Leonardo, Fincantieri and more. How to spend more on defense?
The 2 percent goal in defense spending between opportunities and risks. Extract from the editorial by Pietro Romano on the June issue of Aeronautica & Difesa
The war in Ukraine seems to accelerate the world trend of increasing military spending in Europe as well. Under the pressure of events (and of the USA), the Old Continent has acquired the awareness of the need to combine "soft power" with a conspicuous dose of "hard power". An awareness that seems to be gaining ground even in Italy. Therefore, this national awareness in the ruling class and in public opinion and the goal of 2 per cent in defense spending that the government has set for itself and for our country are welcome. With some essential distinctions, however.
First of all, the commitment that is required of taxpayers after an economic crisis that has lasted continuously for over ten years must respond to proven needs of national security. It cannot be justified only by obligations entered into in the context of international alliances, albeit deeply rooted. Nor, in essence, from the diktats coming from the US administration. Although in the White House now sits a Democratic president, Joe Biden, like all Democratic tenants of the White House, he is very much listened to in our home regardless.
Giving priority to the national interest means taking into account Italian needs before planning considerable investments. “The allocation of more resources will require a careful evaluation of the programs to which they should be assigned”, underlined Leonardo's CEO, Alessandro Profumo, with good reason. The problem is not just how to spend, but how to spend. And on top of a quality expense there are the maintenance of the arsenal, the training of the military, innovation, as well as purchases. The increase in spending – 11 billion euros a year compared to today just to align with 2 per cent of gross domestic product – cannot be wasted on prebends, promotions, expenses and hiring of unsubstantiated necessity. Nor, as is happening in Germany, turn into a trip to the "stars and stripes" supermarket with the excuse (sometimes truthful) that only beyond the Atlantic is there the best. Limiting ourselves to this would mean that the effect of the increase in spending on European technological autonomy (and as far as we are concerned in Italy in particular) would be scarce or nil, as pointed out by Eric Beranger, CEO of the European missile consortium Mbda, of which Leonardo owns. 25 percent.
We must take this opportunity to resolve the usual dilemma: to depend on the USA (which, moreover, does not want to collaborate with European industry, which should be limited to gregarious roles) or to go it alone. And the opportunity to raise defense spending to 2 per cent of GDP, and above all to remain at this level in the future, is not to be missed. "Political" games within the majority have already delayed reaching the goal until 2024.
The increase in military spending can also have a huge impact on our economy: a survey by Prometeia and Aiad (Association of Aerospace and Defense Industries) found that the multiplier effect of investments in the sector is equal to 3 as regards the added value and to 4 as regards the employees. Investments that, moreover, would strengthen the role (sixth exporter in the world) that the Italian industry won in 2021. Thanks to its "champion" Leonardo, to Fincantieri, to companies of the caliber of Elettronica and Iveco Defense Vehicles, of Avio Aero and Beretta, to many other small and medium-sized principals.
This does not mean, however, a return to autarchy. International collaboration can and should be pursued, but taking successful partnerships as an example. This is precisely the case of Mbda, the missile consortium with a model governance, also for any other agreements between the industries of the Old Continent. In 2021 the consortium overcame the wall of 4 billion in revenues and 5 billion in orders and competes on equal terms with Made in Us. In this context, the Italian part of the consortium, of which Lorenzo Mariani is number one, stood out for quality and results. And at the end of this year it should reach one billion in revenues, more than triple in 2020.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/leonardo-fincantieri-e-non-solo-come-spendere-di-piu-per-la-difesa/ on Sun, 22 May 2022 05:46:14 +0000.