Defence Finance Monitor #134
Defence Finance Monitor applies a top–down method that traces how NATO, EU and allied strategic priorities are translated into regulations, funding lines and procurement programmes, and then into demand for specific capabilities, technologies and companies. We use official doctrine as the organising frame to identify where strategic relevance is being institutionally defined and where it is materialising in concrete budgets, acquisition pathways and industrial capacity.
Our working assumption is that what becomes structurally relevant in NATO/EU strategy tends, over time, to become relevant also from a financial and industrial point of view. On this basis, DFM operates as a decision-support tool: it benchmarks investment and industrial choices against institutional demand, clarifies which capabilities are rising on the spending agenda, and maps the funding instruments, eligibility constraints and supply-chain factors that shape real-world feasibility across investors, industry, public authorities and research organisations.
Defence Investment Regulation
The STEP Sovereignty Seal: Regulatory Logic, Eligibility Criteria, and Strategic Implications for Defence and Dual-Use Companies
With the introduction of the Sovereignty Seal under the Strategic Technologies for Europe Platform (STEP), the European Union has equipped its industrial policy with a selective and formalised instrument designed to identify and support projects deemed essential to European technological sovereignty. The Seal is neither a new funding vehicle nor an automatic guarantee of financing; rather, it is a regulatory mechanism that directly influences pathways to public and private capital, the ability to combine multiple EU instruments, and the assessment of strategic risk associated with individual industrial projects. For companies operating in the defence and dual-use sectors, understanding its legal rationale, allocation criteria, and operational effects is critical to grasp how the European Commission is explicitly redefining the Union’s industrial priorities and the perimeter within which European technological champions will be supported in the forthcoming political and financial cycle.
Critical Infrastructure & Corporate Readiness
Foreign Direct Investment as an Exclusion Criterion: The New UBO Transparency
The strategic landscape of European industrial defense in 2026 is defined by a rigorous decoupling from non-allied influence, primarily through the enforcement of the revised Foreign Direct Investment (FDI) screening regulation and the Security Action for Europe (SAFE) instrument. Under Regulation (EU) 2025/1106, the European Union has established a borrowing and lending capacity of up to €150 billion to accelerate defense readiness and ensure the timely availability of strategic products. Central to this framework is the absolute prohibition of control by third-country entities over any contractors or subcontractors involved in common procurement actions. This shift is supported by mandatory national screening mechanisms across all 27 Member States, targeting sensitive sectors such as defense, semiconductors, and artificial intelligence. Furthermore, the introduction of tightened Ultimate Beneficial Owner (UBO) standards ensures that “substantial control” is identified regardless of formal ownership structures, closing previous loopholes used by foreign actors. For civilian enterprises transitioning into the dual-use market, maintaining transparency regarding capital origin is no longer an administrative option but a fundamental prerequisite for financial eligibility.
Public Expenditure & Procurement
European Investment Bank and Piraeus Bank Catalyze Greek Defense Sector with €100 Million Financing
The European Investment Bank (EIB) has formalised a strategic €100 million credit line with Piraeus Bank, marking the first intermediated lending operation in Greece specifically tailored for the security and defense sectors. This transaction addresses the structural barriers that have historically impeded access to capital for small and medium-sized enterprises (SMEs) and mid-caps within this strategic ecosystem. By providing a dedicated framework for credit, the initiative aims to bolster the industrial base of a sector increasingly central to European sovereignty. The agreement reflects a broader shift in the continental financial architecture, where security is no longer the exclusive domain of state budgets but a viable field for structured private and institutional investment.
