Airbus, Navantia, GDELS-Santa Bárbara and Indra. They are the poker of companies specialized in the defense industry that the Government wants to turn into the spearhead of a long-term country operation to strengthen the sector. For them there will be a rain of millions. Pedro Sánchez has decided to take a step forward in the military field with a commitment considered historic and which crystallized at the NATO summit in Madrid with a figure: invest 2% of GDP in defense in 2029. That promise is already being beginning to translate into specific budget items under an international context of great uncertainty due to the war in Ukraine.
The opportunity is unprecedented. Never before has the Spanish defense, security, aeronautics and space industry sector had before it the challenge of growing and modernizing with such a powerful contribution of state money. Public-private arms collaboration dates back to 1996, when the Ministries of Defense and Industry began to finance certain special programs with investments and repayable advances. Sixteen years later, the situation has not been as expected, due to successive economic crises. The result: Spain has so far occupied the tail end of defense spending among the Atlantic allies.
But the government is already changing the pace. Sánchez adopted the initial decision at the beginning of July, when the Council of Ministers approved an extraordinary credit of 1,000 million for the military budget charged to the contingency fund. First unequivocal sign of support for the sector. Second movement: the Executive approved this week different items for the military sector for more than 218 million. The decision involves gradually unlocking different items while waiting for the large investment that will be reflected in next year's budget bill. The objective is 1.2% of GDP next year, some 2,500 million additional investment.
Balancing sensitivities and overcoming the debate on military investment has not, however, been easy for the coalition government. Yolanda Díaz came to request the convening of a commission to monitor the agreements, which was never held. The Council of Ministers on July 5 was especially tense, government sources recall. And all because of defense spending. But Sánchez has stood up. The president has made the decision and the mechanism chosen to overcome the obstacles of his parliamentary partners, such as ERC and EH Bildu. The progressive increase in military investment will be carried out through the so-called special weapons programs, also known as modernization, of the armed forces, which do not count towards the spending ceiling. That is, the health, education or dependency items will not be reduced. Internal tensions unlocked.
One of the current problems of the defense industry is its fragmentation. Up to 373 companies, according to the ministry register. You have to join forces. The industry is ready. The objective is to be inspired by what was known in the United States as “the last supper”. It was a high-level conclave convened in 1993, during Bill Clinton's term, in which the then Secretary of Defense, Les Aspin, ordered the main arms companies in the country to merge or reach strategic agreements. After the fall of the Berlin wall, it was essential to give a change of direction to a central industry for the US economy. A director of the sector comments that the Spanish military sector is currently experiencing its own “last supper”.
Sánchez has been clear: “We know where the needs and risks that Spain is suffering are”. The sector is, without a doubt, a cornerstone of Spanish industry. Its turnover stood at 11,600 million euros in 2021, according to the employer's association Tedae. At the head of it is the diplomat and former Secretary of State for Security of José María Aznar, Ricardo Martín Fluxá. The peak moment was in 2019, the year before covid, when 14,000 million were entered. With the country plan under way, this figure will be far exceeded. One fact: the sector estimates that in 2019 almost 1.7% of the national GDP was explained thanks to this industry. In terms of employment, something that the Government wants to preserve and promote, the defense industry is directly or indirectly responsible for more than 211,921 jobs, as of 2019.
There is, therefore, a clear industrial policy. A line drawn to promote the development of the sector. And more than half a dozen priority weapons programs spread across sectors and companies.
Four companies are the crown jewels for the Government. In the aeronautical field, Airbus, which employs 12,300 people in around eight plants spread across Madrid, Castilla-La Mancha and Andalusia. Its flagship projects: the Eurofighter combat aircraft, the A400M transport device and the NH-90 helicopter.
In the naval sector, the priority is Navantia and its shipyards in Galicia, Andalusia and Murcia. Almost 10,000 workers depend directly on the company owned by SEPI. Two outstanding projects for the construction company: the F110 frigates and the S-80 submarine.
GDELS-Santa Bárbara is the one designated to promote the new 8x8 Dragon armored vehicle of the Army. And at Indra, the priority technology company for the Government, they closely follow the European Defense program, the NGWS/FCAS. It will be the largest project in the continental military industry, and the firm chaired by Marc Murtra is the one chosen by Spain to play a leading role in it. France and Germany unlocked this week a priority military plan.
In short, a decade of powerful investments in defense is approaching, regardless of who governs, and the national industry faces a major challenge to be competitive. The armament operation is already underway.
