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29 Jan 26. Germany proposes ‘two-speed’ EU to hasten defense buildup. Germany is spearheading an initiative to create a “two-speed” European Union, proposing that a core group of six major economies bypass the bloc’s traditional consensus-based decision-making to accelerate defense cooperation and industrial competitiveness amid mounting geopolitical pressures.
German Finance Minister Lars Klingbeil and his French counterpart, Roland Lescure, jointly convened finance ministers from Poland, Spain, Italy and the Netherlands on Jan. 28 for a video conference to establish what is being called the E6 format of the six leading European economies.
“Now is the time for a Europe of two speeds,” Klingbeil said at a Berlin event ahead of the meeting.
In a letter of invitation to his colleagues, obtained by Defense News, Klingbeil presented a four-point agenda that makes defense spending a priority alongside a Savings and Investment Union, strengthening the Euro and securing critical raw materials.
“Europe has to become stronger and more resilient,” Klingbeil said in the letter. “Work towards this goal needs to be sped up in all dimensions. Continuing as before is not an option.”
Klingbeil’s two-page document calls for enhanced collaboration on defense spending and urges making defense a key focus in the next EU multiannual budget. The letter also calls for “turning defense into an engine for growth” for the continent’s economy.
The German finance minister described the Jan. 28 call as a kick-off meeting, saying that he hoped to have a follow-up meeting on the sidelines of the next EUROGroup meeting, a gathering of finance ministers of the Euro-zone.
The two-speed concept for deeper European integration, while not entirely new to EU discussions, is gaining fresh momentum as the bloc confronts what many here describe as an urgent need to reduce dependence on the United States for defense.
However, the approach risks fracturing European cohesion by alienating EU members who are on board with deeper integration but are not part of the group of six. German officials have indicated that the format would remain flexible and possibly open to additional participants.
The initiative also reflects a strategic recalibration in Berlin’s European partnerships.
Chancellor Friedrich Merz signed a comprehensive German-Italian “Protocol on a Plan of Action for strategic cooperation” with Prime Minister Giorgia Meloni on Jan. 27, which commits both nations to “urgently and jointly achieve European defence readiness by closing capability gaps and strengthening the European pillar in NATO.” They will collaborate on integrated air and missile defense, unmanned systems, naval vessels, electronic warfare, and potentially a common land combat platform.
Simultaneously, Berlin is deepening ties eastward: Merz announced in November that Germany and Poland are drafting a new defense policy agreement to be concluded in 2026, with the Bundeswehr already increasing joint exercises with Polish forces and expanding cooperation on drone detection and neutralization.
The initiative comes as Germany itself undergoes a historic military buildup. Berlin’s 2026 budget allocates €82.69 billion ($98.92 billion) for the Bundeswehr, with an additional €25.5 billion ($30.5 billion) from a special defense fund, as Merz pursues his stated goal of making Germany “the strongest conventional army in Europe.”
At the World Economic Forum in Davos on Jan. 22, Merz reaffirmed plans for Germany to increase defense spending to 5% of GDP, calling it “a huge increase” necessary to assert European sovereignty.
All this comes against the backdrop of strained relations in the EU’s traditional Franco-German growth engine, precipitated by an impasse in the Future Combat Air System project meant to design Europe’s next-generation fighter jet, and the challenges posed to collective EU action by unanimity rules among the Bloc’s 27 member countries. (Source: Defense News)
30 Jan 26. The Belgian Ministry of Defence has officially confirmed the launch of the Land Systems Logistic Support (LS²), an industrial partnership bringing together John Cockerill Defense, FN Herstal and Thales. This ambitious and unprecedented initiative aims to ensure the long-term maintenance of all vehicles and embedded systems of the Belgian Land Force and to guarantee their long-term operational availability. Thibault Lambrecht is appointed CEO of LS² and will take up his duties early February.
This project, with a duration of 20 years, is based on a strong and unprecedented industrial cooperation between three major defence industry companies: John Cockerill Defense, FN Herstal and Thales Belgium.
By pooling their expertise in the service of Belgian sovereignty, the three partners have formed a joint venture dedicated to the maintenance, modernisation and logistical support of all land force vehicles and their information systems, communication and armament.