Operational & Tactical Priorities
Defence Finance Monitor applies a structured analytical method that moves from clearly defined strategic priorities to operational and tactical priorities, and from there to the assessment of concrete capabilities, technologies, and industrial actors. Within this framework, “Advanced Technologies & Emerging/Disruptive Technologies” is treated as a core strategic priority, reflecting the reality that deterrence, force credibility, and escalation management increasingly depend on the Alliance’s ability to accelerate innovation cycles, integrate new technologies into operational concepts, and deny adversaries asymmetric advantages across domains. This priority is articulated through a set of tightly interconnected operational layers, corresponding to the operational priorities developed in this issue: “Defence AI & Autonomy” as the driver of decision-speed and scalable mass through intelligent systems and human–machine teaming; “Hypersonics & Counter-Hypersonics” as the stress test for sensing, command latency, and high-end interception under compressed timelines; “Next-Generation Platforms” as the integrative force-development line that embeds multiple emerging technologies into survivable, interoperable air and land combat systems; and “Quantum, Cyber, Space R&D” as the enabling backbone that hardens networks, protects space-derived services, and prepares the transition to quantum-resilient security and next-generation sensing. Using this method, DFM systematically identifies the capability families, technology clusters, and industrial actors that become structurally relevant within this operational architecture, and therefore material for decision-makers and investors assessing exposure to defence and dual-use domains aligned with NATO and EU strategic trajectories.
Defence AI & Autonomy
Artificial intelligence and autonomous systems have moved from the margins of military experimentation to the core of NATO and EU operational planning, reshaping how deterrence, defence, and force employment are conceived in an environment of sustained technological competition. This analysis sets out why Defence AI and autonomy have crystallised into a formal operational priority, how recent conflicts have demonstrated their strategic and operational relevance, and what this shift implies for missions, force posture, command-and-control architectures, industrial capacity, and long-term readiness across the Alliance. By connecting doctrine, battlefield evidence, capability development, and structural constraints, it provides a structured framework for assessing how these technologies are already influencing strategic choices and will increasingly condition how military power is generated, integrated, and applied.
Hypersonics & Counter-Hypersonics
Hypersonic weapons and counter-hypersonic defences have become a defining stress test for NATO and EU deterrence, exposing the limits of legacy air and missile defence architectures and compressing strategic decision-making to unprecedented timeframes. This analysis clarifies why hypersonics have been elevated to a standalone operational priority, how adversaries are already integrating these systems into coercive and warfighting strategies, and what this implies for force posture, readiness models, command-and-control, industrial capacity, and escalation management across the Euro-Atlantic theatre. By grounding the discussion in concrete threat dynamics, operational scenarios, and capability gaps, it provides a decision-oriented framework for understanding how hypersonic and counter-hypersonic capabilities are reshaping the balance between offence, defence, and strategic stability.
Next-Generation Platforms (FCAS, MGCS, Eurodrone)
Next-generation platforms such as FCAS, MGCS, and Eurodrone are best understood as the concrete industrial expression of a strategic requirement: preserving credible deterrence when legacy systems are increasingly exposed to dense air defences, pervasive surveillance, and precision strike in high-intensity scenarios. This analysis frames these programmes as a single operational line of effort that concentrates multiple enabling technologies into deployable force packages, clarifying what problems they are designed to solve on the European theatre, how they reshape mission design and multi-domain integration, and where the decisive constraints lie in readiness, command-and-control, and industrial scaling. The central issue is not procurement in isolation, but whether European forces can field integrated, survivable, and interoperable platform families in time to close emerging windows of vulnerability while reducing critical dependencies in the most sensitive parts of the value chain.
Quantum, Cyber, Space R&D
Quantum, cyber and space research and development have become core instruments of deterrence rather than auxiliary enablers, as NATO and the EU confront adversaries that explicitly target networks, satellites, data integrity and technological supply chains to offset conventional military disadvantages. This analysis situates quantum, cyber and space R&D as a single operational priority that underwrites all other force elements, explaining how advances in encryption, sensing, computing and orbital infrastructure directly condition command authority, escalation control, and operational continuity in high-intensity scenarios. By examining threat-driven requirements, cross-domain dependencies and the structural constraints of industrial capacity and skills, it frames these technologies as decisive factors in preserving freedom of action, resilience and decision superiority in future conflicts rather than as abstract or long-term innovation agendas.
Without a structured map of the linkages between doctrine, budget and capacity, strategy remains abstract, capital remains misallocated, and industrial readiness remains reactive rather than deliberate.