Is enhanced defence cooperation, i.e. the systematic use by Member States of existing EU tools such as the CARD, PESCO and the European Defence Fund, not the most efficient innovation model of all for Europe?
The CARD, PESCO and the European Defence Fund have driven us to cooperate more closely at European level. This is essential because we have scarce defence funding and we need greater interoperability in our equipment, less fragmentation of the defence
industry, fewer silo effects between civil space and defence industries, and ultimately a more competitive EU Defence Technological and Industrial Base (EDTIB).
However, cooperating more does not necessarily mean cooperating more effectively. There is a risk in the current path of reform of national defence innovation models: that of creating models that are incompatible with each other. Between those who will
have reformed their innovation model by eliminating the separation from the civil world and opening it to SMEs and start-ups, and those who will continue to maintain the barriers in place between defence innovation systems and civil innovation systems
and, in so doing, potentially stunt the technological capacities of future arms systems.
So we need to talk about the reform of the defence innovation model at the European level, otherwise we will have difficulty cooperating within a European framework. The defence ministries need to talk to each other about the issue and the EU can arrange
this dialogue. Maybe the EU should become a fully-fledged stakeholder in defence innovation rather than simply putting up the funds, as the European Commission will do with the European Defence Fund. Maybe it should become a true client and structure
the shape this innovation will take. If we decide to go ahead with this change, the EDA will have a role to play.
What about national defence industries? How will they be affected by the new innovation models emerging throughout Europe?
Defence companies apply three strategies to take into account this blurring of the barrier between civil and defence innovation.
The first strategy consists in broadening the scope of their action to include the field of technologies that come from the civil world, particularly with regard to digitalisation or artificial intelligence. We can already see this strategy playing out,
particularly in companies in the defence electronics industry. Generally speaking, there are only a handful of companies left today that operate solely in the defence field. Companies are seeking to embed their strategy in sectors where there are
synergies between products for the civil market and those for the defence market. By doing so, they can rationalise their investments and not depend on one market only.
There are drawbacks to the former strategy: companies can't become a player in digitalisation or artificial intelligence from one day to the next. Sometimes they need to be able to forge partnerships with companies that have a real grip on these technologies.
However that involves a risk: that of becoming dependent on these partners and endangering the security of supply. The so-called GAFAM (Google, Amazon, Facebook, Apple, Microsoft) are not European and if we work with these companies, we create a critical
dependency for the years to come.
The third strategy is to include in the innovation and supply chain SMEs and start-ups that do business in innovative technologies. In that case, we need to open up the supply chains to this type of company. In this respect, the launch of the EDF couldn’t
come at a better time. The rules by which this fund operates allow for partitioning to be removed at several levels: between civil and military innovation, but also between the EDTIBs, since the prime contractors will feel free to choose SMEs and
start-ups from other European Member States. We may then be able to start consolidating defence industries from the bottom up by creating synergies between European supply chains.
With national defence budgets under serious constraints, new innovative financing models might be needed to ensure sufficient investment in defence research and capability development. What do you expect there?
One of the problems the defence industry will have to contend with in the future is that of investments and financing for this industry sector. We are seeing private equity funds and even banks gradually pulling out of this industry due to ethical considerations,
and a return to public financing or even public shareholding in order to buoy up a defence eco-system that is essential to the development of the weapons of the future. Public financing, be it national or European, is essential therefore to support
this eco-system of innovative SMEs with a dual business focus. Setting up accelerators by networking innovation stakeholders from different backgrounds, university laboratories, companies and public funding bodies on a given programme may enable these
SMEs and start-ups to grow and become part of a network of innovation for the defence community. But to achieve real development, the sector will also need to work on improving citizens' everyday life and well-being, work for other sectors such as
healthcare, and assume a fully-fledged role in a strategy of energy transition and decarbonisation. It must be able to attract investors, not deter them. This should encourage them to keep a low profile when communicating about the "defence" component
of these companies' business, while at the same time pursuing the public policy objective to draw them into the defence sector.
Can Europeans learn anything from the successful US defence innovation strategy?
It is true that the Americans were the first to see the benefits to be gained by leveraging innovations from the civil business sector, especially as they have an established ecosystem in the digital and artificial intelligence industry that is extremely
well-developed and undoubtedly the best in the world. This move to break down the partitions between the civil and defence sectors dates from 2014 and what was known at the time as the third offset strategy. This policy was also a way of responding
to China's particularly intensive work on artificial intelligence. As a result, many European Member States are adjusting their model of defence innovation, based on what they were able to analyse of the reform carried out in the US. However, there
is no call for vacuous, naive admiration of the American model. The US’ third offset strategy was also one of the responses to a defence procurement model that the US armed forces themselves considered particularly inefficient. There is no need
to feel inferior to the Americans: we just need to trust in European engineers.