The Dual-Use Gap That Puts Europe at Risk

Europe and the United States have taken very different paths on dual-use innovation. America’s demand-driven model has produced scale and speed, while Europe’s principle-driven approach has left gaps that are now vulnerabilities. Bridging this divide will require not imitation, but a European model that is faster, bolder, and true to its values.

 

When it comes to dual-use innovation, the United States and Europe have walked very different paths. In Washington, the blurring of civilian and defence research has long been treated not as a risk but as an advantage. Agencies such as Defense Advanced Research Projects Agency (DARPA) and Defense Innovation Unit (DIU), backed by a powerful venture capital ecosystem, turned the Pentagon into both a buyer and a driver of technological change. Artificial intelligence, cyber, space, and advanced materials were all propelled by this fusion of public demand and private ingenuity.

In Brussels, the picture could not have been more different. Until very recently, the separation of civilian research from defence was treated as sacrosanct, both in law and in political culture. Horizon Europe, the EU’s flagship research programme, was deliberately designed with an exclusively civilian mission. Defence funding, when it existed, was scattered across national budgets or kept in narrow silos. The result has been a structural gap between the transatlantic partners: two allies facing the same technological races, but with profoundly different models of how to compete.

This article examines the roots of that gap, why it matters now, and what Europe might learn from the U.S. approach. The goal is not to copy it wholesale, but to shape a model of its own that reflects both urgency and European values.

 

America’s Model: Demand-Driven, Capital-Fuelled

The U.S. dual-use ecosystem rests on two foundations: a state willing to act as a risk-taking buyer, and a private sector able to scale technologies at speed.

DARPA is perhaps the best-known example. Created in 1958 to prevent technological surprise, it channelled billions into high-risk, high-reward projects with military relevance but civilian spillover. The internet, GPS, and stealth aircraft all carry DARPA’s imprint. More recently, the Defense Innovation Unit was launched to bridge Silicon Valley and the Pentagon, fast-tracking commercial technologies into defence use and signalling to investors that military markets were open for business.

Behind this lies a uniquely American feature: the Pentagon as a single, massive demand driver. Unlike Europe, where procurement is fragmented among Member States, the U.S. military provides startups with a unified pathway from prototype to deployment. Add to this a venture capital sector accustomed to betting on frontier technologies and willing to accept defence clients, and the result is an ecosystem where dual-use is not an exception but the default.

The American model is not without flaws. It has suffered from boom-and-bust cycles in funding, dependency on military contracts, and tensions between Big Tech and the state. Yet in terms of speed, scale, and appetite for risk, it has few rivals.

 

Europe’s Model: Principles and Silos

If the American approach to dual-use innovation is demand-driven, Europe’s has been principle-driven. For decades, the European Union drew a deliberate boundary between civilian and defence research. This was not only a legal distinction but also a political choice rooted in Europe’s post-war identity and the belief that scientific progress should be insulated from military influence.

Horizon Europe embodies this tradition. As the EU’s flagship research and innovation programme, it was designed with an explicitly civilian mandate, continuing a long line of framework programmes that excluded defence. By contrast, the European Defence Fund was introduced only in recent years, and while it provided a dedicated channel for defence R&I, the connection between civil and military innovation remained narrow and often discouraged.

Financial institutions reinforced this separation. The European Investment Bank and most national development banks long maintained strict policies against funding defence-related projects. More recently, ESG standards added an additional layer of caution, creating reputational risks for investors who might otherwise have supported technologies with dual-use potential.

The consequences of this siloed approach are now evident. European startups with technologies that could serve both civilian and defence markets often struggle to secure capital, particularly in early stages. Venture capital remains cautious, banks avoid exposure, and researchers face uncertainty about whether their work qualifies for funding. The result is an ecosystem that remains fragmented and hesitant, lagging behind global competitors in scale and speed.

Europe’s model has been consistent with its values and its history, but it has also limited its ability to mobilise innovation in response to geopolitical change.

 

Why the Gap Exists

The divergence between the United States and Europe in dual-use innovation is not just a question of funding levels. It reflects structural differences in how each side conceives the relationship between security and technology.

In the U.S., the Cold War forged a political consensus that defence was the ultimate driver of scientific and technological progress. The Pentagon became the country’s largest research funder, creating a single demand engine that pulled entire industries, from semiconductors to aerospace, into its orbit. The result was an innovation ecosystem where commercial and military applications were intertwined from the start, and where defence contracts were often the launchpad for companies that later dominated civilian markets.

Europe’s trajectory was the opposite. Integration after 1945 was built around a rejection of militarisation, with research policy framed as a peace project. Civilian innovation became the focus of EU-level initiatives, while defence remained fragmented across Member States. Even when the European Defence Fund was introduced in 2017, it was designed as a modest complement to national efforts, not a transformative demand driver comparable to the Pentagon.

