Industrial and political developments could begin reshaping Europe's business landscape with new leadership in Thales and Safran, further streamlining at Finmeccanica, a possible Nexter and Krauss-Maffei Wegmann joint venture holding company, and even a rebranding at Kalashnikov.

Austerity measures could still influence procurement decisions in the UK, Italy and France, while Russian aggression has focused the minds of defense and political leaders across Eastern Europe and NATO.

Meanwhile, a general election approaches in the UK, a defense white paper — the first in a decade — is pending approval in Italy, and France still must grapple with its deliver-no deliver decision regarding the Mistral to Russia.

UNITED KINGDOM

General Election: Britain faces a general election in May with the outcome highly uncertain. A minority government eventually followed by a second election cannot be ruled out.

Defense Review: Election results could affect a strategic defense and security review set to take place after the election and a review of government spending. If Labour wins, the review could run to 2016. A Conservative success would see a more rapid completion. Political uncertainty is likely to delay the review in any case. But defense could face cuts whoever wins as the major political parties are committed to a new round of spending austerity.

Military Manpower: Shortages of engineering personnel and other skills are becoming a significant military headache, none more so than for the Royal Navy, which had to borrow US Coast Guard engineers. Meanwhile, the British Army can't recruit the number of reserves it needs to meet its end-of-decade force structure requirements.

Logistics Transformation: The winner of a 13-year support deal to outsource the purchase, storage and transport of Defence Ministry commodities will likely be the first big program announcement of 2015. Media reports say Babcock has beaten out rival bidder Leidos. Expect budget pressures to create more outsourcing deals.

Type 26 Frigate: Wrangling between shipbuilder BAE Systems and the Ministry of Defence over risk management could delay the build contract for a new class of frigates. But with first of class needed by 2022, both sides will be anxious to maintain some progress even if the main deal is not sealed for a while.

Apache Replacement: A possible decision on how to sustain British Army attack helicopter capability out to 2040 could signal the new government's defense industrial policy and whether it intends to support the UK's helicopter industry. One option being considered is replacing the existing AgustaWestland variant of the Apache with the latest Boeing-built AH-64E variant.

Defense Secretary: When Michael Fallon was appointed as defense secretary in July, many viewed it as a stop-gap measure. But if the Conservatives win, Fallon could be reappointed. According to one Conservative, Fallon has taken to the post "like a duck to water."

Airbus President: Observers are watching to see what Paul Kahn, the Airbus Group's new UK president who took over in October, does with the UK elements of a wider Airbus defense and space business that is restructuring and divesting activities like Atlas Elektronik. Executives say one of Kahn's tasks may be to increase the awareness and growth opportunities in the aircraft, satellite and cyber fields.

ITALY

Finmeccanica CEO: Further streamlining is expected in Finmeccanica's January industrial plan, including the possible sale of US electronics firm DRS. There is also speculation that CEO Mauro Moretti, who already announced he would turn Finmeccanica's units into mere divisions in a cost-cutting bid after taking the reins at the Italian group in 2014, may even sell Finmeccanica's stakes in MBDA and Superjet, the business jet joint venture with Sukhoi.

Chief of Staff: Italian Army Chief Gen. Claudio Graziano was named defense chief of staff just before Christmas, replacing Adm. Luigi Binelli Mantelli. Graziano will be challenged to protect the military from cuts and maintain the profile of a job that is sometimes overshadowed by the individual service chiefs.

Defense Minister: Roberta Pinotti, Italy's first female defense minister, is widely respected by the country's generals and admirals, but her job became tougher just before Christmas when it was announced ministry spending would total €13.58 billion (US $16.5 billion) in 2015, almost €1 billion less than predicted in 2013's three-year forecast.

New Naval Law: A massive €5.8 billion funding package for new Navy vessels faces a few remaining bureaucratic hurdles before the service can sign a contract with local shipyard Fincantieri for new multifunctional ships and a landing platform dock, among other vessels. The funding has been shielded from the cuts being suffered by the regular defense budget.

Joint Strike Fighter: The Pentagon's selection of Italy's F-35 final assembly and checkout line as Europe's maintenance hub provided an economic boost, but challenges remain in 2015. Before maintenance work kicks in, can Italy justify the cost of the facility if it cuts orders and fewer aircraft roll off the line? Will the maintenance work be as technologically rewarding as Italian industry would like?

Defense White Paper: Italy's first defense white paper in more than a decade, due to be approved early in the new year, will help determine military purchase plans for the F-35. Advocates of cutting the buy were told in 2014 to wait for the white paper's conclusions. "How many theaters do we expect to operate in and will we need ground attack aircraft, yes or no?" Pinotti said last year. "It's premature to talk about numbers until the white paper is concluded."

