an increase of +5% each year. This is equivalent to 0.9% GDP of funding going directly to developing cutting-edge technology and pushing the state-of-the-art in science, including defence of course. On the other hand, the EU is spending around $419 billion in R&D or 2% GDP — That is before ReArm Europe. Again, this seems better than what USA does. Right?

Here is the catch

Comparing percentages per GDP in EU and USA spending, it is obvious what is going on: For USA, 3.4% in defence versus 0.9% in R&D means that there is a ratio of about 3.78:1 in terms of funding allocation. For the EU, 0.79% in defence versus 2% in R&D means a quite opposite ratio of 1:2.62 in terms of funding. However, in the case of USA the second factor (R&D) is equivalent to $900 billion, while for the EU it is $419 billion, i.e., less than half. Anyone working in R&D can verify that science and technology do not progress linearly with allocated funding. You cannot get “half” a fusion reactor with half the funds. You cannot maintain “half” the biomedical engineering labs or produce “half” efficient batteries for electric cars.