The Europe is entering a new era of defence where security is no longer a secondary budgetary issue but a central strategic priority, Kyriakos Pierrakakis stressed.
Minister National Economy and Finance and President of the Eurogroup, Kyriakos Pierrakakis, pointed out at the Athens Defence Summit that member states are increasing defence spending but the main challenge is turning it quickly into real operational capability through effective industrial and financial mechanisms, while stressing that the European defence industry remains fragmented and underfunded with slow procurement cycles and limited production scaling.
According to him, the key problem is not a lack of capital but the inability to implement and coordinate and he highlighted the role of capital markets in creating a Savings and Investment Union as a mechanism to channel private capital into defence and dual-use technologies.
He praised Mario Draghi for the need to utilise European savings and called for the removal of regulatory barriers that exclude defence from investment portfolios, stressing that a common European supply is critical to avoid fragmentation and waste of resources.
Finally, he proposed taking multi-year contracts for uniform specifications and centralised purchasing, saying that Europe has a technology savings and industrial base but needs discipline and institutional integration to turn resources into power.
Welcome from the Minister of Economy and Finance
Ladies and Gentlemen,
For the past three decades, most of Europe has treated security as a supplementary budget provision, what was left after everything else had been funded. That era is now over. The question before us today is not whether we should spend more on defence. Across the Union, we are already doing so. The harder question is whether we can turn that spending into operational capability at the speed that circumstances demand.
Deterrent capability, in 2026, is no longer just a function of national budgets. It is a function of how quickly capital – public and private, domestic and cross-border – can be mobilised, distributed and converted into ships, satellites, munitions and the industrial base that produces them. And here, frankly speaking, Europe faces a realisation challenge.
Let’s look at the data. Member states are now committed to levels of defence spending that were unthinkable five years ago. Yet the European defence industrial base was built for a different era – fragmented between national champions, adapted to peacetime rhythms and conditions, without sufficient funding for the volume of orders it now receives. Supply cycles still measured in years. Production lines that cannot be expanded without predictability in demand. Suppliers – many of them small and medium enterprises – that cannot secure bank financing because defence is still, for many institutional investors, seen as an excluded sector.
This is where the bottleneck lies. Not in credit. In execution.
Let me make three observations about how we can address it.
First, capital markets must do work that budgets cannot. Mario Draghi was right: European savings are plentiful; the channels through which we strategically direct them are not. The Savings and Investment Union is not an abstract discussion in Brussels. It is the mechanism through which a Greek pensioner saver, a German insurance company and a French family office can finance the radar systems, shipyards and dual-use technologies that secure the continent on which they live. Deeper and more integrated markets are in themselves a strategic security advantage.
Second, we need to remove some artificial barriers that still treat defence as an unacceptable sector to invest in. Regulatory frameworks that exclude defence companies from investment portfolios were formed in a world that no longer exists. Sovereignty implies a balance sheet and we should not hesitate to fund it.
Thirdly – and most importantly for implementation – capital alone cannot solve the procurement problem. When finance is channelled into fragmented demand, the result is inflation, not operational capacity.
This is where common European procurement becomes crucial. Today, the twenty-seven member states buy largely on their own schedules, to their own specifications and from their own preferred suppliers. The result is predictable: overlapping research and development, small-scale production, interoperability gaps in the business domain, and an industrial base that cannot justify the investment needed to expand. In practice, we have organised our defence market to be less than the sum of its individual members.
The solution is not complicated in principle, although it is demanding to implement. Aggregated procurement on a European scale. Multi-year contracts and frameworks that give industry the certainty of demand it needs to invest in capacity. Uniform specifications so that a supplier in Thessaloniki, Tallinn or Toulouse can serve different national buyers without having to redesign for each case. A true single market for defence goods, with the corresponding regulatory and export control framework.
The tools are beginning to take shape – SAFE, EDIP, the work of the Defence Commissioner. What is now required is the political will to use them at the scale that circumstances require, and the necessary fiscal discipline to ensure that joint procurement attracts private capital rather than substitutes for it. The ability of government borrowing is finite, and the ability to finance through markets, when properly mobilised, much less so.
Let me close with this. The countries that prevailed in previous major strategic contests did so not because they had bigger budgets, but because they built the institutions that could turn national resources into national power. That is our task today. Markets, capacity, delivery – three words, one agenda.
Europe has the necessary savings. Europe has the technology. Europe has the industrial heritage. What is needed is the discipline to connect them.
