A significant report on EU competitiveness released on Monday highlights that European Union nations are excessively procuring defense equipment from abroad, with nearly two-thirds sourced from the United States, while not sufficiently investing in collaborative military initiatives.

The 27 member states are also underutilizing Europe’s research and development capabilities to enhance their armed forces, achieving only a fraction of the investment levels seen in the U.S., according to the findings by former Italian Prime Minister and European Central Bank President Mario Draghi.

This report emerges as the EU grapples with the ongoing challenge of supplying adequate weapons and ammunition to support Ukraine amid the prolonged Russian invasion, now entering its third year, and aims to revitalize Europe’s defense sector.

Draghi’s report asserts, “Europe is squandering its shared resources. We possess significant collective purchasing power, yet it is dispersed across various national and EU frameworks.” This comprehensive analysis, a year in the making, is expected to drive a significant revision of the bloc’s industrial strategy.

One of the key issues identified is the insufficient investment in Europe to foster robust defense companies. The report emphasizes, “We are still not collaborating effectively within the defense industry to enable our firms to integrate and scale.”

It also notes a lack of support for competitive European defense enterprises. The report reveals that from mid-2022 to mid-2023, 63% of all EU defense contracts were awarded to U.S. firms, with an additional 15% going to other non-EU suppliers.

Recently, the Netherlands joined other EU nations in placing substantial orders for U.S.-manufactured F-35 fighter jets. In 2022, defense research and development expenditure across the 27 nations totaled 10.7 billion euros ($11.8 billion), representing only 4.5% of the overall defense budget, in stark contrast to the $140 billion spent in the United States, which accounts for approximately 16% of its total defense expenditure.

NATO allies, nearly all of whom are EU members, have been increasing their defense budgets since Russia’s annexation of Crimea in 2014, with the goal of ensuring each nation meets its defense commitments.