The German economy does not feel sufficiently involved in the federal government’s plans to strengthen the armaments location. According to the BDI industry association, the latest ideas for a new security and defense industry strategy (SVI) are heading in the right direction. However, the draft has not yet been discussed with the companies and associations involved. There was also a lack of important instruments to really provide comprehensive support to the defense industry. These include export facilitation, compensation transactions with foreign countries and the relaxation of sustainability criteria (ESG) in order to ensure financing. “It is very welcome that the federal government wants to strengthen the German security and defense industry with a new strategy paper. So far, industry has not been involved in creating the strategy. This is a missed opportunity because the industry’s expertise and needs cannot be sufficiently taken into account in the process,” says Matthias Wachter, BDI department head for international cooperation and security. “If the government wants to credibly support the security and defense industry, it should also formally involve them.” The Defense Ministry of Boris Pistorius (SPD) confirmed on Thursday that it was working together with the Economics Ministry of Robert Habeck (Greens) on a new edition of the SVI -Strategy works. “Its aim is to improve the framework conditions for the security and defense industry in Germany,” said a spokesman. The paper is currently being voted on by departments, so details cannot be given. Going to Cabinet in SeptemberAccording to reports, the concept will go to Cabinet in September. Similar to the expansion of energy supply, it provides for defining armaments projects as being of “outstanding public interest”. This would speed up planning and approvals. There are also plans to open up state defense research programs, make it easier for start-up companies to access venture capital and allow the European Investment Bank (EIB) to invest more money in defense projects. The Handelsblatt first reported on it. According to information from the newspaper, the chapter on the promotion of key military technologies also allows the state to invest in companies more often for strategic reasons. The federal government had already joined the radar manufacturer Hensoldt in 2020 with a blocking minority of 25.1 percent so that foreigners were not involved. According to F.A.Z. information, the same level of investment of more than a quarter, which was processed via the state bank KfW, is now planned for the submarine manufacturer Thyssen-Krupp-Marine-Systems TKMS. However, the issue of participation is not of great importance. Realignment of exports required. An important topic that the business community believes should be given greater consideration in the strategy is the realignment of exports of military equipment. The traffic light in the coalition agreement actually aims for stricter export controls, but this has been obsolete since the Ukraine war and the Greens’ change of direction. Wachter believes it is important that deliveries to reliable third countries outside the EU and NATO become easier in the future, for example to so-called value partners like India. It would help exports a lot, for example, if foreign governments signed the contracts directly instead of with German companies the federal government. The model would be the “Foreign Military Sales” in America: Germany has successfully used this instrument itself when purchasing the F-35 fighter jets, but does not offer domestic industry comparable support when exporting them. From the industry’s perspective, German companies should do so when purchasing abroad be better involved industrially than before in order to strengthen innovations and cooperation. When purchasing the F-35 aircraft, Switzerland stipulated that important orders would flow back to federal companies. More defense contracts to domestic companies? “Other countries are successfully demonstrating how more defense contracts can be awarded to their own industry,” says industry expert Wachter . “Germany has so far been very cautious in this area, despite the turning point.” The expert reminds us that an estimated 35 to 40 billion euros out of 100 billion euros from the Bundeswehr’s special funds went to non-European companies. More on the topic It is also problematic that many German universities “Civil clauses” voluntarily renounced cooperation with the armed forces and industry. This inhibits the flow of third-party funds and innovations that could also have civilian benefits. Wachter also considers the still pronounced reluctance of many financial institutions to cooperate with the defense industry to be worthy of discussion. Due to ethical considerations in the sense of sustainability criteria for the environment, social affairs and corporate governance (ESG), some banks have even terminated the accounts of such customers. So far, “green” federal bonds are also unlikely to be used to finance armaments. “With such rules, Germany is unnecessarily tying itself down at a time when we have to do everything we can to strengthen our defense preparedness,” warns BDI department head Wachter.
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