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09 Oct 25. Latvia to strengthen defence infrastructure with EIB advisory support.
• Latvia to develop military base and training area in Selonia region, along with storage facility in Kuldīga Municipality.
• EIB to provide advisory services to help assess and prepare a potential public-private partnership for the defence project.
• New infrastructure to strengthen Latvia’s national defence capabilities.
The European Investment Bank (EIB), the Latvian government and the State Real Estate Agency (VNI) have joined forces to develop a military base and training area in the southeastern region of Selonia, along with a storage facility in Kuldīga Municipality. The initiative aims to enhance both national and regional defence capabilities.
The agreement was formalised today in Riga through the signature of key documents between the EIB, the Latvian government and State Real Estate, marking the official launch of the advisory assignment to assess a potential PPP structure for the defence base project. This support will help ensure the base and associated facilities is developed in line with international best practices and is attractive for financing.
“The Selonia base is a landmark project for Latvia and the Baltic region,” said EIB Vice-President Karl Nehammer. “It’s not just about infrastructure – it’s about resilience, readiness and regional solidarity. The EIB is proud to support this effort with our advisory expertise to help ensure the project is bankable, sustainable and impactful.”
The EIB advisory support stems from a request by the Latvian Ministry of Defence and covers the development of the base, training area and storage facility infrastructure. This would mark Latvia’s first defence infrastructure PPP, which follows successful cooperation with a PPP involving a bypass road in the city of Kekava near Riga and comes amid advisory support for a planned affordable-housing programme.
“In response to the geopolitical challenges and threats posed by Russia’s war in Ukraine, we are actively and thoughtfully implementing the National Armed Forces Development Plan for 2025–2036, which was approved in 2023,” said Latvian Minister of Defence Andris Sprūds. “Public-private partnerships have been identified as one of the effective and forward-looking models we can apply in the future for the development of defence infrastructure”.
The EIB will offer free advisory support through its European PPP Expertise Centre, helping Latvia prepare the project with strong financial planning, feasibility analysis, and impact assessment. The goal is to make sure the base is well designed, financially sound, and attractive to private investors.
“Cooperation with the European Investment Bank is a strong commitment of how to use state resources wisely – by leveraging the expertise of the private sector and international experience that provides valuable knowledge to public administration specialists and additional capital to strengthen Latvia’s defence and economy,” said Latvian Minister of Finance Arvils Ašeradens. “I highly appreciate that since the opening of the EIB office in Riga, its presence in Latvia has become increasingly significant. This year, EIB investments already exceed €330 m that is a significant contribution to the development of our economy.”
Renārs Griskevičs, Chairman of the Management Board of State Real Estate (VAS “Valsts nekustamie īpašumi”), said: “We are honoured to contribute to this strategically important project for Latvia’s and the region’s security. State Real Estate will oversee the project from the implementation phase through to the end of the availability period. Our team brings extensive experience in managing security infrastructure projects, and our expertise in the public-private partnership model will enable us to deliver this large-scale initiative efficiently and to the highest standards.”
The EIB’s support for Latvia’s defence infrastructure development reflects its growing role in strengthening European security and resilience. The Bank is increasingly involved in defence-related projects across Europe, including barracks, logistics hubs, critical infrastructure, industrial capacity, advanced technologies, and support for SMEs. These efforts support EU initiatives such as REARM Europe and underscore the EIB’s commitment to Europe’s security and resilience.
Background information
About the EIB
The European Investment Bank (ElB) is the long-term lending institution of the European Union, owned by its Member States. We finance investments in eight core priorities that support EU policy objectives: climate action and the environment, digitalisation and technological innovation, security and defence, cohesion, agriculture and bioeconomy, social infrastructure, the capital markets union and a stronger Europe in a more peaceful and prosperous world. The EIB Group, which also includes the European Investment Fund (EIF), signed nearly €89bn in new financing for over 900 high-impact projects in 2024, boosting Europe’s competitiveness and security.
