Decades of defense industrial atrophy following the post–Cold War peace dividend have left NATO ill-equipped to meet the demands of today’s geopolitical moment. U.S. adversaries, on the other hand, are stepping up the pace. Secretary General Mark Rutte has highlighted that “Putin’s war machine is speeding up,” and assessments have found that China is outpacing the U.S. defense industrial base. The 76th annual summit of NATO provides an opportunity to highlight the progress made since the Russian invasion of Ukraine. But it also is a platform to draw attention to the hurdles that continue to stymie arms sales, technology transfer, and defense industrial cooperation—both among NATO members and in their bilateral relationships with the United States.
The transatlantic defense industrial base has long been disjointed, duplicative, and inflexible—and a range of regulatory, political, and cultural factors have worked to keep it that way. Each European state manages its defense industry at a national level, making it difficult to forge a unified defense vision across European NATO. Indigenized defense capabilities often outweigh production efficiencies and industrial integration, even if the “go-it-alone” approach is more expensive. Efforts to synchronize cross-border acquisition strategies are hindered by divergent threat perceptions: Poland and the Baltic states view Moscow as an immediate and existential threat, while other allies assign varying levels of urgency and strategic importance to Russian aggression. Meanwhile, the United States has historically had little incentive to encourage an integrated European defense industry, as its fragmentation helps preserve its defense firms’ market dominance.
Existing mechanisms for coordination have proven inadequate to address these structural problems. For instance, the NATO Defense Planning Process is designed to harmonize defense planning and promote allied capability development and acquisition—but it is ponderous, slow, and operates separately from NATO’s Common-Funded Capability Development process, which funds shared capabilities. Greater strategic alignment on procurement and NATO defense integration could help alleviate these inefficiencies, but entrenched political divisions—on both sides of the Atlantic—render this outcome unlikely in the near to medium term. It remains uncertain whether a consensus could be reached even among Europe’s major defense exporters over diminished national autonomy and domestic industry losses.
The current security environment demands an integrated transatlantic defense industrial base, as unilateral approaches will prove insufficient. While Europe possesses advanced defense technologies and weapons systems, it has heavily relied on U.S. assistance to replenish depleted stockpiles and bolster its defense posture in the face of a belligerent Russia. Additionally, Europe remains overly dependent on critical capabilities largely maintained by the United States, such as air-to-air refueling, strategic airlift, cyber defense, and intelligence, surveillance, and reconnaissance assets. However, this dependence runs both ways: The United States will struggle to deter Russian aggression—or pivot its strategic focus to the Indo-Pacific—without the contributions and leadership of its friends. This underscores the need for both streamlined U.S. export control policies and expanded codevelopment and coproduction initiatives, which build industrial power.
To highlight some of the perennial challenges of arms sales, technology transfer, and defense industrial cooperation, CSIS conducted a study that surveyed some of the United States’ closest industrial partners—those with a Reciprocal Defense Procurement Memorandum of Understanding (RDP MOU). These agreements relax provisions in the Buy American Act and allow foreign vendors to be considered domestic sources, granting the U.S. Department of Defense greater and easier access to allied and partner technologies and supply chains. As of 2025, 28 countries have RDP MOUs with the United States. Thirteen nations (which include one RDP MOU observer nation) responded to the survey.
Respondents called not for the elimination of U.S. export controls, but rather their reengineering. The Arms Export Control Act (AECA) of 1976 was passed during the Cold War, when the chief objective of the technologically dominant United States was to prevent U.S. arms and research and development advances from reaching the Soviet Union. The United States developed a detailed, highly regulated process to govern how it shared its technology, which left little room for defense cooperation. The International Traffic in Arms Regulations (ITAR), an implementing framework for the AECA, and the Technology Security and Foreign Disclosure (TSFD), a process that manages the tradeoffs of sharing sensitive technology and information with allies, were rated by survey respondents as the most challenging hurdles to international procurement and cooperation.
The NATO summit can be used as a forum to engage allies on which possible exemptions to ITAR would be most impactful, how they might be structured, and what reforms are necessary to fundamentally realign U.S. export controls with today’s threat environment. While Australia, Canada, and the United Kingdom benefit from certain license-free trade arrangements, these ITAR exemptions do not always lead to enhanced joint development or production. Any meaningful expansion of ITAR waivers and streamlining efforts must be developed in close coordination with allies, who operate on the receiving end of U.S. export control policy and therefore have a unique vantage point on which processes prove most burdensome.
Similar to ITAR and TSFD, survey respondents identified Foreign Military Sales (FMS), the mechanism through which foreign governments procure U.S. defense systems, as particularly onerous. It can take years to clear the Letter of Request, Letter of Offer and Acceptance, and Congressional Notification process. Actual delivery of requested capabilities takes even longer. Survey respondents noted that the United States is often reluctant to formally deny FMS requests, which leads to administrative foot-dragging and the delayed acquisition of urgently needed systems from alternative sources. They also emphasized that when NATO allies submit individual, uncoordinated requests for similar capabilities, it creates unnecessary review burdens and slows delivery timelines. As one participant put it, “the challenge is to coordinate procurements between allies to make NATO as strong as possible in our region.” Others echoed this, noting that “Allies (NATO members) are not coordinated, and the US Government has no method to help out.”
The United States could establish a combined review process of weapons requests from its allies to help alleviate prolonged procurement timelines and ease bureaucratic burdens. According to respondents, FMS cases are reviewed on a country-by-country basis, even if weapons are going to the same region or include systems intended to support interoperable forces. Additionally, prior FMS requests from countries do not seem to have any bearing on future FMS approvals, and there is no difference in process between a request coming from a NATO country versus one that has a limited defense relationship with the United States. Establishing categories—or “bins”—of allied countries that the United States could conduct combined reviews for would require extensive deliberation between Congress and the executive branch. A good starting point could be the 23 NATO members that already maintain an RDP MOU with the United States. The NATO Support and Procurement Agency could play a key role in facilitating joint FMS requests among these allies.
