The strategic role of space and Europe’s answer

Agora Strategy Executive Briefing on Space

Executive Summary

• Space becomes increasingly crucial for defence and security, as space powers like the US, China and Russia engage in an arms race of counterspace capabilities and are planning for warfighting in space.
  

• Conflicts and wars are increasingly being fought in space and involving civilian and commercial assets, with some countries, e.g. Russia, already officially designating them as legitimate targets for retaliation.
  

• While this development puts commercial assets at risk, the push from European governments to build up critical infrastructure and strengthen their autonomy also holds great potential in the market for new defence capabilities in space.

  
  

Implications for International Business

• Given the new urgency with which European governments pursue their military procurement, companies are often required to switch from individual manufacturing to mass production as quickly as possible.
  

• As Europe expands its investments and harmonises regulation, companies must deepen cooperation with public institutions and private peers, including cross-border alliances, to ensure interoperability, compliance and innovation speed.

  
  

• Consolidation and vertical integration across the value chain—from launch and manufacturing to downstream data services—will not only strengthen Europe’s autonomy but also provide funding opportunities and improve competitiveness.

Key Topics

Strategic role of space in Europe

Space is essential for modern warfare and multidomain operations. The war in Ukraine demonstrates that the involvement of commercial space assets has fundamentally changed the nature of warfare. Earth observation (EO) and satellite communication (SatCom) services from low Earth orbit (LEO) enable real-time warfare and significantly impact the outcome of battles. Consequently, space has now reached the tactical level, enabling combat on hypertransparent battlefields.

Over the past decade, Europe, a self-proclaimed "global space power", has failed to consider the geopolitical aspects of its space policies. This has resulted in the temporary loss of its own access to space between 2022 and 2024, when Europe was not able to autonomously launch even its most important satellites into orbit. This was due to the suspension of Soyuz launches after the start of Russia's war of aggression against Ukraine, combined with the phasing out of the Ariane 5 launch vehicle, delays in the development of Ariane 6, and the halt of Vega launches. Furthermore, European countries have long neglected to build up their own capabilities in space and rely heavily on US space services for defence activities.

Still, Europe learned another lesson from Ukraine: that commercial assets can compensate for the lack of national space capabilities and thus improve sovereignty. Nevertheless, the dominance of Starlink and SpaceX demonstrates that such assets can create risks of critical dependency if its owners are not from the same jurisdiction.

Political programs & institutional frameworks

In contrast to NATO, which has no own space assets and depends on Member States making their capacities available when needed, the European Union has its own space capabilities with high technological standards. Most known are Galileo the Position, Navigation and Timing (PNT) system, which is more accurate than GPS, and Copernicus, the “gold standard” in EO. Both will also be involved in military activities in future and supplemented by IRIS² as Europe’s own multiorbital SatCom system until 2030. However, skepticism remains regarding the private sector’s contribution to financing and the system’s ultimate design and function: Some worry it will be overly complex and not provide sufficient data capacity, shaped more by competing interests between industry and governments than real-world requirements.

Building up sophisticated, common European capabilities in relevant space services will be a long-term challenge as gaps in the military sector are wide, especially in missile detection, geospatial intelligence, Intelligence, Surveillance, Reconnaissance (ISR), and in Space Domain Awareness. Even though it is impossible to replace dependencies on US and commercial services in the short term, there are several European initiatives to integrate the space capabilities of EU states and make them interoperable. For example, the recently published EU Defence Roadmap 2030 includes a European Space Shield as one of the four flagship projects. It aims to enhance interoperable national defence capabilities and ensure the protection and resilience of space assets and services.

In addition, the EU Space Act establishes a common framework to strengthen the internal market in the space sector. Not all European countries have a national space law, including Germany, where the last three governments declared their intention to pass one. An EU-wide regulation could therefore strengthen the European space sector and industry by providing Europe-wide investment security and framework conditions in the growing European market. However, industry representatives fear overregulation and a shift in competence at the expense of national control. They call for uniform (minimum) standards for all market participants, but with procedures differentiated according to company size and risk profile, so that the Act is practical, flexible, innovation-friendly, and industry-appropriate.

