European stocks soared last week after the European Union pledged to loosen budgetary strings to bolster defense spending — and the region’s long languishing space sector might be in line to benefit.
Last week, the EU declared it would “massively step up” its support for Ukraine’s three-year plight against Russia’s invasion through the ReArm Europe plan that could mobilize roughly 800 billion euros ($867 billion). The continent’s largest economy, Germany, had already set the tone as expected-next chancellor Friedrich Merz divulged plans to overhaul the nation’s long-standing debt policy to allow for higher security expenses. Beyond the EU, the U.K. likewise last month announced intentions to lift its defense contribution to 2.5% of the country’s gross domestic product, starting in April 2027.
That’s a lot of money slated to walk the talk of Europe’s solidarity. The pledges follow uncertainty over Washington’s willingness to continue footing part of the Ukraine war bill under President Donald Trump’s second administration. A largely land-bound conflict of attrition doesn’t immediately bring space to mind, until you remember that, for years, Starlink — a venture of Trump ally Elon Musk’s SpaceX — has offered Ukraine’s military its satellite internet services throughout the hostilities. Shares of French-British satellite operator Eutelsat rose last week on the prospect that the company might replace Starlink to provide internet access to war-torn Ukraine, where it is already present.
Musk’s intentions for ongoing support to Kyiv, meanwhile, remain unclear:
“My Starlink system is the backbone of the Ukrainian army. Their entire front line would collapse if I turned it off,” tech billionaire Musk warned over the weekend, prompting a reminder from Polish Foreign Minister Radosław Sikorski that Warsaw pays for Ukraine’s Starlink service and “will be forced to look for other suppliers,” if SpaceX proves to be an unreliable provider. Amid a heated clash, U.S. Secretary of State Marco Rubio rushed to reassure that “no one has made any threats about cutting Ukraine off from Starlink” and called for Poland’s gratitude.
The operational future of the tens of thousands of Starlink terminals currently active in Ukraine — and of some of the services purchased for the embattled country under a Pentagon contract in 2023 — remains in question.
But “it’s clear that everybody is asking us today, ‘Can you actually replace especially this very large number of terminals that Starlink has across Ukraine?’ And that’s something we are looking very actively at, yes,” Eutelsat CEO Eva Berneke said in a Bloomberg TV interview, acknowledging that it may take “probably a couple of months” to increase the number of her company’s active terminals in Ukraine.
And Eutelsat’s not alone. Luxembourg’s SES, Viasat and Spain’s Hisdesat have told the Financial Times that they’re in governmental and institutional talks to broker back-up connectivity for Kyiv’s needs.
“It is a key element of modern warfare to have strong communication capabilities from space. Satcoms has always been a military weapon, but now with the low earth-constellation it’s even more key in terms of keeping … communication open and actually providing intelligence to armed forces,” Berneke said.
Perennially linked to national security, the space industry has always counted governments as its No. 1 customer. The European decision to double down on defense could shepherd some of that capital toward the continent’s thirsting space sector.
Noting the role of satellite communication networks and GPS in facilitating military command, control, intelligence gathering and navigation, Seraphim Space CEO Mark Boggett told CNBC that “significant contracts will now be accessible to home-grown European firms.”
“A significant portion of this new defense funding is likely to be allocated to space initiatives. Years of underinvestment must be addressed swiftly and effectively,” Boggett added, flagging the restraining impact of tight regulation, weak funding and government procurement practices on European space developments to date.
“If Europe can reform its bureaucratic procurement processes that have historically favored established primes, the next five years could witness a revolution in AI-enabled deep tech, leading to considerable wealth creation and growth while simultaneously rebuilding European defense capabilities.”
It’s no secret that Europe’s space industry has been struggling to keep up with transatlantic peers, relying heavily on its allies for launches. Just last year, SpaceX fulfilled a contract with the French-based European Space Agency to sling four satellites to orbit for the Galileo navigation system. Previous Galileo deliveries were arranged on a European ticket and launched on either Arianespace’s now retired Ariane V or Roscosmos’ Soyuz rockets, before Russia’s invasion of Ukraine soured the latter relationship.
It’ll have sent a sigh of relief across Paris when, eight months after its maiden flight, Arianespace last week culminated a spate of postponements with the successful launch of Ariane 6’s first commercial mission, which set the CSO-3 Earth observation satellite in orbit for the French Defense Procurement Agency. But that may have been a bittersweet achievement against numbers pointing to just three European launches — excluding Russia — last year, compared to a triple-digit performance out of the U.S.
