Regions call on the EU to take measures to unlock the full potential of SMEs in the defence sector

SMEs must play a much greater role in the European defence industry. This is the main conclusion of the meeting held by the European Committee of the Regions’ (CoR) Working Group on Defence on 16 June in Cartagena, its first meeting outside Brussels. Its members called for simpler procedures, better access to funding and public procurement, and a place for SMEs in EU defence policies and in the next European budget, the Multiannual Financial Framework (MFF) 2028–2034.

Russia’s war against Ukraine, geopolitical instability and the fragility of supply chains have made it urgent to strengthen the European defence industry. To this end, the Working Group chose a venue with its own significance: the naval city of Cartagena, in partnership with the Region of Murcia. And it focused on the smallest companies.

SMEs are more agile than large conglomerates and develop cutting-edge technologies that underpin the EU’s strategic autonomy. They are better at exploring groundbreaking innovation and dual-use applications, both civilian and military. Deeply rooted in the regional fabric — in clusters, research centres and supply chains — they are the link between defence and the local area.

But their progress is hampered by fundamental obstacles. The European defence market remains highly fragmented, and each country’s regulations make it difficult for a small company to operate beyond its borders and grow. Participants highlighted three main obstacles: access to European R&D programmes is complex; funding is scarce, particularly at regional level; and it is difficult to attract specialist talent.

Regions and European institutions, united

Fernando López Miras (ES/EPP), President of the Region of Murcia and of the Working Group on Defence, opened the session along these lines. He described the contribution of SMEs to European security as undeniable and called for strong regional ecosystems to open the doors of the defence market to them. He also called for regions to have a say in the design of European defence policy. His message: if the EU wants to be prepared, its regions and SMEs must be too.

Olgierd Geblewicz (PL/EPP), Christophe Rouillon (FR/PES), Karīna Miķelsone (LV/Renew) and Kai-Ari Lundell (FI/CRE) called for greater cooperation between SMEs and large companies, more cross-regional projects and more networks to forge robust European value chains. Mantas Varaška (LT/AE) referred to the draft opinion by Tadeusz Truskolaski (PL/AE) on the defence industry, which aims to better align national models with the involvement of local SMEs and NGOs.

MEP Nicolás Pascual de la Parte, a member of the European Parliament’s Subcommittee on Security and Defence (SEDE), outlined the four priorities on which the subcommittee is working, all aimed at clearing the way for SMEs: streamlining red tape, promoting specialisation, involving them in major projects and strengthening public-private partnerships. Arnoldas Abramavičius (LT/EPP) called for closer ties between the CoR and SEDE through joint initiatives.

Pablo Fernández Cras, from the European Commission’s Directorate-General for Defence and Space Industry (DG DEFIS), acknowledged that Brussels is well aware of the funding difficulties faced by these companies and revealed that the MFF 2028–2034 has been designed precisely to address them.

What the industry teaches us

Teemu Seppälä, Director of Technology and Innovation at the Finnish DEFINE network, presented an ecosystem that combines a powerful innovation hub with an accelerator. Forty-eight start-ups have passed through the programme; 21 have raised over 200 million euros in venture capital and, between them, have created more than 100 jobs.

Miguel García, from Navantia, argued that large companies should reach out to small ones: helping them to comply with regulations and build the capacity to do so. That, he said, is the integrative and facilitating role that Navantia takes on. He also emphasised how difficult it is for them to access capital and called for more support to pre-finance their projects.

Murcia, a leader in dual-use technology

The best example of dual-use technology – which strengthens both defence and the economy – was provided by the host organisation itself: CAETRA, the Region of Murcia’s programme funded by the ERDF. It supports defence, security and reconstruction companies and start-ups through R&D grants, market access services and advice on European funding. And, in the process, it drives innovation, employment and industrial competitiveness.

Noelia Ortega, director of the Naval and Maritime Technology Centre (CTN), which represents CAETRA, summarised the recipe for success in three key elements: a shared vision, good coordination and clear values of trust, perseverance and resilience. Three other companies involved in the programme showcased their solutions: CISO (underwater systems, satellite data, drones and artificial intelligence), THALANOR Dynamics (drones and anti-drone systems developed from battlefield experience) and HERJIMAR (underwater technology and dual-use metallurgical products for the naval and defence sectors).

The event concluded where its significance is best understood: at the Navantia shipyard in Cartagena, a testament to the region’s role as a naval and defence hub in Europe.

Statement

Fernando López Miras (ES/EPP), President of the Region of Murcia and Chair of the Working Group on Defence: “The role of small and medium-sized enterprises in strengthening European security and defence is undeniable. Their contribution is essential for developing advanced technological solutions, strengthening industrial capabilities and driving forward strategic infrastructure. It is our responsibility to foster robust regional ecosystems that stimulate innovation, facilitate access to the defence market and promote cross-border collaboration, thereby making a decisive contribution to a stronger, more autonomous and better-prepared Europe.”

More information: European Committee of the Regions.