Committee on Security and Defence Ordinary meeting
3 September 2026
Contents updated on 3 Sept 2026
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SEDE European Parliament
Follow its sittings26:28 - 27:13
Speaker 1
Okay, dear colleagues, the next point on the agenda is a presentation of a study of advancing the inclusion of SMS and the EU's defense technological and industrial base with Professor Dr. Daniel Fiott. I would like to remind you that SEDE coordinators requested the study to support our work on strengthening the role of defense, the defense SMEs in the EU, such as in EDF and Agile instruments, and in particular for the upcoming INI report on this topic. So I would now like to give the floor to Daniel for 10 minutes to present the study, and then you have the possibilities to ask, please, the floor is yours.
27:13 - 34:26
Speaker 2
Yeah, thank you, Chair, and good morning, everybody. Thanks also for commissioning the study and for allowing me to come and present some of the main themes from the report.
I think everyone has access to a copy of it already. And maybe beginning straight away about the logic of the report and as the title I think is very clear, the question I was given was to see and to analyze the role of SMEs in the EDTIB, which I guess most people in this room will already recognize is a rather important question, not least because of the geopolitical context Europe is faced and also the growing importance of the European defense industrial base, but also looking at some of the experiences from Russia's war on the Ukraine and the role of SMEs and the role they've played as well in Ukraine's ability to defend Ukrainian territory. And in that context, there has been a much greater use of new technologies, dual-use technologies, and a rather, I would say, set of different processes that enabled the Ukrainians to get these technologies faster into the field. So this was a little bit the inspiration I had at the beginning of the study, but as the study also makes very clear, which is the importance of SMEs themselves. So we already recognize that SMEs already play quite a considerable role not only in the European economy more generally, but also in defense specifically.
So they're already part of existing defense supply chains and they play a critical role in enabling technologies to be integrated within the work of mid-cap firms and also the prime firms, so the higher tier. So there's already an integrated tier system of firms at the European level. Why that's important also is that SMEs are, if one tries to define it, but we don't really have the time to define what an SME is, in general terms, thinking about the role they play, SMEs can be considerably important when it comes to the sourcing and manufacturing of individual components and parts, but also, and that I think is very, very important, the role that SMEs play in terms of the innovation potential of the production and development of defense systems. That is increasingly important today because, as we know, we are engaged already in a form of technological revolution with technologies like artificial intelligence, the use and rise of autonomous systems, cyber defense, cyber capabilities, space technologies. If you zoom out and you look at the technology suites that SMEs are involved in and where innovation rests in Europe, SMEs play a considerable, considerably important role within the defense market.
However, one of the challenges, and there are many challenges facing SMEs, but one of the main questions that we try to tackle in this study is how best to go beyond what is the existing structure of the market at the moment with SMEs to also be able in Europe to benefit from new innovators, whether that's in the defense or the civil or the dual-use sectors, that they also have an opportunity to integrate their technologies and to sell their technologies throughout the European market for the benefit of defense. Now, this is not simply a question, and the report makes that very clear, this is not simply a question of developing new technologies, although that is certainly an important part of it. The question is also not just about the adaptation of existing technologies for defense. That is also a very, very important question. But the considerable challenge that we face in a more general sense in European defense is how do we get these technologies integrated quickly within the market and also within defense systems.
Again, coming back to the experience of Ukraine, one of the developments there that has been very interesting and which I outline in the study is how Ukraine have also been able to adapt their procurement system to enable a much faster connection between initial innovation, early-stage development, and then the integration of these technologies in the battlefield.
In in essence, in in basic terms, what this really means is how do we get warfighters, soldiers on the front lines being able to use, adapt these technologies, these defense technologies for defense. Ukraine has a specific story on this, but the question is how can we translate that also into a European-wide story as we think about the adaptation and evolution of the European defense technological and industrial base. I also apologize if there are too many words on the slides. I know that can be a bit of a challenge. So sorry.
I will nonetheless still take us through the second slide with some of the more specific challenges. In in the paper, I group the challenges in in three general terms: finance, regulation, and politics. The finance aspect, as I will show also in the next slide, is of course one of the more considerable challenges. We say these days that we have much more money in defense, and that is very, very true, but there is still a question of whether that money gets to the right place at the right time for the right actions. So making sure that finance is available at very specific points within the procurement system is absolutely critical.
This relates, by the way, when we talk about financing, finance, if there is a lack of money for SMEs, they find it considerably difficult to develop technologies and also, more importantly, get them tested and certified so that they can be used within the marketplace. Again, in the next slide, I will I will go into a bit more detail about what I what I mean on this. So there is a challenge already because of the risk still involved in investing in defense of attracting private investment also to SMEs. So there's a difficulty there for SMEs to get the money that they need. Second point is on regulation, which I know has become a really hot topic, especially in European terms in general, but also within the defense context with the defense omnibus, etc., where we still see a lot of fragmentation along national lines, which makes it very, very difficult for SMEs to conduct their business across borders within the European Union.
There are different procurement rules in the member states. There are different specific requirements related to, for example, security clearances. There are also the costs involved, it comes back to finance again, of high compliance costs of operating in different markets within Europe. In general terms, for example, it might be very difficult for SMEs to be able to afford the legal team and the administrative capacity they need to be able to operate in in different member states at the same time. The final big challenge, especially when it comes to market access, and as a good academic I come with no answer of how we overcome this, is good old-fashioned politics.