BREAKINGVIEWS-How economics will shape Europe-Russia drone wall

By George Hay

LONDON, Jan 6 (Reuters Breakingviews) - “Whatever you shoot at another adversary's capability, it should be cheaper than what you're shooting down”. So said General Chris Donahue last summer at the U.S.-run LANDEURO defence conference in Germany. The most senior American soldier in Europe is right to zero in on economics as NATO and the European Union race to counter an impending Russian threat. But the dismal science is even more fundamental to the continent’s security than his maxim implies.

For Donahue, and the region's own leaders like EU Defence Commissioner Andrius Kubilius, the exam question is how to defend a border that runs for 2,700 kilometres from Finland to Poland. The added twist is that the war in Ukraine has shown that expensive traditional weaponry like tanks, guns and missiles can be taken out by unmanned aerial vehicles worth a fraction of their cost. Kubilius refers to a “drone wall” to face down Moscow. Donahue prefers to speak of an “eastern flank deterrence line” (EFDL) between Europe and Russia. On balance, the latter is a more useful concept.

For unmanned craft, the economic imbalance is indeed stark. Russia’s version of Iranian “Shahed” drones have a range of 2,000 kilometres but can cost as little as $35,000 to make, according to the Center for Strategic & International Studies. That's a problem because, right now, Europe’s defences are primed to fire much more expensive missiles at them. When drones appeared last September over the Polish border, in an incursion that Warsaw blamed on Russia, Dutch F-35 fighter jets used AIM-9X Sidewinder missiles – unit cost, just over $1 million – to down them. The Russian so-called “Gerbera” craft in question aren’t even real Shaheds, but still-cheaper decoys made of plywood.

This status quo explains why Moscow seemingly finds it worthwhile to send hundreds of drones a night against Ukrainian cities. Only 10% of Russian Shaheds actually hit their target, the CSIS reckons. Yet that ratio implies that sending 10 of them, at a combined cost of $350,000, would make a hit likely. That decision makes economic sense, from Moscow's perspective, given that the drones may be countered by U.S. Patriot missiles costing $3 million per unit. NATO loses financially in this scenario. It also wastes the chance to deploy its high-tech ordnance against more expensive and heavier-hitting Russian missiles.

On the face of it, Europe just needs to make these “cost-exchange ratios” more favourable. One answer is to use new kit from companies like Project Eagle, backed by ex-Google CEO Eric Schmidt, which aims to make drone interceptors costing around $15,000 each.

Producing 60,000 annually – a figure the Institute for the Study of War uses for estimated Shahed production – would only cost around $1 billion. Meanwhile, so-called Sky Fortress acoustic sensors, used in Ukraine to great effect for tracking the distinctive whine of Russian drones, only cost around $1,000 each. Buying tens of thousands would be a rounding error on EU member states’ $381 billion aggregate military budget in 2025, based on European Council figures.

Unfortunately, the true cost of a drone wall is likely to be much higher. Sky Fortress systems may track drones effectively, but spotting a low-flying Shahed requires radar units different to pre-existing ones used to face down ballistic missiles. Defence industry sources told Breakingviews that the right sort of systems could each cost in the hundreds of thousands of dollars. Consultant Alpine Eagle estimates Europe would need 200 of them, or one every 10 miles, along the eastern border. If they cost $500,000 per unit, this would come to $100 million.

Other factors hike the bill further. Identifying incoming drones in all weathers requires so-called electro-optical/infrared sensors - at tens of thousands of dollars each. The CSIS reckons 400 could be needed just to cover Poland. Then there’s the need to jam the Russian electromagnetic signals that control drones remotely: Ukrainian firm Kvertus’s Atlas system costs $140 million. Finally, cheap interceptors only have a range in the handful of kilometres. Europe needs plenty of reconnaissance and longer-range craft too. Along with the accompanying personnel costs to operate all the kit, that would inflate the expense. U.S. group Anduril’s longer-range Roadrunner interceptor, for example, costs in the low hundreds of thousands of dollars per unit.

If Brussels and Donahue could rely on the 32 NATO countries and 27 EU member states pooling expertise and resources, this expense would be surmountable. But while all have pledged to hike their military spending to 3.5% of GDP, they are doing so at different speeds. The latest U.S. National Security Strategy, meanwhile, arguably raises the risk of Washington pulling resources from Europe.

The even tougher economic conundrum for a drone wall, therefore, is how best to allocate what scarce resources the continent has. Doing so requires decisions, deception, and deterrence.

A starting point, for European governments and militaries, would be deciding where to prioritise placing sensors and drone interceptors. Ukraine, for example, has massed its main defences around Kyiv. European leaders could mimic that approach, and minimise their own bill, by focusing on big cities, transport and energy infrastructure.

A spot of deception could also help. Military sources told Breakingviews that one of the best ways to make a drone wall cost-effective would be to use decoys. Europe and NATO could place drone interceptor hardware in thousands of mobile shipping containers along the eastern flank. Only a minority of these would actually need to contain weaponry, but Moscow may have to act as if the kit existed in all or most of the boxes. Europe would effectively be leveraging its own resources to get a greater martial return on investment.

The final piece of the jigsaw is deterrence. During Israel and Iran’s 12-day war last June, the former's ability to strike Tehran's top command proved critical. European leaders, therefore, may similarly conclude that Russia-adjacent states need to project a willingness, and ability, to fight fire with fire. Stocking up on cruise missiles like MBDA’s Taurus – unit cost 3.5 million euros - might do the job, even if governments hope never to use them. The lesson is that Europe's drone wall needn't be a wall in order to make economic sense.

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