The financial cultures also diverged. American venture capital embraced frontier technologies with clear defence potential, encouraged by the presence of military customers willing to pay for untested products. In Europe, by contrast, investors and banks treated defence as high-risk and reputationally toxic. ESG frameworks reinforced this reluctance in recent years, but the underlying hesitation predated them by decades.

Finally, scale matters. U.S. procurement is centralised, with one set of rules and a budget larger than the GDP of many European states. European procurement is fragmented into 27 national systems, each too small to offer startups the market certainty they need. Even when EU programmes exist, their size and scope remain limited compared to the American model.

These contrasts explain why the U.S. could create an environment where dual-use innovation was natural, while Europe effectively institutionalised its absence.

 

Why It Matters Now

For decades, the differences between the U.S. and European approaches to dual-use innovation were manageable. Europe could afford to focus on civilian research and social priorities while relying on the U.S. security umbrella for defence. The transatlantic gap was wide, but it was tolerated.

That era is over.

Russia’s full-scale invasion of Ukraine forced Europe to confront its dependence on both U.S. security guarantees and foreign technologies. From ammunition production to drones, the continent discovered not only that its defence industry lacked capacity, but that many of the enabling technologies were being imported. The uncertainty has been compounded by shifting U.S. politics: recent debates, including President Trump’s reluctance to commit unequivocally to NATO, have raised questions about how reliable America’s security umbrella will remain in the future.

At the same time, the U.S.–China rivalry has turned dual-use technologies such as AI, quantum computing, space systems, and advanced semiconductors into the front lines of geopolitical competition. In this environment, Europe’s structural hesitation toward dual-use is no longer an ideological choice. It is a vulnerability.

The American model, with all its flaws, is producing scale and speed. The Chinese model, though different, is also deliberately fusing civil and military innovation. Europe risks being left in the middle: too constrained to compete at the technological frontier, yet too dependent to guarantee its own security.

Bridging the transatlantic gap does not mean copying the Pentagon. But it does mean recognising that Europe can no longer treat defence innovation as an afterthought or a reputational risk. If strategic autonomy is to mean anything, it must extend to the technologies that will define both security and competitiveness in the decades ahead.

 

What Europe Can Learn — and What It Should Avoid Copying

The U.S. model of dual-use innovation is not a blueprint for Europe, but it offers important lessons. The first is the power of demand. Startups and investors move where there is certainty that customers will buy at scale. Europe cannot replicate the Pentagon, but it can create stronger and more predictable demand signals through joint procurement, coordinated EU-level programmes, and early-stage adoption by public authorities.

The second lesson is the importance of speed. American defence innovation benefits from fast-track mechanisms such as Other Transaction Authority (OTA) agreements, which bypass lengthy procurement procedures. Europe does not need to import these instruments wholesale, but it does need to cut red tape if it wants promising technologies to reach deployment before they are obsolete.

The third lesson is the role of capital. The U.S. venture capital ecosystem has been willing to fund dual-use startups because defence markets are open and respected. In Europe, the stigma remains strong. This is where EU and national institutions can lead, by backing specialised funds, de-risking private investment, and normalising security-relevant technologies as part of sustainable finance frameworks.

But Europe should not try to mirror everything. A Pentagon-style dominance of the innovation ecosystem would clash with European traditions of academic independence, social oversight, and cooperative governance. Nor should Europe embrace the boom-and-bust cycles of American venture capital, which can leave startups stranded when political priorities shift.

The real opportunity for Europe is to design its own model: values-driven, strategically coherent, and rooted in cooperation rather than confrontation. Dual-use technologies are not just about weapons; they are about resilience, infrastructure, and the competitiveness of Europe’s economy as a whole. A European model of dual-use innovation can balance openness with responsibility, and ethics with effectiveness.

If Europe succeeds, it will not close the transatlantic gap by copying the United States, but by creating a framework that reflects its own history and ambitions, one that makes dual-use innovation a natural part of its future, rather than a contradiction.

 

Conclusion

The transatlantic gap in dual-use innovation is real, but it is not permanent. Europe has the talent, the industries, and the political momentum to catch up. What it needs is the courage to break with old silos, the clarity to design its own model, and the speed to act before others set the rules. The choice is no longer between defence and innovation, but between shaping the future or depending on those who do. If Europe can meet this challenge, it will not only close the gap with its allies but also help define a more balanced and resilient model of dual-use innovation for the 21st century – one that strengthens its industry, underpins its economy, and reinforces societal resilience.

 

Katarína Cséfalvayová