Europe’s defence landscape is being reshaped at record speed. Rheinmetall, Germany’s largest arms manufacturer, inaugurated what will be the EU’s biggest ammunition plant in Unterlüß, northern Germany, marking a symbolic and practical milestone in Europe’s effort to adapt to the demands of a prolonged war in Ukraine. NATO Secretary General Mark Rutte attended the opening alongside Rheinmetall’s CEO Armin Papperger, underlining the strategic importance of the facility.

Expanding Europe’s War Industry

The facility is designed to significantly increase the continent’s production of artillery shells — a weapon system that has proven decisive in Ukraine, where both sides have expended munitions at a rate far exceeding pre-war expectations. Stockpiles across Europe have been heavily depleted since 2022, forcing NATO allies and the EU to accelerate industrial output.

Rheinmetall has expanded operations across multiple countries, with projects in Germany, Hungary, and Lithuania, reflecting a pan-European effort to rebuild defence capacity. The Unterlüß plant is set to produce hundreds of thousands of rounds annually, feeding both Ukraine’s immediate needs and Europe’s longer-term deterrence requirements.

Rutte’s Warning: Budgets Must Equal Capabilities

At the factory’s opening, NATO chief Mark Rutte echoed warnings he had made days earlier: “Cash alone doesn’t provide security.” His remarks signalled that NATO’s new spending targets — with all allies reaching 2% of GDP in 2025 and several pushing toward 3.5% — must not stop at political promises but must transform into deployable weapons, ammunition, and production chains resilient to supply shocks.

The EU’s rearmament effort now reflects a wartime economy mindset, one in which long-term contracts, state subsidies, and cross-border cooperation are seen as essential. Officials say the Unterlüß plant is a blueprint for scaling defence industry output to match Russia’s massive mobilization.

Energy Market Fallout

The opening also coincided with another reminder of how war in Ukraine affects Europe beyond the battlefield. Ukrainian drone and missile strikes on Russian oil facilities have disrupted supplies, contributing to higher petrol prices across the continent. Analysts note that this dynamic adds pressure on European governments, who are already grappling with high inflation and public fatigue with the costs of war.

Why It Matters

The Unterlüß plant highlights the convergence of NATO and EU priorities: to ensure Europe can sustain a long war, deter further Russian aggression, and maintain credible industrial capacity. Beyond military logic, it also represents a shift in Europe’s political economy — with defence now at the centre of industrial policy.

For Germany, the plant reinforces its ambition to lead Europe’s defence transformation under Chancellor Olaf Scholz’s Zeitenwende (“turning point”). For NATO, it serves as proof that allies are moving from rhetoric on rearmament to real output. And for Ukraine, it is a critical lifeline ensuring the flow of ammunition continues into 2026 and beyond.