Defence Finance Monitor Digest #18
Defence Finance Monitor analyses how strategic imperatives defined at the national and supranational level—by EU institutions, NATO, and national Ministries of Defence—shape defence policy, technology priorities, and industrial development. Rather than identifying individual companies, we examine how recognised strategic problems—such as deterrence shortfalls, technological dependencies, or capability gaps—are translated into public funding programmes, procurement frameworks, and defence innovation roadmaps. Our premise is simple: a company becomes relevant to investors only if it is relevant to institutional buyers or prime contractors. And it becomes relevant to those buyers only if it contributes—directly or indirectly—to solving a clearly defined strategic challenge. We trace this logic from political doctrine to operational requirements and industrial structures, highlighting the strategic, technological, and organisational dimensions that may signal long-term alignment with institutional demand. This enables more coherent and risk-aware capital allocation in a sector where investment decisions are inseparable from public strategy.
Rethinking Post-Industrial Warfare: A Critical Response to The Economist’s Vision
Contemporary debates on the future of warfare increasingly revolve around the question of whether technological innovation—particularly in autonomous systems, additive manufacturing, and AI-driven logistics—can compensate for the erosion of traditional industrial defence capabilities. In an era marked by digital transformation, shrinking arsenals, and modular production models, some argue that large-scale re-industrialisation is no longer necessary for military preparedness or strategic relevance. This position is especially appealing in liberal democracies where economic constraints, political hesitancy, and labour shortages make industrial expansion politically and financially burdensome. Yet, at stake is more than an economic calculus: the underlying issue concerns the structural requirements for credible deterrence, territorial control, and coercive effectiveness in war. If war remains a political act governed by human judgment and enforced through physical force—as Clausewitz and his intellectual successors contend—then any doctrine that privileges technological agility over full-spectrum military capacity risks strategic incoherence. The challenge, therefore, is to determine how new production paradigms can be integrated into, rather than substituted for, the enduring logic of warfare.
UK Revives NATO Nuclear Role with Purchase of F-35A Fighters
The United Kingdom has announced the acquisition of at least 12 Lockheed Martin F-35A fighter jets configured for nuclear missions, marking a significant shift in its defence posture and reaffirming its role within NATO’s nuclear deterrence framework. The F-35A, unlike the F-35B already in service with the UK, is capable of carrying U.S. B61 nuclear gravity bombs. This procurement signals Britain’s formal participation in NATO’s Dual Capable Aircraft (DCA) mission, a shared nuclear responsibility already fulfilled by several other European allies. The announcement comes amid growing strategic uncertainties and was framed by Prime Minister Keir Starmer as a response to evolving global threats, underscoring the UK’s intent to bolster both its deterrent capabilities and its standing within NATO.
European Defence Strategic Autonomy: Industrial and Technological Implications
Europe’s defence sector has long depended on external suppliers for critical technologies and components, creating vulnerabilities in times of crisis. Recent data show that 78% of EU military equipment acquisitions from mid-2022 to mid-2023 were sourced from abroad – 63% from the United States alone. This reliance spans high-end systems and basic inputs alike. For example, Europe produces only about 9% of the world’s semiconductors (with just 4 of the top 35 chip manufacturers based in Europe), underscoring a heavy dependency on foreign microelectronics vital for modern defence. Similarly, many critical raw materials essential for defence technologies are overwhelmingly imported – over 80% of Europe’s cobalt (used in jet engines) is sourced externally. Such dependencies expose European defence to supply disruptions and strategic pressure, whether from geopolitical export restrictions or supply chain shocks. EU policymakers now regard strengthening domestic supply chains and reducing these dependencies as a top priority to ensure Europe can maintain and deploy military capabilities without undue external constraints. Indeed, as the European Commission notes, without the ability to rapidly produce and procure critical defence assets, Europe “cannot credibly deter threats or reduce dependency” – highlighting the link between industrial resilience and strategic autonomy.
Indra Secures EU Support for High-Tech Defense Hub in Madrid
Indra, Spain’s leading technology and defense group, has obtained €385 million in financing from the European Investment Bank (EIB) to fund the development of its new Indra Technology Hub (ITH) in Torrejón de Ardoz, Madrid. The total investment planned for the hub amounts to €200 million, with EIB’s support enabling a broader framework of technological innovation and industrial modernization. The ITH is intended to become a central node for research and development in advanced defense and aerospace systems. Construction is scheduled to begin in late 2025 or early 2026, creating an estimated 3,000 jobs and reinforcing Spain’s role in Europe’s strategic industrial landscape.