Home-From Peace to Power: The Innovation Shift Europe Didn’t Plan For

From Peace to Power: The Innovation Shift Europe Didn’t Plan For

The lines between civil and military innovation in Europe are no longer holding. As new strategies, funding tools, and political imperatives take shape, the EU is entering a new phase of research governance — one where dual-use is not the exception, but increasingly the rule.

 

Introduction

For decades, Europe’s innovation model was built on a clear boundary: science and research were civilian — full stop. Defence, if funded at all, belonged elsewhere: in national silos, military procurement lines, and far from Brussels’ flagship research programmes. This separation wasn’t just bureaucratic — it was ideological, a reflection of Europe’s post-war identity and its deep aversion to militarising knowledge.

That firewall is now quietly being dismantled.

Across EU institutions, a subtle but decisive policy shift is underway. From the European Innovation Council to the European Investment Bank, from new funding calls to evolving legal frameworks, the lines between civil and military innovation are being redrawn — not with fanfare, but with regulatory footnotes, reworded calls for proposals, and shifting investment mandates. The driver is not ideology, but geopolitics: a war on Europe’s doorstep, growing strategic dependence on foreign tech, and the hard realisation that security, resilience, and innovation can no longer be pursued on parallel tracks.

This article maps the contours of that shift. Building on our earlier piece No Longer Classified, which explored how non-traditional actors are reshaping defence innovation, we now turn our focus to policy. We examine how and why Europe is opening the door to dual-use — and even defence-related — innovation, and what this means for the governance, legitimacy, and future of EU research strategy.

 

What’s Driving the Shift?

Europe didn’t set out to blur the lines between civilian and military research. The shift we’re witnessing today wasn’t planned — it was provoked.

The most immediate trigger was Russia’s full-scale invasion of Ukraine. For the first time in decades, the European Union found itself responding to a conventional war on the continent — not just with economic tools, but with industrial and technological mobilisation. The conflict exposed critical vulnerabilities: in supply chains, in defence manufacturing capacity, and in the speed with which innovation could be translated into operational advantage. Ukrainian battlefield improvisation — from garage-built drones to software-driven targeting — laid bare the agility gap between traditional defence procurement and 21st-century conflict.

At the same time, the global strategic environment was shifting. The United States and China have both embraced a model where dual-use technologies — AI, quantum, space, cyber — are central to their military and economic competitiveness. In these systems, the line between civilian innovation and national security is not just porous; it’s deliberately fused. Europe, by contrast, was still operating under an innovation framework that largely treated security as a separate domain — if not a contaminant.

This mismatch between Europe’s principles and the geopolitical reality created a mounting pressure to adapt. Calls for “strategic autonomy” — once a catchphrase — began to crystallise into policy demands: for secure supply chains, for technology sovereignty, and for a more resilient industrial base. Innovation policy could no longer be insulated from questions of defence and security.

Add to this the growing sense that Europe is falling behind — in patent output, in venture capital, in tech leadership — and the case for a more flexible, strategic approach to dual-use innovation becomes not only compelling, but urgent.

 

Where the Change Is Happening: A Multi-Level Policy Recalibration

EU Research & Innovation Funding

The gradual shift toward dual-use innovation is perhaps most clearly observed in the EU’s flagship research instruments. Until recently, programmes like Horizon Europe and the European Innovation Council (EIC) operated under an unwritten rule: defence and dual-use technologies were to be avoided, if not explicitly excluded. That is now beginning to change — cautiously, but definitively.

At the centre of this evolution is the European Innovation Council (EIC). Although the EIC was originally launched with a strictly civilian mission, its role is now evolving. The most consequential development came in April 2025, when the European Commission proposed amendments to Regulation (EU) 2021/695, the legal basis of Horizon Europe. The revision would explicitly allow the EIC to fund startups and research projects working on dual-use and even defence-related technologies1. While the regulation has not yet been adopted, its mere proposal signals a significant policy turn: one that repositions the EIC as a potential tool in the EU’s strategic autonomy agenda. If approved, the change would mark a departure from the EIC’s original design as a “civilian DARPA” and bring it closer to a mission-driven model aligned with Europe’s security priorities.

The European Defence Fund (EDF), while formally distinct from Horizon Europe, is also increasingly aligned with it. The Commission has promoted synergies between EDF and civilian programmes2, including co-investment schemes, dual-track evaluation pipelines, and shared testing infrastructure — especially in areas such as quantum, space, and autonomous systems.

Meanwhile, while Cluster 3 of Horizon Europe has always focused on “Civil Security for Society,” recent calls within this cluster increasingly use language that reflects dual-use potential — with references to “resilience,” “preparedness,” and “strategic autonomy” becoming more explicit3. Although these calls are framed around civil protection, many topics — such as unmanned systems or AI-based threat detection — have clear potential crossover into defence applications.