FRANCE

Budget Challenge: The French government may have set the 2015 annual defense budget at the expected €31.4 billion, but civil servants must explore creative financial engineering as the Finance Ministry will not fully fund the topline figure, delivering a virtual cut. A public-private partnership to lease equipment, rather than a straight acquisition, is one of the options.

Mistral and Moscow: Mistral helicopter carrier: deliver or not? If President François Hollande canceled the Vladivostok sailing east, some commentators see doubt cast over France as a reliable arms exporter and a financial hit as the Russians are refunded.

Rafale: France is counting on India sealing a deal to purchase 126 Dassault Rafales by the end of March with Qatar also closing in on an order. If contracts are signed, a financial burden is eased for Paris and sales confidence in the multirole fighter grows.

Land Weapons: Nexter and Krauss-Maffei Wegmann are due to wrap up talks on forging a joint venture holding company to build land armaments. A thrust at European consolidation, there is much interest in whether the deal will go ahead and on Berlin's policy on weapons export.

Industry Leadership: Patrice Caine and Henri Proglio will lead Thales as, respectively, chief executive and chairman, ushering in new top management at the electronics company.

At Safran, Philippe Petitcolin and Ross McInnes will lead the engine maker as, respectively, CEO and chairman, while Jean-Paul Herteman steps down as chief executive. Sagem hopes its defense unit can win fresh orders for its armement air-sol modulaire, an air-to-ground missile, to keep the production line open.

Politics and Exports: When Jean-Yves Le Drian became defense minister in 2012, French media reported a critical view of what was seen as his reluctance to sell French arms overseas. Le Drian's riposte was that his job was to build political ties and leave the companies to sell. But since Le Drian's arrival, he has traveled widely and exports have risen. There are high hopes for more contract wins.

POLAND

Defense Minister: In September's Cabinet reshuffle, Defense Minister Tomasz Siemoniak, seen as a rising political star, was promoted to deputy prime minister while remaining at the helm of the Defense Ministry. He will oversee plans to spend US $41.5 billion to modernize Poland's military and purchase new weapons by 2020.

Missile Defense: Poland's ongoing tender to acquire new air and missile defense systems is likely to produce the largest military procurement among Eastern European NATO member states, with bids by Raytheon and the Eurosam consortium shortlisted.

UKRAINE

Defense Minister: Col. Gen. Stepan Poltorak was reappointed defense minister Dec. 2 in a sign of political support for the military reforms he launched after assuming office in October. He is seen as a trusted adviser to President Petro Poroshenko.

NATO

Joint Procurements: NATO allies in Eastern Europe may boost cooperation in defense procurement. Current examples include joint air patrols, special forces operations and acquisitions of personal weapons planned by the Czech Republic and Slovakia, and a project by local defense firms to jointly supply new 3-D radars to the Czech, Slovak and Hungarian militaries.

Crimean Crisis: Russia's military intervention in Ukraine and its annexation of the Crimean peninsula has boosted defense spending in Eastern Europe, with a number of NATO members expected to significantly hike their military expenditure in the upcoming years.

RUSSIA

Kalashnikov Marketing: The rebranding of Russian firearms maker Kalashnikov Concern, launched in December, and plans to increase its revenues fourfold to 24 billion rubles (US $421 million) by 2020, could help establish Alexei Krivoruchko, chief executive and co-owner of Kalashnikov Concern, as a leader of Russian defense industry.

Defense Minister: Defense Minister Sergei Shoigu, a close adviser to President Vladimir Putin, ranked second in a Person of the Year opinion poll carried out by the Yuri Levada Analytical Center in December. No 1? Putin.

Air, Space Defense Upgrades: With Russia's December Military Doctrine document stressing the need to counter NATO's missile defense efforts in Europe, the country is expected to spend 2 trillion rubles to upgrade its Aerospace Defense Forces.

The new and overhauled systems are expected to be operational by 2025.

Arctic Command: The Defense Ministry's decision to establish an Arctic Strategic Command and deploy new aircraft, radars and other equipment there demonstrate Moscow's rising military focus on the region. The increased push reflects Putin's April declaration that the Arctic has always been a sphere of "special interest" to Russia.

Spending vs. Sanctions: Russia continues to back separatists in eastern Ukraine, but Moscow's financial woes, triggered by cheaper oil and Western sanctions, are likely to affect long-term defense spending, analysts say.

Plans by Moscow to spend 20 trillion rubles on military modernization by 2020 could be in jeopardy.

Jaraslow Adamowski in Warsaw, Andrew Chuter in London, Tom Kington in Rome and Pierre Tran in Paris contributed to this report.