The Ukrainian tragedy is forcing Europe to speed up the resolution of this inconsistency. It goes without saying that the defense industry must fully comply with standards related to governance, the fight against corruption, the energy transition and gender equality. At the same time, however, it is vital to ensure that it is not sidelined from market financing, due to a poorly controlled regulatory agenda or pressures from certain parts of civil society. There can be no sustainable development without security, which remains the primary condition for freedom.
In this series of three articles, Institut Montaigne will revisit the importance of Europe’s defense industry, and the risks it might face from the sustainable finance agenda. We will also formulate proposals to ensure that, faced with the need to strengthen its defense, Europe maintains an industrial base that guarantees its strategic autonomy.
A crucial industry with unique features
The defense industry has specific dimensions that are important to address. It is firmly embedded in the sphere of sovereignty, which means that the state plays a crucial role in the development of projects, export orders and authorizations, and sometimes even in company capital. As such, it depends directly on political will. This reality extends to the industry’s financing, either in the form of shareholders - as is demonstrated by the provisions on investment control - or in the (largely sovereign) form of taking risks.
In defense, business life cycles are long, ranging anywhere from 10 to 25 years, which implies two strong constraints. On the one hand, there is the "non-obsolescence" requirement, which reinforces the second requirement, of design performance: because the equipment must last, it is imperative that it uses technologies that are both innovative and robust. In other words, the defense industry must be at the forefront of innovation.
Add new comment