Together, these developments suggest a strategic recalibration of EU innovation policy, in which dual-use potential is no longer disqualifying — and in some cases, may even strengthen a project’s eligibility and relevance.

 

Strategic & Regulatory Frameworks

The EU’s gradual embrace of dual-use innovation is not only playing out in funding programmes — it is also reflected in the bloc’s evolving strategic frameworks. Over the past five years, a series of official documents, action plans, and security strategies have quietly — but decisively — recast defence-related R&D as a legitimate and even necessary component of Europe’s innovation landscape.

The process gained momentum with the Action Plan on Synergies between Civil, Defence and Space Industries, published by the European Commission in 2021. The plan laid out a roadmap for breaking down silos between civilian and military R&D, promoting “cross-fertilisation” between sectors, and encouraging funding interoperability across instruments such as Horizon Europe, the European Defence Fund (EDF), and InvestEU.

This direction was reinforced with the Strategic Compass for Security and Defence adopted by the Council of the European Union in March 2022. The Compass outlines a vision for strengthening the EU’s defence and security capabilities, and explicitly calls for investments in emerging and disruptive technologies (EDTs). It identifies innovation as a pillar of European defence readiness and positions dual-use technologies — including artificial intelligence, cyber, quantum, and space — as key to Europe’s strategic autonomy.

The ambition to better connect civil and military innovation programmes has recently gained renewed political momentum. In June 2025, Manuel Aleixo, advisor to Research Commissioner Ekaterina Zaharieva, stated that the Commission should “not just look at dual use within the civilian research programme, [but] look into how the civilian and the European defence research programmes should interact better4.” He highlighted the need for improved mechanisms to spin in and spin out technologies between Horizon Europe and the EDF, noting that the current barriers between the two programmes risk stifling cross-sector innovation.

This approach is echoed in the European Defence Industrial Strategy (EDIS), released in March 2024. The strategy proposes tools for boosting Europe’s defence industrial base — including faster procurement, joint investment vehicles, and a resilience lens in innovation funding. It further supports the development of startups and SMEs capable of operating across the civil-defence interface.

These frameworks reflect a growing consensus: technological advantage cannot be maintained without bridging Europe’s legacy separation between innovation and security.

 

Institutional Repositioning

Beyond funding programmes and strategy papers, one of the clearest signs of Europe’s shift toward dual-use and defence innovation is unfolding within its financial and investment institutions. For decades, many of these institutions — including national promotional banks and the European Investment Bank — maintained strict limitations on defence-related financing. Today, those boundaries are being redrawn.

The most visible shift has come from the European Investment Bank (EIB). In March 2025, the EIB announced that it would begin financing projects related to European security and defence, including critical infrastructure, R&D, dual-use innovation, and SME support5. While lethal weapons and ammunition remain excluded, the Bank’s language has notably changed: it no longer refers to “dual use,” but instead frames its support in terms of “security and defence investments”. According to EIB Vice-President Robert de Groot, this change reflects an effort to clarify and normalise the Bank’s role in strengthening Europe’s strategic resilience — in areas ranging from AI and space to data centres and hospital infrastructure6.

At the national level, a parallel evolution is underway. In France, Bpifrance, the country’s public investment bank, is playing a lead role in defence-sector investment. In March 2025, the government announced the creation of a €450 million public fund7 for defence-focused companies, to be managed by Bpifrance. Finance Minister Eric Lombard noted that the initiative is designed to support France’s broader rearmament strategy and increase public participation in defence investment — a clear sign that dual-use innovation is now seen as a national strategic asset, not a reputational liability.

In Germany, public development bank KfW has adopted a more open stance toward defence financing. While still adhering to strict compliance standards — and excluding controversial weapon types — KfW now accepts financing requests from companies in the Security and Defence Industry (SDI), including those working on dual-use technologies. The bank also notes that such support is aligned with Germany’s federal policy objectives and may include equity participation or investment mandates assigned directly by the government8.

This shift is not limited to individual institutions. In May 2025, the national promotional banks of France (CDC), Germany (KfW), Italy (CDP), Poland (BGK), and Spain (ICO), together with the EIB, announced plans to jointly coordinate support for Europe’s security and defence sector9. Their agreement — formalised at a European Association of Long-Term Investors (ELTI) meeting in Warsaw — focuses on investment in research, industrial capacity, and infrastructure. It explicitly aims to develop joint financial instruments and advisory services, and is open to other national institutions across the EU. This initiative marks the beginning of a pan-European platform for long-term defence financing, one grounded in public-sector cooperation rather than siloed national strategies.