29 Jan 26. Powering Europe: EIB Group invests a record €100bn to support shared prosperity, security and European values
• Financing for energy security rose to a record in 2025, with €11.6bn invested in European grids, and mobilising around a third of the total energy transition investment
• Biggest ever financing programme for startups, scale-ups and tech infrastructure consolidates EIB Group’s position as cornerstone of EU’s venture capital ecosystem
• Scope of security and defence investments expanded, financing quadruples to reach nearly 5% of EIB Group’s annual EU business, in milestone year of historic decisions
• Financing for housing innovation, renovation and new construction rose by 50%, while more than half of EIB Group’s EU financing went to projects in cohesion regions
The European Investment Bank (EIB) Group is deploying its full firepower to support European competitiveness, security and strategic autonomy, with a record €100 bn in annual financing. The results from the EIB Group’s activity in 2025 show historic highs in new investment for the green and digital transitions, for European security and defence, for shared priorities including housing, and for reinforcing win-win partnerships and alliances in Ukraine, accession countries and across the globe.
“Europe is a superpower, and we must punch our weight and believe in our capabilities,” said EIB Group President Nadia Calviño. “The EIB Group is making a difference. Investing in shared prosperity, security, strategic autonomy and European values, so Europe delivers on its promises to citizens and partners.”
Transition to the future
Almost 60% of EIB Group’s total financing in 2025 went to green projects, from large energy grids and interconnectors to the deployment of storage and renewables, clean technologies for the decarbonisation of heavy industry, as well as adaptation investment, such as water infrastructure, reinforcing the resilience of economies and societies to climate change and its impact.
A record €11.6bn was devoted to grids and storage projects, supporting the security of the power supply. It is estimated that the financing signed last year will help construct or upgrade 56,000 km of power lines, from the landmark Bay of Biscay interconnector between the Iberian Peninsula and France, through an underwater cable connecting two regions in central Italy, to local grids and municipal power infrastructure in Germany.
EIB Group financing backed one fifth of all newly installed solar capacity, one in three new onshore wind projects, as well as the vast majority of all offshore wind projects in 2025. Tailored financing products supported the EU’s wind and grids manufacturing industries, while record high investment volumes in energy efficiency are expected to lower bills for small and medium-sized companies and households. EIB Group financing supported around one third of the total energy transition investment in the EU last year.
In addition to clean technologies, the EIB Group is supporting homegrown innovation in health and biotech, artificial intelligence and other disruptive technologies, digital infrastructures and critical raw materials. With the rollout of TechEU last year, the biggest ever financing programme for innovation, the EIB Group plans to mobilise at least €250 bn in investment by 2027, ensuring that ideas, technologies and innovative companies born in the EU, can stay, grow and thrive here in the EU. The financing deployed last year alone is estimated to mobilize more than €100 bn in investment, from AI-powered 6G networks, to semiconductors manufacturing.
As cornerstone financier of innovation, the European Investment Fund (EIF) – EIB’s risk-finance subsidiary – delivered close to €16 bn in guarantees and equity finance for small businesses and startups across the EU. The EIF is estimated to have contributed almost a quarter of all venture capital raised by European funds last year. In the months ahead, it will expand its European Tech Champions Initiative, building on the huge success of the first phase, which has already anchored the creation of 12 venture capital mega funds in Europe, and the scale-up of 35 startups – including nine unicorns.
Security and defence
Responding to the new geopolitical landscape, the EIB Group significantly expanded the scope of its activities in the area of security and defence and into projects dedicated to military use. Security and defence investments quadrupled to more than €4 bn, close to 5% of the EIB Group’s EU financing.
Thanks to this step change, the EIB Group plays a leading role in safeguarding peace and security for EU citizens, with flagship projects ranging from military camps and maintenance facilities to research and development in advanced radar systems and avionics, and from sensors essential for the protection of Europe’s seabed and underwater assets to cybersecurity infrastructure and space capabilities.
Moreover, the EIB Group has been a pathfinder for EU’s financial industry, catalysing support for companies supporting Europe’s deterrence capabilities. Through intermediated lending agreements signed with commercial banks in Germany, France, Spain, Greece, and Austria, the EIB Group is facilitating access to financing for small and medium-sized companies in the supply chain of Europe’s large defence contractors, while the EIF has been nurturing, as anchor investor, the development of a venture capital ecosystem investing in defence firms with a pan-European approach.
Underpinning Europe’s economic model and values
The EIB Group is focusing on investments that underpin the European economic model and values. Investments for cohesion rose to a record high, with more than 50% of the Group’s EU investment going to projects in Europe’s less developed regions.
The EIB Group’s Affordable and Sustainable Housing Plan (available in EN, FR and DE) launched in 2025 alongside the European Commission, raised EIB Group financing for innovation, renovation and new buildings to more than €5bn, up nearly 50% on an annual basis, with a further increase planned for 2026. From student residences in Greece, to social housing in Belgium, from hospitals and health facilities in Spain, to primary schools in France, financing for social infrastructure whose impact is felt daily by EU citizens is a key priority for the EIB Group.
