On 17 June 2026, European Commissioner for Defence Andrius Kubilius, in a keynote speech at the Eurosatory defence exhibition in Paris, called for the creation of an integrated European defence market, arguing that the current fragmentation into 27 national markets hinders innovation, competitiveness, and readiness. He also announced he would sign a €15 billion SAFE loan agreement with France later that day to support defence ramp-up in France and Europe.
Kubilius identified four reasons for deeper market integration: it would strengthen national security by helping defence industries grow and sell across borders; it would boost European industrial competitiveness and strategic autonomy, as highlighted by the Letta and Draghi reports; it would enhance European defence readiness by enabling Europe to outproduce Russia; and it would support defence start-ups and SMEs by removing barriers such as national transfer licenses and differing standards. He contrasted Europe's slow transformation with Ukraine's rapid defence innovation, noting that Ukraine's defence production surged from €1 billion in 2022 to €50 billion in 2026, and that the number of Ukrainian companies at Eurosatory grew from 10 to 80 in two years. Kubilius stressed that Europe must integrate Ukraine's military force and defence industry into its own architecture.
The speech contained concrete proposals, including a recently agreed reform to cap permit waiting times for defence production facilities at 102 days, down from up to four years. However, the call for an integrated defence market remained a broad policy orientation without specific legislative proposals or deadlines. Kubilius acknowledged that defence remains a national prerogative under EU treaties, but argued that greater integration would not undermine national sovereignty. The speech did not address potential opposition from member states wary of ceding control over defence procurement, nor did it detail how to overcome the widespread use of Article 346 exemptions for direct awards, which he said account for up to 80% of defence procurement.
The speech marks Kubilius's most explicit push for market integration since becoming Commissioner, building on earlier EU initiatives such as the European Defence Fund and the Act in Support of Ammunition Production. The SAFE loan for France is part of a broader EU effort to mobilise joint borrowing for defence investments, though the speech did not specify whether similar loans would be extended to other member states. Kubilius concluded by urging the defence industry to shift from "haute couture" to "good enough" production, echoing Ukraine's approach of cheaper, scalable weapons.
Stakeholder impact: European defence primes, which dominate national markets, could face increased competition from SMEs and cross-border rivals, potentially reducing their market share. SMEs and start-ups would benefit from reduced regulatory barriers and easier market access, fostering innovation. National defence ministries would gain access to a wider range of suppliers but would lose some procurement autonomy. EU taxpayers would see increased EU-level spending on defence, with the SAFE loan adding to joint debt, while potentially benefiting from lower costs through greater competition and economies of scale.