In addition to financing, the EIB offers advisory services that help public and private partners develop and implement high-quality, investment-ready projects. The European PPP Expertise Centre is an advisory initiative of the EIB and supports the public sector across Europe in delivering better public-private partnerships (PPPs). In 2024 alone, EIB advisory teams helped mobilise over €200 bn of investment across Europe and beyond.
08 Oct 25. German arms makers lukewarm on government stakeholder push. Representatives of Germany’s defense enterprises have responded cautiously to a proposal for the government to become a shareholder in key companies.
German Defense Minister Borius Pistorius pushed ahead with the idea that the state might play a more active role by becoming a significant stakeholder in key military industries during an interview with the business newspaper Handelsblatt at the start of this week. He indicated the proposal had the support of other Cabinet members, notably of the finance minister.
“I am firmly convinced that we need state participation,” said Pistorius, “also to ensure that expertise and jobs remain in Germany.”
German-French tank maker KNDS and shipbuilder ThyssenKrupp Marine Systems are in the crosshairs for such action, Pistorius revealed.
KNDS, which produces the Leopard and Leclerc tanks among other armored vehicles, is planning to go public as soon as next year. At present, the French state holds half of all shares; the contemplated German government investment would aim to balance out French influence in the crucial company.
Hans Christoph Atzpodien, chairman of the defense contractor lobbying association BDSV, said he welcomed the federal government’s intention to secure domestic skills and jobs in strategic technology areas by way of state investments.
But he defended the industry’s free-market philosophy, arguing that heavy-handed government interference could scare away investors. Such a scenario, he said, could leave both companies and the government as the largest customer of defense goods in a worse spot, potentially unable to deliver the surge of military gear required for the country’s rearmament.
It was thanks to private investment, not state actions, he suggested, that the German defense industry was able to ramp up production on short notice in recent years.
There is precedent for the German government to buy shares in private military enterprises for geopolitical reasons.
Berlin acquired a blocking minority stake of 25.1% in the German sensor specialist Hensoldt in 2021, aimed at countering and balancing Italy’s leverage in the company, which it had gained through its own involvement with Leonardo. And the German state holds 11% of all shares of aerospace giant Airbus, although under an agreement from 2012, major governmental shareholders renege on their right to corresponding seats on the board of directors.
In a written statement published on Monday, Atzpodien also countered the defense minister’s concerns that arms makers may be poised to charge astronomical prices due to the sudden influx of cash. Pistorius had called it a “gold rush mentality” and warned of a possible looming “armaments price inflation.”
According to Atzpodien, government rules and the fact that “there is a high degree of responsibility within the industry itself” would combine to avoid price gouging.
Other European governments maintain stakes in their local defense companies: most prominently France with shares in Dassault Aviation, Naval Group, Thales, KNDS and others; Italy in Leonardo; Spain in Indra Sistemas; Sweden in Saab, and Norway in Kongsberg. (Source: Defense News)
08 Oct 25. German budget committee approves 20 more Eurofighters for 3.75bn euros. Germany’s budget committee on Wednesday approved the procurement of 20 more Eurofighter jets for around 3.75bn euros ($4.36bn), according to the defence ministry.
The so-called tranche 5 of Eurofighter jets is to be delivered to the air force between 2031 and 2034.
Within the NATO alliance, the new jets are important for data collection and electronic warfare, said Andreas Schwarz, who handles budget for the coalition partner Social Democrats.
“This will ensure the military operational capability of the Eurofighter until 2060,” the lawmaker added.
In total, the committee approved 14 proposals that surpass the threshold of 25m euros, requiring committee approval, for a value of more than 7 bn euros, said the ministry.
