The Defence sector in Spain requires greater investment and technological development

The defence sector is vital for any state, as is the case of Spain. The Russian invasion of Ukraine that began in February 2022 shook geopolitics and continues to affect the world order. The North Atlantic Treaty Organisation (NATO) and the European Union (EU) have intensified their defence policy by varying strategic objectives and concepts, which gives a higher level of importance, if possible, to the Armed Forces, which require greater investment in Spain. The army requires a greater provision of funds in Spain and greater industrial and technological investment.  

These arguments were the focus of the event organised in Madrid by the Asociación de Empresas Contratistas con las Administraciones Públicas (AESMIDE) under the slogan "The challenges of the industrial and technological base", which was sponsored by entities linked to the sector such as GAHN, Inetum, Fecsa, Oracle and NVLS. The event featured an opening speech by Gerardo Sánchez Revenga, President of AESMIDE, and valuable contributions from relevant personalities such as Antonio Garamendi, President of the Spanish Confederation of Business Organisations (CEOE), Guillermo Ardizone García, Director of Foreign Policy and Security of the Spanish Ministry of Foreign Affairs, European Union and Cooperation, and María Amparo Valcarce, Secretary of State for Defence of the Spanish Ministry of Defence. 

Gerardo Sánchez Revenga wanted to highlight that this was the 21st edition of the forum, while AESMIDE is now in its 40th year, with the mission of seeking a meeting point between the Ministry of Defence and the Armed Forces and the sector's industry.  

For the president of AESMIDE, the Russian invasion of Ukraine has conditioned international life, forcing a new geopolitical, strategic and technological order, which requires concrete actions to address the situation, highlighting for example the project for rationalisation and savings in Defence, made up of 21 measures presented by the CEOE led by Antonio Garamendi to the European Union regarding the logistics base of the Spanish Army. 

Gerardo Sánchez Revenga indicated that it is better to face the challenges together and that a solid industrial and technological base is required. He stated that the challenges facing the defence industry focus on ICTs, highlighting three important aspects: industrial fabric, human capital and new technological trends.  

Like other European countries, Spain prioritises investment in defence spending to deal with the management of various crises. Between 1999 and 2021, European defence budgets grew by more than 19%. Very little in relation to the figures for China, the United States and Russia, as the president of AESMIDE explained, which affected the technological base of Defence. According to Sánchez Revenga, "the war in Ukraine showed the importance of defence and the returns on defence spending". He pointed out that in a company there can be returns in the form of profits while also contributing to the security and prosperity of investments.  

The president of AESMIDE referred to the more than 13,000 million euros of investment for defence; but military capabilities are not the only important thing, there must be research in R+D+I and there must be synergies between the military and civilian industries to provide technology and qualified jobs, as the president of AESMIDE explained. 

The defence budget is to be increased by 2% by 2029. The aim is to maintain the capabilities of the Spanish Armed Forces to meet the needs of the sector. In this scenario, the President of AESMIDE called for autonomous funding for Defence in the General State Budget, something that "is necessary". Gerardo Sánchez Revenga called for defence to be removed from the rest of the budget in order to be autonomous. In this case, he called for a legal instrument to provide security through a medium- and long-term defence investment plan in order to "provide financial and administrative solutions for long-term planning of the needs of the Armed Forces, giving stability to the industry".

For his part, Antonio Garamendi, President of the CEOE, stressed the great importance of the defence industry. He expressed his deep gratitude to the Armed Forces for their work "in the face of problems such as COVID, the Russian invasion of Ukraine or the attack by the terrorist group Hamas on a democratic state".   

"The reality is that for a State to live in freedom and be able to manage through democracy, it is necessary to have the Armed Forces, the first to defend freedom," said Antonio Garamendi. The defence industry contributes 1.3% of Gross Domestic Product and generates 2.5 euros for every euro invested. In this way, Antonio Garamendi highlighted the value of the defence industry, which generates qualified employment.  

The CEOE president indicated that 20% of Spain's GDP needs to be accounted for by industry in order to generate stable employment, with a technological contribution that must be valued. Antonio Garamendi also stated that "we must continue to promote public-private collaboration with a commitment to internationalisation". He pointed out that defence companies know how to internationalise and that this is Marca España. 

Antonio Garamendi stated that the European fund of 7,000 million to encourage innovation is still low. The aim is to reach 2% by 2027, which would still be low. On this point, the university must be involved in real projects and this is not being done either, as the CEOE president indicated. "We should be at 3%," he said.  

He agreed with Gerardo Sánchez Revenga that the part of Defence should be separated in the General State Budget because this sector is not discussed and it is currently easy to punish it ideologically in the budget. 

The president of the CEOE pointed out that the equipment needs to be improved because "we are behind what we should be". Antonio Garamendi highlighted the existence of the army and SMEs, which "are the major players in the development of dual technologies and are working intensively in this industry".  

