2018-2019 : overview and forecasts for the defence sector

100 years after the First World War and nearly 70 years after NATO’s birth, the world, and Europe in particular, are facing new threats (cyber, drones, nuclear), in geopolitically challenging situations:

  • Russia’s provocations (Ukraine attacks, Crimea annexation etc) and USA increasing militarization confronting russian tensions, reviving the last cold war
  • Potential withdraw of the USA from the INF (Intermediate-Range Nuclear Forces treaty)
  • Long lasting conflicts in Syria and in Yemen
  • Emerging countries increasing armaments spending (India, China, Brazil…)
  • European Union losing one of its major military leader (Brexit) but working on new policies instruments

Therefore, security and defence policies are becoming a top priority for countries.

World defence industry outlook for 2019 – the growth will continue led by higher defence spending

According to Deloitte publication on the 2019 global aerospace and defence industry outlook, the industry is expected to continue its growth trajectory in 2019, led by growing commercial aircraft production and strong defence spending. In the defence sector in particular, heightened global tensions and geopolitical risks, recovery in the US defence budget, and higher defence spending by other major regional powers such as China, India, or Japan are expected to drive global defence sector growth in 2019 and beyond.

EU defence and security progress in 2018 and implementation for 2019

In 13th and 14th December, the European Council welcomes the significant progress made this year in the area of security and defence, including in implementing Permanent Structured Cooperation (PESCO), in improving military mobility, in implementing the European Defence Industrial Development Programme (EDIDP) and in the negotiations on the proposed European Defence Fund (EDF) (See our articles on PESCO projects)

“These initiatives contribute to enhancing the EU’s strategic autonomy and its capacity to act as a security provider, while complementing and reinforcing the activities of NATO and strengthening EU-NATO cooperation, in full respect of the principles of inclusiveness, reciprocity and decision-making autonomy of the EU.” EU council summit conclusions

2019 should see the implementation of these “tools”, as the European elections will held in May, and the next EU budget (2021-2027 Multiannual Financial Framework) will be voted next year, with the aim of an “autonomous EU”.

“There is no contradiction between investing in Europe’s strategic autonomy, and cooperating even more closely with our partners – on the contrary. We, Europeans, are taking more responsibility for our own security and for the world around us.” High Representative/Vice-President Federica Mogherini 

NATO: The Cold War is over, but big challenges remain for 2019

In DefenseNews article, NATO Secretary General Jens Stoltenberg recalled that NATO’s original purpose was as a defensive shield against the Soviet Union. And, even though the Cold War is over, significant challenges remain. He stressed the “increasingly dangerous and unacceptable pattern of behavior from Russia”. Regarding this Russian threat, he said “NATO will maintain its dual-track approach: strong deterrence and defence combined with our pursuit of meaningful dialogue.” Nato is also facing other threats, such as international terrorism. And these “big challenges” require more investments.

“Increasing our response to a more challenging security environment does not come for free, and allies continue to spend more on defence” NATO Secretary General Jens Stoltenberg

As Stoltenberg outlined it, 2018 will be the fourth consecutive year of rising defence spending. But he admits that “there is still a long way to go”, as only 8 Nato countries hit the defence spending target of 2% of GDP.

Objective for 2019: Standing together and keep us safe

“By standing together, NATO allies have ensured the security of the trans-Atlantic area for seven decades. Today we face a range of complex and diverse challenges, but by continuing to stand together, by taking the decisions necessary to strengthen our defence and by investing more in our own security, NATO will continue to keep us safe for many decades to come.” NATO Secretary General Jens Stoltenberg


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