A change in the winds of European defense spending

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Two large developments this month are positioning European space companies to receive fresh investments with an angle historically perceived as taboo: “Joint Defense.”

On June 24, the European Investment Bank, which historically was banned from giving money to military companies, said it is mobilizing €6 billion (US$6.4B) for defense projects such as satellites, drones, and cybersecurity. A week earlier, NATO’s Innovation Fund began deploying its €1 billion in assets with investments in five European companies – three in the space sector: Isar Aerospace (launch), SpaceForge (space semiconductor production), and iComat (lightweight spacecraft structures). NATO also backed four private venture capital firms in the investment round (Alpine Space Ventures, OTB Ventures, Join Capital, Vsquared Ventures). 

The war in Ukraine, now in its third year, has challenged traditional thinking around the defense of the European bloc. Defense budgets for individual European countries pale in comparison to the U.S., meaning European space companies could not hope for the level of support U.S. defense primes enjoy. But joint defense opens up new streams for government funding of space technologies (given the fact that U.S. GDP is ~50% greater than the entire EU block, there won’t be parity between spending levels, but it’s still an improvement).

Sitting in the offing remains a proposed €100B bond program championed by EC Commissioner Theirry Breton, the same politician who spearheaded the European Union’s multi-orbit constellation IRIS2. It’s still unclear if EU members will agree to collective borrowing to finance defense missions, but if the precedent is broken, it could be good news for IRIS2, which is currently stuck in limbo due to cost and financing disputes between the EU and private participants.

SOURCE: https://www.businesswire.com/news/home/20240617573406/en/NATO-Innovation-Fund-makes-first-investments-to-secure-the-future-of-the-Alliance%E2%80%99s-1-billion-citizens

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