European Defense Sector Outlook 2025: Post-Putin Geopolitical Scenarios

Looking ahead to a post-Putin era, Europe’s defense outlook will be shaped by what replaces Vladimir Putin’s regime in Moscow. This report analyzes three plausible scenarios and their implications for the European defense sector, focusing on both NATO and non-NATO countries (notably Sweden, Finland, Turkey, Switzerland, and Austria) from an investment perspective. The scenarios considered are: Scenario 1 – Continued Authoritarian Regime, Sustained Russian Threat: A hardline leadership in Moscow (whether Putin or a like-minded successor) persists with aggressive, anti-Western policies, keeping Russia a formidable threat. Scenario 2 – Chaotic Transition in Russia, Unpredictable Outcomes: A destabilized or fragmented Russia (e.g. internal power struggles or state fracture) creates an uncertain security environment with diffuse risks. Scenario 3 – Stabilization and Normalization: A reformist or pragmatic post-Putin government de-escalates tensions, leading to a gradual normalization of Russian foreign policy and reduced threat perception. For each scenario, we assess European defense spending trends, procurement and industrial capacity, and financial flows (public equity, ETFs, private equity, venture capital). We then provide detailed investor guidance – including portfolio strategy, stock/fund allocation principles, ESG considerations, and potential exit signals to manage risk – tailored to each geopolitical outcome.