The European Parliament has urged the European Union this Thursday to remove barriers and facilitate the entry of small and medium-sized enterprises, as well as of emerging companies, into financing and defense-linked contracts, with the aim of allowing them to develop their technologies, take them to the production phase, and supply them to the armies of the member states.
This request appears in a report approved by the plenary of the Eurochamber with 411 votes in favor, 133 against, and 41 abstentions, in which the members of the European Parliament highlight the obstacles these companies face in order to turn their developments into products usable by the Armed Forces, mainly due to administrative red tape, the scarcity of financial resources, and the slowness of public procurement procedures.
The document identifies two major bottlenecks: the jump from technological development to the validation of new systems and the subsequent phase, when the companies already have tested prototypes but run into difficulties when it comes to winning their first contracts and effectively accessing the market.
To overcome these difficulties, the Parliament calls for European defense programs not to be limited to funding research activities, but also to support companies in the testing and certification phase of their technologies, in direct contact with military users, and in obtaining orders from the member states.
At the same time, the institution asks for cuts to the bureaucratic burdens that weigh especially on smaller firms and to speed up the processes for financing, testing, and purchasing equipment, while keeping competition rules in the European market in place.
Along these lines, the members of the European Parliament stress that SMEs and startups are key actors in generating new military technologies, but they warn that a significant portion of them has serious difficulties scaling up production and winning contracts against large groups in the sector.
More support for drones and improved access to capital
Among the priorities set out in the report, the Eurochamber asks the Commission to intensify support for autonomous systems, for next-generation drone technologies, and for equipment dedicated to detecting and neutralizing unmanned aircraft, due to their growing weight in contemporary conflicts.
In the field of financing, the text proposes mobilizing more private investment toward the European defense industry and shows its concern about the risk that certain companies may be forced to relocate outside the EU or to be sold to investors from third countries due to difficulties in accessing capital.
According to the data included in the report, small and medium-sized enterprises generate around 70% of the total value of European defense systems and represent the majority of the sector’s business fabric. However, since the first call for proposals of the European Defence Fund in 2021, only 7% of the total resources has been directed to project lines associated with innovation and SMEs.
At the same time, Parliament calls for intensifying industrial and technological cooperation with Ukraine, in particular through joint projects and agreements that would make it possible to incorporate the experience accumulated by Ukrainian companies during the war into the development of European military capabilities.
Specifically, the Eurochamber urges Member States and the European Defence Agency to use the lessons coming from Kyiv to reduce innovation, certification, and armament procurement timelines, as well as to speed up the integration of new technologies into the European armies.