Europe's rearmament ambitions face another hurdle after MEPs overwhelmingly backed a damning report exposing two major obstacles holding back defence start-ups and SMEs from bringing new technologies to market.
European defence start-ups and small and medium-sized businesses face two distinct “valleys of death” as they struggle to bring new technologies to market, according to a damning report backed by more than 400 MEPs on Thursday.
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“Our small companies invent excellent new defence technologies, but too often they never make it into production, or they end up growing in the United States or elsewhere,” said the report’s rapporteur, Latvian Green MEP Mārtiņš Staķis.
“Our defence systems are still built for yesterday’s wars and are afraid of failure.”
The term “valley of death” describes the critical period when a business risks running out of funding before its products become commercially viable and generate sufficient revenue to sustain operations.
The report identifies two such obstacles facing Europe’s emerging defence companies: the first between developing new technology and proving its military effectiveness, and the second between validating that technology and securing customers.
MEPs called for EU funding instruments to address both gaps, ensuring that successful projects receive support to secure their first contracts and subsequent orders from member states’ armed forces.
Smaller defence companies also need better access to testing facilities, military end-users and the infrastructure required to demonstrate, validate and certify their technologies, the report said.
It also urged the EU to cut red tape and lengthy approval procedures that put smaller businesses at a disadvantage against larger, established defence contractors.
The European Commission’s “Readiness 2030” plan, presented last year, backs production of strategic equipment such as air and missile defence, artillery systems, missiles, ammunition and anti-drone systems, with a €150 billion loan package.
It is the centrepiece of the EU's drive to rearm by the end of the decade: a year identified by western intelligence agencies as the year Russia could attack the North Atlantic Treaty Alliance (NATO), of which 23 out of the 27 EU countries are members of.
But the plan for Europe to rearm — with revenue and political will unseen since the Cold War — has faced its problems, with the EU executive itself acknowledging issues with these ambitions.
European People’s Party MEP Riho Terras, also former general of the Estonian Army, highlighted at the Euronews' Defence and Space Summit in September that Europe’s defence industry is not yet equipped to produce what is required “in the numbers, in the speed, and in the quality which is needed for our armed forces to speed up”.