Market & industry landscape

The space sector is in a revolutionary phase similar to where commercial aviation was after the Second World War and the internet in the 1990s. Traditionally, the sector was characterized by governments commissioning agencies such as ESA or NASA to contract large companies to develop and build new systems individually and over the long term. In the last two decades, launch costs have dropped by around 90 per cent and radically changed the market, thanks to private venture capitalists and so-called NewSpace companies with innovative products and services primarily for commercial customers. Even large traditional space players – Airbus, Leonardo and Thales – are consolidating their space businesses to meet new, faster procurement requirements and better compete in the global market. The space economy is highly dynamic, with innovation cycles shortening at an increasing rate.

Over the next decade, more than 43,000 satellites are set to be launched, reshaping competition across orbits and applications, and fuelling a $665 billion market in manufacturing and launch services. Five major government and commercial mega-constellation projects in LEO will account for 66 per cent of the satellites launched in the next decade – SpaceX’s Starlink and Starshield, Amazon’s Kuiper, and China’s Qianfan and Guowang networks. However, despite accounting for only 9 per cent of new satellites, defence will once again become the market's economic anchor. Currently, budget priorities in Europe lie with defence and strategic autonomy. The urgent need for resilience and redundancies, as well as rising defence spending, creates opportunities and demands new technologies and readily available solutions.

Sovereign access to space will remain the critical bottleneck. Although Ariane 6 is now available and Vega C rockets can again launch smaller satellites, the European launcher crisis is not over. It is currently unclear whether Ariane 6 will be able to perform ten launches per year in future. While reusable rockets are now standard practice in the United States thanks to SpaceX, and China has made significant progress in this area, Europe has only just begun to discuss the successor to Ariane 6, required by the mid-2030s. To strengthen Europe's competitiveness and autonomy, and to catch up in terms of momentum and innovation, ESA has initiated the European Launcher Challenge. This initiative will promote new projects and provide financial support for five selected companies – Isar Aerospace, Maiaspace, Orbital Express Launch, PLD Space, and Rocket Factory Augsburg. They should raise Europe’s autonomy by providing launches for payloads of a few hundred kilograms into LEO from European spaceports with rockets manufactured in Europe. However, the European market will not be comparable to the United States or China in terms of numbers, and likely very few micro-launcher companies will survive in the long term unless ESA and national governments act as anchor customers and guarantee a certain level of launch demand.

Geopolitical risks & future scenarios

All actors in space face severe and growing risks regarding safety and security. For one, space is becoming increasingly congested and contested. Not only is there a massive increase in the number of active satellites, but the amount of space debris has also risen sharply: It is estimated that, due to more than 650 breakups, explosions, collisions or other anomalous events, around 54,000 pieces of debris larger than 10 cm, 1.2 million pieces between 1 and 10 cm in size, and an astonishing 140 million pieces sized between 1 mm and 1 cm are circling in space. Traveling with 8 km/h in LEO, a debris piece of 1 cm unleashes the kinetic effect of a hand grenade.

The increasing number of active and scrap elements in space raises the risk of further collisions and satellite failure, with each collision leading to new space debris, which in turn jeopardizes other objects. This is the very definition of the Kessler syndrome: Proposed by NASA scientist Donald J. Kessler in 1978, this scenario describes a chain reaction in which collisions between satellites and debris generate more fragments, thus exponentially increasing the likelihood of further collisions. This cascading effect can, once initiated, affect all satellites and ultimately render entire orbits unusable.

Besides the risks of incidents, both increased military reliance on space for tactical operations and rapidly improving space capabilities of potential adversaries mark a growing threat to public and private space assets. The United States, China and Russia now have extensive and growing counter-space capabilities to temporarily or permanently disrupt or destroy anyone’s space operations. These range from cyber-attacks, electromagnetic interference, jamming of data signals, lasers, rendezvous and proximity operations, i.e. approaches in space, to anti-satellite weapons and nuclear explosions in space. Furthermore, the increasing number of demonstrations of capabilities and operations, as well as the flying of military-related manoeuvres and strategic planning for warfighting in space, illustrate that future wars will not only be fought in and through space (which is already common), but also in space itself.

The arms race in space has already begun. Next is, it seems, an actual war fought in space. For the US Space Force, at least, “space warfare is a certainty in the future because the use of space in war has become vital”. Thus, space will be part of future conflicts and commercial assets are likely increasingly involved.