Not since the end of the Cold War have European defense manufacturers found themselves at the center of attention to this extent. After more than two years of war in Ukraine, and Donald Trump’s recent hostile remarks against NATO, the question of the EU’s strategic autonomy has returned to the heart of the debates. With, as a corollary, that of a rise in power of the European defense industry, today asked to increase its production. “We have made big decisions in terms of investment, but there is probably a need for a deeper paradigm shift, to go even further. But we need the support of governments for this,” explains Micael Johansson, the CEO of the Swedish defense group Saab, one of the heavyweights in the sector.
L’Express: How did the war in Ukraine impact your group?
Michael Johansson: In many ways, I must say. Already, this war constitutes a major alarm signal that the peace – which we have known for many years – is fading away, and that today we need to have a more dissuasive and resilient defense. This is true for my country, Sweden, but also for other European countries. Understanding that it is necessary to increase defense spending, both to support Ukraine, but also to increase our own military capabilities, was a big step forward for Europe. As a company, we are doing our part by strengthening our productive apparatus. Beyond this awareness, the state of mind of the populations is also changing: people today better perceive the leading role played by our industries in the defense of our countries. This is a radical change, in many ways.
Many European political leaders are calling on defense manufacturers to invest more in their production tools…
This is what we are doing: we have already invested 200 million euros to increase our production capacities. On the Karlskoga site [NDLR : au sud-ouest de la Suède, où Saab concentre ses usines liées au combat terrestre], we want, by 2025, to quadruple those of anti-tank munitions, to reach 400,000 units per year. State defense spending is expected to continue to increase for at least ten years, so we are ready to mobilize resources and take risks. However, if we spend heavily to increase our production capacity, the return on investment must be reasonably secure in the long term. Therefore, commitments from governments are necessary, in particular long-term contracts, to guarantee that demand will not fall below a certain threshold.
Does Europe continue to underinvest in its defense?
It’s even a certainty. There is an urgent need to move to another level regarding defense in Europe. This means making bolder decisions. A certain number of European countries are moving forward step by step: it is not fast enough. Basically, I fear that the Europeans are not doing enough to strengthen their defense. As a company, we have made some big investment decisions, but there is likely a need for a deeper paradigm shift to go even further. But we need the support of governments for this. Politicians are currently discussing the directions to take in terms of financing defense capabilities, but this is still taking too long in many European countries.
Russia’s defense industry is now operating at full capacity to support its army’s war effort in Ukraine. Can European industry compete?
If strong measures are taken to support European industry, yes, absolutely. We have excellent defense industries in Europe, so there is no reason we can’t compete. But this requires a commitment from European states to our side. The initiatives that we see in Brussels are going in the right direction – I am thinking in particular of the ASAP (Act in Support of Ammunition Production) and EDF (European Defense Fund) programs – because they encourage countries and industries to work together to strengthen existing capacities and develop new ones.
We also look forward to the new European defense industrial strategy, launched by Ursula von der Leyen, which must be followed by an investment program. However, the EU is an organization that works by consensus, and this takes time. This is why it is also important for countries to mobilize on their own.
According to a study by the Institute of International and Strategic Relations (Iris), 78% of arms orders placed since the start of the war in Ukraine by Europeans have been with non-European players…
Today, the balance between European and non-European purchases is not good. If we want to increase Europe’s sovereignty in defense matters, and be a deterrent towards Russia, we must devote a greater share of our orders to European defense industries. We cannot afford to be dependent on American, South Korean, or other industries. On the one hand, this limits the ability of European industries to develop, on the other hand, it also weakens supply chains. European politicians should, in my opinion, take up this subject. The current balance should be reversed, with at least 70% of orders placed with European defense manufacturers, compared to 30% outside Europe.
Last spring, the Europeans committed to supplying one million shells to Ukraine by 2024, before recognizing a few months later that the objective would not be achieved. Was it too ambitious?
As far as we are concerned, we do not manufacture 155 millimeter shells, however I know that orders in this area have been very small for many years. Therefore, relaunching their large-scale production on the European continent requires heavy investments. In addition, the entire industrial ecosystem must be strengthened: suppliers of powder, other materials, assembly plants… I don’t think that the money that has been spent so far is enough to get there quickly. But with enough support, we can get there, even if it takes longer than expected.
At the beginning of February, the head of European diplomacy, Josep Borrell, asked European countries to stop exporting munitions to third countries, in order to prioritize Ukraine. Does this measure seem feasible to you?
Maintaining a substantial defense industry in Europe requires exporting to third countries. This fills the order books, and therefore ultimately allows production to be supported. This does not prevent us from honoring contracts intended to support Ukraine when we receive them. In my opinion, the question is therefore not to choose only one or the other. Furthermore, it is not up to manufacturers to define priorities: we cannot stop deliveries to third countries without this having been the subject of prior agreement between States. For example, if Sweden agrees with an Asian country to postpone certain deliveries, we will adapt to this situation. But as an industrialist, I must respect my contracts.
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