“Over the course of the year, we will be submitting further armaments projects on a considerable scale to the German Bundestag in order to continue the positive momentum in procurement for the operational readiness of the Bundeswehr and the needs-based equipping of our soldiers,” the ministry added. ($1 = 0.8596 euros)(Source: Reuters)
07 Oct 25. Italy lines up fallback plan for freeing €12bn defense spending. Italy is ready to use an EU-devised accounting trick to help boost its defense budget by €12bn, or $14bn, as it tries to meet tough new NATO spending targets. The plan devised in Brussels last year allows EU member states to exempt defense spending when they calculate annual deficit spending, allowing them to raise defense budgets without breaking EU deficit rules. The EU normally requires member states to keep their budget deficit below 3% of GDP or face infraction procedures.
An Italian government source told Defense News the so-called National Escape Clause (NEC), if used, could result in Italy adding €12 bn to its defense budget over three years starting from 2026.
Rome’s readiness to use the EU rule was signaled in a Ministry of Finance budget document issued this month, which stated it could be triggered if low-cost EU loans to boost defense spending – dubbed the SAFE program – were not enough to get Italy up to NATO requirement that members spend 5% of GDP on defense and security by 2035.
“The decision on whether to activate the NEC is postponed until after the completion of the SAFE program, when its actual need will be assessed,” the document stated.
Italy has already applied to the EU for €14.9bn in SAFE loans. The document stated that Rome will give the EU a list by Nov. 30 of what defense products it planned to spend the loans on.
It said the list would focus on “joint programs with other member states of third countries interested in developing defense strategies in collaboration with the European Union.”
The document added the European Commission would issue a response to the request by Dec. 31.
Italy spent €29.18bn on defense in 2024, equaling 1.54% of GDP, and has said it will reach 2% this year. Government sources have told Defense News that the gap will be made up by reclassifying parts of the Italian coast guard as military units, but no formal announcement has yet been made, and a proper defense budget document breaking down spending for 2025 has yet to be published.
Looking ahead to 2026, the finance ministry document says a further “gradual” rise in spending will see Italy budgeting 2.5 percent of GDP by 2028.
The document warns that hiking budgets too quickly would prompt a “rush to buy” which would result in the market hiking prices.
“Based on a realistic projection, spending in relation to GDP would rise by 0.15 percentage points in 2016 and again in 2017 then by 0.2 percent points in 2028,” the document states.
Planners would first use the SAFE loans to achieve that, then decide on whether to use the National Escape Clause.
The permission to use the NEC by the EU was part of its March 2025 ReArm scheme to push member states to increase military readiness in light of Russia’s invasion of Ukraine.
“The EU’s fiscal rules limit how much member states’ governments can spend. That’s why the EU is allowing additional budgetary flexibility within the fiscal framework to ensure that rising defense expenditure does not jeopardize fiscal sustainability or trigger penalties normally associated with breaching EU budgetary limits,” the EU has said.
“The flexibility under the NEC for defense expenditure would be available for four years, starting from 2025, with an annual excess through 2028 that will not exceed 1.5% of GDP,” it has said.
Italy has previously said it did not want to use the NEC option as long as its annual deficit was already over 3%, meaning it was facing an infraction procedure. But it now predicts it will drop to 2.8% next year. The document contains one paragraph hinting that Italy may not yet need to achieve the 5% spending demanded by NATO.
Its logic is that the 5% target has been established to ensure countries reach specific military capabilities. If Italy can achieve those capabilities through “rationalization strategies and optimizing spending, it could yet be possible to deliver the capabilities assigned to each country with a smaller outlay.” (Source: Defense News)
06 Oct 25. European arms industry growth to beat 10% a year, Redburn forecasts. European defense companies may grow their revenue from European customers by an average 10.5% to 11.5% a year for the next decade, as most countries commit to NATO’s 2035 spending targets, financial research firm Rothschild & Co. Redburn said.
The fastest growth will continue to be in countries that have underspent historically, such as Germany, or in parts of Europe “uncomfortably close” to the perceived threat from Russia, analysts Olivier Brochet and Joe Orchard wrote in an Oct. 2 report.