Taken together, these developments suggest a profound shift in how public financial institutions across Europe approach security and defence innovation. Once kept at arm’s length, the sector is now being integrated into long-term investment strategies — not only as a response to geopolitical risk, but as a driver of industrial competitiveness and technological leadership.

Together with national and multilateral banking shifts, these developments have been further reinforced by the EU Startup and Scaleup Strategy, published in May 2025. The Strategy explicitly recognises the role of startups and scaleups in strengthening Europe’s strategic autonomy, and includes a dedicated commitment to investing in security and defence-relevant companies, including dual-use startups. Among its proposed actions are a new Scaleup Europe Fund, expanded EIC support for deep tech, and the development of flexible financing tools tailored to the needs of emerging defence innovators — including equity, debt, and support for single-entity applicants. The Commission also signals its intention to align these tools with the White Paper on Defence – Readiness 2030 and the forthcoming Omnibus Defence Simplification Package, confirming that dual-use innovation is no longer peripheral, but an integral part of the EU’s industrial strategy.

 

The Governance Gap — and Why Moving Forward Is Essential

For all the momentum behind Europe’s pivot toward dual-use and defence-relevant innovation, the policy shift remains contested — and in many respects, under-governed. As EU institutions open the door to technologies that blur the line between civil and military use, long-standing assumptions about the purpose and governance of European research are being quietly rewritten — yet who decides where that line is, and how to enforce it, remains unclear.

This ambiguity was brought into sharp relief in April 2025, when the League of European Research Universities (LERU) issued a strongly worded response to the European Commission’s proposed amendment of the EIC’s legal mandate. LERU described the change as “non-transparent” and warned it could undermine the public trust that underpins Horizon Europe. The group argued that, without clear ethical safeguards or institutional debate, the inclusion of defence-linked research risks distorting funding priorities and damaging the credibility of European science10.

The integration of dual-use and defence innovation into instruments like the EIC Accelerator raises fundamental questions about what kinds of technologies will be deemed strategically relevant, who has the authority to make such decisions, how ethical oversight will apply across research domains with ambiguous use cases, and whether universities and research institutions can maintain autonomy if participation in defence-relevant funding becomes politically or financially expected.

While the Commission’s January 2024 White Paper on Enhancing R&D Support Involving Technologies with Dual-Use Potential proposed defining risk tiers, reinforcing ethical and security checks, and opening a consultation on governance frameworks, the continued concerns voiced by stakeholders like LERU show that these commitments have yet to translate into concrete mechanisms or reassurance. Meanwhile, no formal ethical review architecture for dual-use projects exists within Horizon Europe — a gap that risks eroding the trust which underpins Europe’s research ecosystem.

Institutional fragmentation adds to the challenge: national governments, funding agencies, and universities are moving at different speeds and with varying political comfort. Some Member States, like France and Estonia, are actively promoting dual-use clusters and startup funding, while others remain cautious or lack clear guidance for researchers.

Yet the need to act is clear. In today’s geopolitical environment, strategic autonomy is not a slogan. It is a structural requirement. Europe cannot maintain its economic security, technological competitiveness, or democratic resilience while keeping its research and innovation policies artificially siloed from its defence and security objectives. The world’s most critical technologies — from AI and quantum to autonomous systems and space — are inherently dual-use. If Europe doesn’t fund them, shape them, and deploy them responsibly, others will.

The path forward is not to deny the tensions, but to govern them — ensuring integration happens transparently, with ethical guardrails, and with engagement of those most affected. This is not about erasing values, but updating frameworks to reflect the world we now live in.

The greatest risk at this point is not moving too far, but moving too slowly. Europe has the tools, the institutions, and the experience to manage this shift. What it needs now is clarity — and speed.

 

Conclusion: From Principle to Practice

Europe is no longer debating whether to support dual-use innovation — it is learning how. The shift underway is not merely technical, but foundational: a redefinition of what innovation is for, and who it serves. At stake is not only the EU’s ability to defend itself, but its capacity to shape the future of strategic technologies on its own terms.

This moment demands more than adjustment. It requires leadership — political, institutional, and intellectual — and a willingness to close the governance gap that still threatens to erode trust. The challenge now is to translate strategic ambition into operational clarity: through funding, coherent rules, and ethical oversight that earns public confidence. That means moving fast, but not carelessly. It means building a policy architecture that supports dual-use innovation not as a loophole or an exception, but as a legitimate and vital part of Europe’s technological and security strategy.

If Europe can rise to that challenge, it won’t just protect its values. It will prove they can evolve — and still lead.

 

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Katarína Cséfalvayová