ESA, EU Push $25.5B Space Budget to Fuel Defense Autonomy

Europe's space and defense budgets are set for a major overhaul as the European Space Agency (ESA) and the European Union (EU) push for increased spending to bolster military capabilities and autonomy. The ESA has proposed a €22 billion ($25.5 billion) budget for the next three years, a 36% increase from its previous allocation. According to the report, this funding will support a new program aimed at strengthening the continent's defense infrastructure in space.

The European Space Agency's move into the defense sector marks a historic shift. For the first time, ESA—traditionally a civilian organization—will work on initiatives that directly support military and security operations. A key part of this effort is the European Resilience from Space (ERS)

program, which will leverage systems like the EU's Iris2 satellite communications network and the Galileo navigation system to support defense forces and emergency services according to the same report.

In parallel, the European Parliament recently approved a €1.5 billion ($1.7 billion) defense investment program (EDIP) to boost the EU's military industry and aid Ukraine. This initiative is part of a broader push to enhance European defense capabilities in the wake of Russia's 2022 invasion of Ukraine and growing U.S. pressure for European self-reliance as reported.

A New Era in European Space and Defense

The ERS program is being positioned as a critical step toward European autonomy in space and defense. Director General Josef Aschbacher emphasized that future space funding will increasingly come from defense ministries rather than just civilian ones, reflecting the changing landscape of global security. The program will allow defense forces, police, and emergency services to access shared space-based assets, improving coordination and response times in times of crisis.

However, securing buy-in from national governments has proven challenging. Aschbacher has held discussions with defense ministers across the continent to explain the benefits and address concerns over sovereignty. The proposal will be reviewed at the ESA ministerial council, where space chiefs from key member states such as the UK, France, and Italy will cast their votes according to official statements.

The EU's defense spending is expected to reach €392 billion this year, nearly double the amount from four years ago. This surge in spending is being driven by a combination of geopolitical pressures, including Russia's war in Ukraine, and a shifting U.S. defense strategy under President Donald Trump. The Trump administration has made it clear that European nations must take greater responsibility for their own security and support for Ukraine.

Ties with Ukraine and a Reshaped Defense Industry

The EU's defense commissioner, Andrius Kubilius, has also proposed deeper integration of the bloc's defense industry with Ukraine. This effort aims to not only support Kyiv in its ongoing war but also to tap into Ukrainian military innovations to strengthen the EU's own defense capabilities. A portion of the recently approved €1.5 billion EDIP will be allocated to the Ukraine Support Instrument.

The EDIP itself has been the subject of intense negotiations among EU member states. France has pushed for strict "buy European" rules to prioritize domestic defense suppliers, while countries like the Netherlands have advocated for greater flexibility to source equipment from U.S. and UK allies as reported. The program is expected to run through 2027 and will be used to streamline joint procurement, boost production, and enhance European defense coordination.

At the same time, the European Commission has outlined a broader 10-year roadmap to spend €3.4 trillion on defense and space initiatives. This includes plans to boost the EU's long-term defense and space budget to €131 billion ($153 billion), reinforcing the continent's strategic independence and technological self-sufficiency according to the commission's plan.

The Space Sector: Eutelsat's Big Push

The European space sector is also undergoing a transformation as companies like Eutelsat seek to compete with U.S. players like SpaceX. Eutelsat recently completed a 1.5-billion-euro capital increase to stabilize its finances and invest in its low-Earth orbit (LEO) satellite broadband services. This move is part of a broader strategy to reduce Europe's reliance on foreign satellite providers and build a competitive domestic space industry.

Eutelsat's recent funding round has helped to restore investor confidence, with bond yields on its 2029 debt falling to about 7% from 16% in February. The company aims to reduce its net debt to 2.5 times EBITDA by next summer and is preparing to replace aging OneWeb satellites to maintain its competitive edge .

As Europe continues to shift toward a more defense-focused and technologically autonomous future, the coming months will test whether these ambitious plans can gain broad support and deliver tangible results. With space becoming an increasingly strategic domain, the continent's ability to coordinate its efforts and innovate could shape its geopolitical standing in years to come.