Financing for agriculture and the bioeconomy also rose to a record high of nearly €8 bn, strengthening a vital sector for Europe’s economy and food security, supporting rural communities, and creating viable futures for young and new farmers, who face financing barriers
Building bridges and win-win partnerships around the world
The EIB Group also deployed more than €9 bn for its EIB Global operations, building win-win global partnerships anchoring Europe as a trusted partner in a changing world, improving living conditions in many areas. For example, in 2025, the EIB Group financing for water projects rose to a record €5bn globally.
Financing for Ukraine rose to a new record and now exceeds €4 bn since the start of Russia’s invasion, with a new project signed or inaugurated every other week, from schools, hospitals and community facilities to district heating and power supply.
An EIB Global strategic orientation was adopted in 2025, fully aligning our operations with EU policy priorities. The EIB is the world’s largest public financier in water and a global leader investing in health, clean energy, and transport. Investments in private sector support and entrepreneurship brings opportunities for young people and women in emerging economies.
Doing more, doing better
In parallel to increasing the volume of its activities, the EIB Group has streamlined its internal processes, with the goal of accelerating investment decisions and cutting time to market. One-stop-shops have been introduced for clients, with investment checkers and reliance on established regulatory frameworks, designed to help Europe’s entrepreneurs get the right financing, at the right time, and the right scale to make a difference.
The full activity report, including a list of flagship project examples can be found here
A key figures summary for 2025 can be found here: [EN] [FR] [DE] [IT] [ES]
The presentation of the EIB Group’s annual operational[1] results, including project examples will be available here after the press conference
[1] All figures are unaudited and provisional, refer to signatures and are for the EIB Group unless otherwise specified.
29 Jan 26. “Credible nuclear deterrence in Europe continues to depend on US conventional and nuclear backstops…Recent isolationist tendencies in US defence and foreign policy have also re-ignited doubts over US commitments to extended nuclear deterrence.”
This is according to Nuclear Deterrence in Shifting Euro-Atlantic Security Architecture, a new RUSI research report by Darya Dolzikova, which shows how Europe needs to adapt its conventional and nuclear posture to ensure that nuclear deterrence remains effective in the face of changing threats and geopolitical pressures reshaping the wider Euro-Atlantic security environment.
The report argues that while nuclear weapons remain central to NATO’s deterrence posture, the credibility and effectiveness of nuclear deterrence in Europe are under increasing strain due to shifting US security priorities, the persistent threat of Russian conventional and potentially nuclear aggression, and the growing impact of China on global nuclear dynamics.
The study says European nuclear deterrence continues to rely heavily on US conventional and nuclear backstops, even though Washington has signalled a long-term reorientation of its security priorities. This report underscores the limitations of existing British and French nuclear postures to address the full range of threats facing Europe. It says that perceptions that the UK’s deterrent is dependent on the United States undermines its wider assurance value to its allies. France, while stressing the ‘European dimension’ of its deterrent, remains outside NATO’s Nuclear Planning Group, and has not specified the nature of the ‘European dimension’, creating ambiguity for non-nuclear Allies.
Key Findings
• US conventional and nuclear support underpins European deterrence but is no longer guaranteed. The report notes that “European inferiority [vis-a-vis Russia] in conventional capabilities on land is currently offset, inter alia, by superior NATO airpower” but warns that NATO remains reliant on the US for that air superiority as well as missile and air defence. It adds: “Recent isolationist tendencies in US defence and foreign policy have also re-ignited doubts over US commitments to extended nuclear deterrence.”
• British and French nuclear forces face credibility limits. “Without the backstop provided by US nuclear forces, the UK and France currently lack the flexibility of response – in capabilities and doctrine – to credibly deter or respond to the expanding range of threats facing Europe, including potential threats of Russian ground incursions into NATO territory and, in extremis, limited Russian nuclear use in Europe.”
• China’s nuclear expansion complicates US nuclear commitments to European security. China’s expanding nuclear arsenal – expected by the US to reach 1,500 warheads by 2035 – risks US deterrence resources being stretched across two theatres. The report says: “Expanding Chinese capabilities (the US expects China to field 1,500 nuclear warheads by 2035) are increasingly drawing US attention and resources away from Europe.”
Key Recommendations
• Maintain US engagement in European security. The report says: “The immediate priority must be finding ways to maintain US engagement in European security and Washington’s continued provision of key conventional enablers and extended nuclear deterrence to Europe, while considering ways to strengthen European capabilities.”
