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The Financial Times' has a lengthy analysis of British and French moves to better coordinate their defense strategy and military procurements:

Geopolitics too are forcing Paris and London to think harder about their common future. Britain has long cherished its â??special relationshipâ? with the US. There is little doubt that London, in the years to come, will continue to regard Washington as its strategic partner of choice. But fears have been growing since President Barack Obama took office that the US no longer sees the relationship as so â??specialâ?, and that Washingtonâ??s security focus is moving away from Europe, which has proved too weak an ally in Afghanistan, and towards China.

France too is rethinking its alliances. â??President Nicolas Sarkozy has taken France into Nato, a factor that makes co-operation with Britain easier,â? says Etienne de Durand of the Institut Français des Relations Internationales in Paris. â??But France is also coming to terms with Germanyâ??s unwillingness to spend more on military capabilities. France is therefore recognising that, for now, pan-European defence structures are unlikely to do more than short-term crisis management.â?

One of the central articles of faith in American security policy is that absent the overt presence, preponderance and guarantee of U.S. military power, harmful arms races will ensue. But as the Financial Times piece makes clear, the opposite is happening, at least with respect to Britain and France. Faced with budgetary constraints and evident uncertainty about America's commitment, France and Britain are exploring cooperative ways to make declining defense budgets go further while still retaining military capabilities far superior to most countries. They aren't surrendering to the enemy dejure or clamoring to piggyback with China. They're adapting.

UPDATE: The other thing to add is that Germany, far from rearming and threatening Europe (as was feared even during the unwinding of the Cold War), is doing the opposite.