Antonio Garamendi highlighted three perspectives in the CEOE's line of action: 

The integration of military personnel into the labour market, as the Armed Forces have a high level of technical training and can provide high-level professionals. On this point, he highlighted the CEOE's programme of support for the active force, "It's your strength". 

The technological development work of the Army's logistics base in Cordoba, a major project of the Ministry of Defence in which the CEOE is involved in collaborating with the Army to ensure that the project goes ahead.   

And the CEOE's collaboration with the Army Museum Foundation and the Civil Guard Museum Foundation to put the Armed Forces in their proper place.  

Finally, Antonio Garamendi called for permanent collaboration, the promotion of knowledge and the encouragement of SME participation and public-private cooperation in the field of Defence.   

For his part, Guillermo Ardizone García, Director of Foreign and Security Policy of the Spanish Ministry of Foreign Affairs, European Union and Cooperation, highlighted the foreign policy framework and the important role of the defence industry and its presence abroad.  

Guillermo Ardizone thanked the Armed Forces for their dedication to general defence and their impeccable role abroad. "Our Armed Forces are exemplary, fulfilling the objectives of Spain and of the EU and NATO. Foreign policy is determined by our constitutional framework and our values and principles," clarified the director of Foreign and Security Policy at the Ministry of Foreign Affairs. 

There is an obligation of territorial defence and national sovereignty, which is a priority for Guillermo Ardizone. But national defence is linked to foreign policy with democratic values. The ministerial representative highlighted the commitment to NATO and the EU. The most immediate in defence is the link with NATO. Now there is a complicated period with the Russian aggression in Ukraine and the direct attack on the principles of international order and the values and respect for the national sovereignty of States and, ultimately, the United Nations Charter.  

Guillermo Ardizone explained that we used to think of the technical supremacy of the West and NATO's founding objective of deterrence and defence took second place to cooperative security, but this changed with Russia's annexation of Crimea and Europe's international order and security architecture with confidence-building measures between partners was subverted. From this strategy and security architecture based on confidence-building measures, there was a shift to assurance measures to guarantee strategic security. Thus, the last NATO Summit in Madrid sought to adapt the Atlantic Alliance's Strategic Concept. The context of threat since the annexation of Crimea changed to one of coercion and violence, as the ministerial expert explained.  

Thus, uncertainty ended and we moved on to certainties, with Europe returning to the use of war in foreign policy, and this showed the need for adaptation and the response given by NATO with the new Strategic Concept at the Madrid Summit. As Guillermo Ardizone pointed out, "deterrence and defence return to the forefront by increasing unity and cohesion, something that Russian President Vladimir Putin did not expect". 

New threats are now being defined, such as military aggression and other hybrid and all-encompassing threats that call into question peace and security in Europe. The focus is now on the eastern flank, providing deterrence and defence elements, as NATO's priority objective, with Spain heavily involved in deployments on this flank. Not forgetting that NATO should take an interest in other sources of instability in the world that may affect it directly or indirectly: the Eastern neighbourhood and the South or countries of the Middle East and the Indo-Pacific.   

The new Madrid Strategic Concept sets out Spain's foreign policy for the next decade, affecting the defence industry. Deterrence and defence are the raison d'être of NATO's creation and have now come to the fore.  

As Guillermo Ardizone explained, "the new Strategic Concept and its implementation comes at a cost and requires the commitment of states to defence spending and contributions to NATO missions and capabilities". On this point, "research and technological innovation are very important". 

Spain is also a member of the EU, itself subject to the shock of Russian aggression. For Guillermo Ardizone, Europe must have a strong foreign and defence policy, which has already been in the process of development, with a starting point at the Cologne Congress in 1999. The EU must have the means and capabilities to assume responsibility for a common European foreign and defence policy. The process was accelerated in 2016 and culminated in 2022 with the definition of the Strategic Compass, accelerated by Russian aggression, moving from uncertainties of a possible threat to a reality. "The EU must provide security for its citizens," said the director of Foreign and Security Policy at the Ministry of Foreign Affairs. 

In the current crisis it is necessary to act quickly, to provide security for citizens, to invest in capabilities and technology, and to partner with others to achieve common goals through partnerships. This is all focused on meeting the objectives of the Strategic Compass, which is concerned with capabilities and having the financial means to acquire and develop them. Capabilities can give the EU the ability to act in crisis situations and provide a response. As Guillermo Ardizone recalled, the Strategic Compass places importance on investment and developing capabilities to act autonomously with real EU armed forces. The role of industry is central here, in order to reduce vulnerabilities.

Combining NATO and EU membership is necessary, as in the case of Spain. We must try to ensure that the two organisations act harmoniously using synergies. It is good to strengthen Europe through Defence and the EU can strengthen NATO by sharing more of the burden of maintaining international peace and security. We are at a critical moment for our security as we see war in Europe again, as Guillermo Ardizone pointed out.