• Reassess UK and French nuclear posture and capabilities. The study identifies the UK–France Nuclear Steering Group, established under the 2025 Northwood Declaration, as a potential mechanism for deeper coordination, transparency and dialogue. It also suggests the UK should consider developing its own sub-strategic nuclear weapons.
• Strengthen European conventional capabilities and improve integration of conventional and nuclear planning. The paper says that non-nuclear Allies in particular should invest in advanced conventional capabilities, which will allow for the distribution of deterrence responsibilities across NATO. It says adds: “For these advanced conventional capabilities to have the intended benefits for European defence, and for nuclear deterrence in Europe in particular, NATO Allies must have a better demonstrated ability and strategy of integrating conventional and nuclear deterrence and related operational planning within NATO.”
• Match investments into strengthened conventional and nuclear posture with risk management measures. The report notes that the ability for a greater number of decision-making centres in NATO to pose threats to Russian strategic assets creates additional escalation and miscalculation risks, which will need to be managed. “Within NATO, working towards a uniformity of risk perception and identifying ways to reassure Allies is critical both to effective deterrence and to risk management.”
Conclusion
The report concludes that nuclear weapons will remain indispensable to Euro-Atlantic security but warns that deterrence in Europe is entering a far more complex and uncertain phase. Russia’s readiness to use nuclear coercion, combined with doubts over US conventional engagement and the limitations of European nuclear forces, creates acute risks of miscalculation in a future crisis. While sustaining US commitment remains essential, European NATO Allies must also shoulder greater responsibility by strengthening conventional capabilities, improving options for leveraging and managing escalation dynamics, and more closely integrating nuclear and non-nuclear capabilities to preserve credible deterrence in an increasingly complex security environment.
Notes to Editors
Darya Dolzikova is a Senior Research Fellow at the Royal United Services Institute (RUSI) focused on nuclear proliferation and deterrence issues. This report forms part of RUSI’s Future Euro-Atlantic Security Architecture project. The report draws on a meeting of experts held in Brussels in October 2025, alongside a review of primary policy documents and secondary literature from across NATO member states and Russia.
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28 Jan 26. Report by the Comptroller and Auditor General
Smarter approach to tackling fraud and economic crime could save MoD millions – NAO report
• While the MoD recovered more than it spent on counter-fraud work in 2024-25, over the last four years it recouped on average just 48p for every £1 spent (government expects that public bodies should save £3 for every £1 spent).
• Procurement fraud, asset theft, personnel management issues and information exploitation constitute the MoD’s main areas of fraud risk.
• NAO recommends several measures to help MoD better manage fraud and economic crime, including setting a department-wide objective to bring down the overall level of estimated financial loss.
• Download the embargoed report (PDF)
• Download the embargoed press notice (PDF)
• Download the embargoed statement from the Chair of the Public Accounts Committee (PDF)
The Ministry of Defence (MoD) recouped less than half the money it spent over the last four years on tackling criminal economic activity including procurement fraud, theft of assets such as laptops, weaponry and armour, and pay and expenses fraud, according to a new National Audit Office (NAO) report.1
This is because of ongoing challenges that include a limited shared understanding of departmental objectives, a fragmented structure leading to inefficiencies in investigations, and a historic lack of trust between counter-fraud and police teams – although its return on counter-fraud spending is improving.
Like all parts of government, the MoD is vulnerable to economic crime including fraud, bribery and corruption. It has in place a counter-fraud team and several defence police authorities who can tackle such threats.2
But recent whistleblowing disclosures to the NAO indicate that individual allegations can take a long time to resolve or do not reach a satisfactory resolution and that overall, the MoD could manage fraud and economic crime far more effectively.
The MoD reports that its potential exposure to fraud can reach up to £1.5 bn a year, mostly from procurement. But, as it acknowledges, this is only a broad estimate that does not take into account the effectiveness of its controls.
Although the MoD receives hundreds of allegations of suspected fraud or economic crime each year, relatively few result in detection, disruption and recovery. Government expects that public bodies should save £3 for every £1 spent on counter-fraud work, yet between 2021-22 and 2024-25, the MoD reported a return of just 48p for every £1 spent. In 2024-25, however, it saved £1.34 for every £1 spent.3
The MoD also has limited assurance that cases assigned outside of its counter-fraud and police teams are handled appropriately and it does not always know and centrally record how its police services investigate fraud against the department.
