Among the major defence industry players, Germany is one of the countries with limited state ownership in its critical defence sector \u2013 but this looks set to change.<\/p>\n
Germany\u2019s Defence Minister Boris Pistorius recently spoke out in favour of acquiring stakes in defence companies with key technologies, alluding to a more hands-on approach to its national industry.<\/p>\n
\u201cI am firmly convinced that we need state ownership \u2013 also to ensure that expertise and jobs remain in Germany,\u201d Pistorius said in a recent interview<\/a>.<\/p>\n Berlin\u2019s ambition to bring industry closer aligns with the government\u2019s coalition agreement to \u201cconsider strategic investments\u201d.<\/p>\n ThyssenKrupp Marine Systems (TKMS), the shipbuilding division of ThyssenKrupp, plans to go public in 2026 and is on the radar of Germany\u2019s defence minister as a possible target for a state stake.<\/p>\n In a statement to Euractiv, the company said \u201cIt is still too early to provide details on the structure of possible ownership models. Our focus is currently on the spin-off and planned stock market listing.\u201d<\/p>\n Nothing Unique<\/p>\n As strategy, that is not new in the wider defence sector.<\/p>\n \u201cGermany currently seems the most active in this regard, although countries like France, Italy, and Spain always had significant direct equity stakes in their main industrial players,\u201d Tim Lawrenson, defence analyst at the security think-tank IISS, told Euractiv.<\/p>\n The interest in having some form of control over the national defence industry is legitimate, according to Maximilian Lasson, a lawyer at Freshfields, as the state seeks to \u201cprotect the foundations of its defence capabilities from foreign influence, prevent the outflow of information and expertise abroad, and ensure that production facilities remain physically located within the country.\u201d<\/p>\n Germany has been working on revamping its defence sector by freeing over \u20ac500 billion<\/a> for defence investments in the next few years. Nonetheless, the defence industry has criticised<\/a> calls to ramp up production without receiving long-term security in the form of predictable multi-year contracts, arguing that the current format does not provide sufficient investment certainty. The European Commission and NATO have both urged countries to place joint orders to counter price inflation.<\/p>\n Aside from Germany\u2019s special defence funds<\/a>, the government has the option to \u201cgo in and invest in the companies and essentially get them capital so that the companies have an easier time [expanding production],\u201d George Ferguson, defence analyst at Bloomberg, told Euractiv.<\/p>\n Katharina Weiner, a lawyer at Baker McKenzie, agreed that partial state ownership \u201cwould certainly bring financial stability to a company,\u201d while at the same time possibly giving it a competitive advantage.<\/p>\n Greater motivation<\/p>\n Such investments are not only about boosting Germany\u2019s own industry but also about communicating priorities and direction from the government.<\/p>\n According to Lasson of Freshfields, it can also send a political signal that the state is actively engaged in the issue.<\/p>\n However, the national push for more ownership contrasts with calls for greater European defence industry consolidation. EU Defence Commissioner Andrius Kubilius has argued<\/a> that further consolidation \u2013 and thus reducing the proliferation of non-compatible weapon systems produced across Europe \u2013 could make the sector more globally competitive.<\/p>\n \u201cOne way of resolving this conflict, as it can currently be seen, is through the formation of joint ventures: this allows states to retain their stake in the parent companies while enabling institutionalised cross-border cooperation,\u201d Lasson suggested.<\/p>\n A draft EU regulation, the European Defence Industry Programme (EDIP), would address exactly this through a new proposed tool, the Structure for European Armament Programme (SEAP). SEAPs would push EU states to apply for defence funding in groups of three or more, and applicant states would have to harmonise standards with each other.<\/p>\n