Cold War alliance architecture locked Europe into U.S. defense supply chains: interoperability rules and procurement practices created durable technological lock‑in and fragmented European industry, leaving Europe ill-equipped to surge on its own. The same institutional dynamics warn that early choices about AI standards, procurement and alliances could similarly entrench foreign platform dominance unless governments pursue coordinated, sustained policy changes.

Main Finding

European defense-industrial dependency on the United States is not merely the result of underinvestment, poor policy design, or European disunity. Rather, it is a structural, self-reinforcing outcome of Cold War–era alliance institutions and the decisions of both American and European actors. NATO’s integrated command, procurement norms, and interoperability requirements created technological lock‑in, fragmented European production, and persistent reliance on U.S. supply chains that are difficult to reverse even as strategic preferences shift.

Key Points

• Alliance institutions (especially NATO’s integrated command structures and common interoperability standards) systematically privileged U.S. capabilities and incentives.
• Both U.S. and European actors made rational, short-to-medium-term choices—prioritizing operational effectiveness, alliance cohesion, security guarantees, and cost efficiency—that cumulatively produced long-term dependency.
• Institutional features became path dependent: interoperability standards, procurement practices, and market access norms yielded technological lock‑in and fragmented European industrial development.
• Dependency was therefore not solely a deliberate U.S. design nor simply European unwillingness, but a mutually reinforcing structural outcome.
• The Russia–Ukraine War exposed the operational limits of this arrangement, revealing Europe’s inability to surge ammunition and advanced systems at scale.
• Institutional inertia and alliance incentives have constrained attempts to build independent, large-scale European defense production capacities.

Data & Methods

• The article uses a comparative historical and institutional analysis spanning World War II to the present.
• Analytical frameworks: dependency theory, path dependence, and theories of alliance politics.
• Evidence sources include:
  • Historical evolution of NATO integrated command and interoperability requirements.
  • Analysis of procurement norms and market-access practices developed in the transatlantic alliance.
  • Comparative assessments of U.S. vs. European production, technology diffusion, and market structure over time.
  • Contemporary operational evidence from the Russia–Ukraine War demonstrating supply shortfalls.
• Methodological approach is primarily qualitative and case-based, emphasizing institutional mechanisms and causal narratives rather than formal econometrics.

Implications for AI Economics

• Early institutional choices and standards can create durable market and technology lock‑in; the same dynamic may apply to AI (e.g., standards for models, data formats, cloud infrastructure).
• Alliances and procurement practices shape industrial structure: defense shows that prioritizing interoperability and short-term operational needs can fragment regional industry and produce long-term dependence—analogous to how governments’ choices to adopt dominant foreign AI platforms can hinder local AI ecosystems.
• Path dependence implies that building strategic autonomy in AI requires coordinated, sustained policy (procurement, R&D, standards, industrial policy), not one-off investments.
• Trade-offs are unavoidable: prioritizing immediate capabilities and cost-efficiency (e.g., buying U.S. AI services) can be rational but will limit future domestic capacity and bargaining power.
• Resilience lessons: stockpiling compute/data, diversifying supply chains, and investing in scalable domestic production (chips, data infrastructure, talent pipelines) are necessary to avoid operational shortages in crises.
• Institutional reform matters: altering procurement norms, interoperability rules, and alliance incentives can be as important as funding—policy design should address incentives that lock actors into dependencies.
• Empirical research agenda: economists should study how alliance-like institutions, procurement regimes, and interoperability standards in AI affect market concentration, technology diffusion, and strategic autonomy, using mixed methods (historical institutional analysis, firm- and sector-level data, and counterfactual simulations).