The NAO has identified several key challenges preventing the MoD from strengthening its response to fraud and economic crime.4 These include not having a department-wide objective to minimise fraud losses and protect defence capability; a fragmented structure that makes it hard for the MoD’s counter-fraud and police teams to acquire the specialist resources to investigate cases effectively; and a historic lack of trust between counter-fraud and police teams, with unclear lines of reporting, duplication and missed investigative opportunities. A series of internal and external reviews of MoD policing have drawn similar conclusions.5
The MoD has recently strengthened its approach to managing fraud and economic crime by increasing and improving its use of fraud risk assessments, embedding police staff within counter-fraud teams, and working on a joint investigative model for criminal economic activity.
To build on this, the MoD should:
• set a department-wide objective to bring down the overall level of estimated financial loss due to fraud and economic crime
• empower a senior official to act as the MoD’s representative in cases where the department is the victim of economic crime
• establish an accountable multi-disciplinary body that brings together the various counter-fraud and police teams that investigate economic crime
• improve the triaging of cases
• improve its counter-fraud performance by gathering intelligence from across the department, developing its understanding of fraud risk and publishing a detailed estimate of its total fraud losses
• gather complete information on fraud incidents either through a single case management system or through aligning its case management systems
• identify where analytics would be most helpful in tackling fraud and economic crime, and resource these in a way that maximises returns on investment
Gareth Davies, head of the NAO, said:
“The MoD could make significant savings if it better managed its losses from fraud and other forms of economic crime.
“Using this resource more effectively will require the MoD to reform the way it goes about tackling fraud and other economic crime, but would enable it to achieve real savings that could be used to enhance the country’s defence capability.”
27 Jan 26. EU should only buy European components for defence, France space minister says.
• Summary
• EU relies on U.S. tech for defence, space access
• Baptiste calls for EU-wide effort on satellite autonomy
• European firms merge to compete with SpaceX, Starlink
If the European Union wants to be serious about defence, the first step is to stop buying non-European components with a “Buy European Act”, France’s minister for space said on Tuesday.
The EU relies heavily on U.S.-made missiles and fighter jets along with many high-tech defence products.
In space, the EU used Elon Musk’s SpaceX to launch critical satellites such as its Galileo system, which runs Europe’s location services independent of the U.S. GPS system.
“The world has drastically changed and our main ally has become highly unpredictable,” the French minister Philippe Baptiste said, adding to growing calls round the world for greater self-reliance in response to U.S. President Donald Trump’s erratic foreign policy.
“We need to have autonomous access to space. It’s a radical change from the way we behave. We need to design European (satellite) constellations which means there is no American kill switch,” Baptiste added to reporters on the sidelines of a European space conference in Brussels.
“To be serious, the first step is we need a kind of ‘Buy European Act´. Let’s stop buying on-the-shelf components that are not European.”
He pointed to the war in Ukraine where entrepreneur Elon Musk decided to disconnect his satellite internet service Starlink, disrupting a counter-offensive by Kyiv.
“We need ITAR-free constellations,” Baptiste added, referring to strict U.S. International Trafficking in Arms Regulations (ITAR) that govern the export of components.
“I agree with Germany. We think it’s very urgent and we cannot wait 10 years.”
EU-WIDE EFFORT NEEDED
With the bloc lagging behind on Low Earth Orbit satellites, Baptiste cautioned efforts should be at EU level and there was no point in individual nations like France, Germany and Italy building their own systems. LEO satellites are critical for real-time defence uses as high-orbit have longer signal delays.
“Today we have countries who have weaponised satellites. It’s not science fiction, it exists. Our industry needs to cooperate better,” he said.
China, Russia and the U.S. have demonstrated anti-satellite weapons and launched manoeuvrable spacecraft, raising worries that an attack during conflict could disrupt GPS navigation or sever channels of communication.
The EU’s new launcher Ariane 6 only completed its first mission last year after years of delays.
France is pushing for international regulation for LEO satellites as collision risks rise and the capacity of transmission frequency bands becomes limited.
“We need to have discussions among the big players – it’s us, the United States and China,” he said.
“It’s overcrowded up there. There is no choice … when there will be a collision with a Chinese satellite whether it’s America First or not – you have a collision.”
The threat of U.S. primacy has triggered consolidation among European companies active in space.
Europe’s biggest satellite firms – Airbus, Thales and Leonardo – announced a $7bn merger last year in order to compete with SpaceX and Starlink. The merger has prompted two major German companies Rheinmetall and satellite maker OHB to discuss a joint bid on a satellite project for Germany’s armed forces. (Source: Reuters)
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