The European Commissioner for Defence, Andrius Kubilius, called on Monday 1 June in speeches to the NATO Parliamentary Assembly and EBAN (European Business Angel Network), in Vilnius, for the creation of a genuine single market for defence.
“We have no single defence market in Europe. There are 27 small markets, no possibilities for European-wide competition”, he regretted.
The Commissioner explained that in Europe, up to 80% of defence primes production is procured by national governments and national militaries, and up to 80% is procured through direct awards (using the ‘security’ exemption of TFEU Art.346) without a public call for tender. Thus, the absence of a single market for defence is due to the protection national governments provide to their large, traditional and established defence groups, Mr Kubilius explained. He added that these groups produce heavy weaponry, sometimes technologically very advanced, “haute couture production, expensive and impossible to ramp-up. “Traditional defence primes are influencing governmental demand, which means that they also have a strong influence on national military doctrines”, he regretted.
“Without a single defence market and competitive procurement we shall never have a proper space for start-ups and SME’s in defence to grow, to innovate and to transform the supply, and at the end, to transform the war doctrines of our countries”, Mr Kubilius warned, taking the Ukrainian model as an example. He insisted that without a dedicated space for start-ups and SMEs in Europe, there will be no change in military doctrines. “There will not be enough space for risk and for Business Angels”, he added.
According to Mr Kubilius, the European Commission is expected to present, at the end of June, a special communication on the development of the single market in Europe.
Beyond a single market, the Commissioner called for more private investment in defence. “European private capital is still lagging behind. 65% of Defence Tech investment in the European Union comes from the US. And that is not good for our strategic autonomy”, he explained.
Pointing out that the Defence Equity Facility, endowed with €175 million in equity to mobilise €500 million in private capital, had been “very successful”, Mr Kubilius announced that a Facility 2.0 would be launched later in the year, “with a five times bigger budget - €1 billion - to mobilise even more private investment”. (Original version in French by Camille-Cerise Gessant)