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Europe needs to be careful not to become “too protectionist” as it seeks to build up its defence industrial base in the wake of the war in Ukraine, one of the region’s biggest arms makers has warned.
Micael Johansson, chief executive of Sweden’s Saab and vice-president of ASD, the European industry trade body, said it was important to allow companies from third countries to play a role on certain conditions.
“We can’t become too protectionist — it can’t become ‘everything has to be done by European-owned and controlled companies’,” he told the Financial Times in Brussels.
“We must be able to look at foreign-owned companies as local and . . . they must be able to be involved in the defence capabilities development of Europe,” he said.
Johansson’s comments come as EU member states debate proposals from Brussels for the bloc’s first-ever defence industrial strategy.
The initiative encourages everything from joint procurements to prioritising EU-based defence companies over non-EU suppliers. It has set a target for at least 50 per cent of its procurement by budget to come from European defence suppliers by 2030.
Policymakers are keen to reverse the long-standing practice of countries purchasing US-made equipment. Many have pointed to the fact that over the past two years, just as spending has surged in the wake of Russia’s full-scale invasion of Ukraine, 78 per cent of defence equipment acquired by EU member states was sourced outside of the bloc.
The initiative, however, has sparked concerns among some EU capitals and industry executives that it could become too restrictive and risk excluding important defence capabilities. Executives said the focus right now should be on expanding the industry’s capacity to produce as well as on investing.
Countries, including Sweden — which has deep and long-standing ties to the UK defence industry — Germany and Poland, are lobbying the European Commission not to hew too closely to the position advocated by France and others that the strategy should seek to promote only EU companies.
“The debate is about whether it is restrictive regarding non-EU states like the UK, US and Turkey . . . or actively encourages them to take part under certain conditions,” said one official involved in the negotiations.
Johansson said the strategy should not just consider the ownership of a technology but also “what kind of controls do we have over the content, the capabilities”.
Policymakers, he added, should look at whether the so-called design authority — the company or organisation able to modify and evolve the design of a product and its capabilities — is in the region.
“You nurture the capability in Europe even though maybe the mother company also benefits from that . . . on the other side of the Atlantic,” he said. “That doesn’t bother me that much.”
His comments echo those of Eric Beranger, chief executive of Europe’s missile defence champion MBDA, who recently told the FT the UK in particular should be considered part of “geographical Europe”.
Industry executives said there was some concern among UK companies they might be excluded after Brexit.
Kevin Craven, chief executive of ADS, the UK industry trade body, told a conference in Brussels last week that Britain was still “geographically and culturally part of Europe”.
Europe, he added, “is stronger with the industrial capability of the UK”.
But Timo Pesonen, director-general for the defence industry at the European Commission, stressed that British companies would be treated like others from third countries.
Initiatives such as the European defence fund, he told the conference, were open for non-EU companies under certain conditions as long as they “operate on European soil”.