Rising military budgets already led to a “material jump” in order backlog that is yet to be fully reflected in financial results and profit outlooks of the continent’s defense industry, the analysts said. European Union countries lifted defense spending by 19% to a record €343 bn ($400 bn) in 2024, with spending set to rise to €381bn this year, according to the European Defence Agency.
“The European defense industry’s backlog should continue to expand at a faster rate than it is consumed for years,” Brochet and Orchard wrote.
Based on Europe spending 3.5% of GDP on defense in 2035, with 35% to 40% of the budget spent on equipment, European defense equipment spending would be around 1.2% to 1.4% of GDP, more than double today’s levels, the report said.
As it rearms, Europe will “materially outgrow” the United States, which is planning to keep defense procurement steady at about 1% of GDP, according to Brochet and Orchard.
European defense companies on average filled about 34% of their backlog every year between 2013 and 2021, with that number falling to 30% in 2024 due to the acceleration in order intake. The number is expected to return to its historic levels as production capacity increases, the analysts said.
That would then see the industry’s European revenue at least tripling by 2035, Brochet and Orchard wrote, or a compound annual growth rate of 10.5% to 11.5%.
Based on a sample of 11 large Western European defense companies between 2013 and 2024, defense procurement takes about a year to translate into order intake, suggesting the “sharp increase” in defense budgets in 2024 and 2025 could materialize into industry orders in 2025-2026, according to the Redburn analysts.
The backlog for the sample set of companies increased to an average 3.9 years of sales in 2023-24 from three years in the period from 2013 to 2021, they said.
For Europe’s defense industry, the home continent on average accounted for around 65% of 2024 sales, with Naval Group and Rheinmetall getting a larger share from Europe, and BAE Systems on the lower end.
Firms exposed to geographies with the biggest spending increases and those active in air defense and land armament are growing revenue faster than peers, led by the German land-armament defense industry, according to the report.
“Local players disproportionately benefit from the strength in defense spending, as countries aim at reinvesting what is effectively their taxpayer money into their domestic economies,” Brochet and Orchard wrote, adding that has been particularly visible in Germany and Eastern Europe. (Source: Defense News)
03 Oct 25. Poland’s link with strategic NATO fuel pipeline to cost $5.5bn. Poland said on Friday that its plan to link to a NATO pipeline network, which is designed to supply troops with fuel in the event of war, will cost 20bn zlotys ($5.5bn).
Earlier in the day, the ministry and Polish pipeline operator PERN signed a preliminary deal to extend the country’s pipelines to connect them to the NATO system.
“We are talking about…construction of pipelines over a distance of 300 km…we are talking about one of the largest investments in the security of the Polish state in the last 30 years,” Deputy Defence Minister Cezary Tomczyk said.
Poland has long sought to connect with NATO’s Central Europe Pipeline System (CEPS), which dates from the Cold War era and transports jet fuel, gasoline, diesel fuel and naphtha across Belgium, France, Germany, Luxembourg and the Netherlands.
The matter has taken on increased urgency for the eastern flank NATO member since Russia’s 2022 invasion of Ukraine and more recently, drone incursions. NATO has allocated 60 m zlotys to Poland. (Source: Reuters)
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Founded in 1987, Exensor Technology is a world leading supplier of Networked Unattended Ground Sensor (UGS) Systems providing tailored sensor solutions to customers all over the world. From our Headquarters in Lund Sweden, our centre of expertise in Network Communications at Communications Research Lab in Kalmar Sweden and our Production site outside of Basingstoke UK, we design, develop and produce latest state of the art rugged UGS solutions at the highest quality to meet the most stringent demands of our customers. Our systems are in operation and used in a wide number of Military as well as Homeland Security applications worldwide. The modular nature of the system ensures any external sensor can be integrated, providing the user with a fully meshed “silent” network capable of self-healing. Exensor Technology will continue to lead the field in UGS technology, provide our customers with excellent customer service and a bespoke package able to meet every need.
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