During his speech, Kyriakos Pierrakakis emphasized the need to create a true single market for defense goods in Europe, with a unified regulatory and export control framework.
Europe now faces a serious implementation challenge, as the era when security was considered a supplementary budget item has definitively come to an end.
The key issue for the European Union is not the level of funding, but the speed at which defense spending is converted into operational capability.
Deterrent power depends directly on the rapid mobilization of both public and private capital.
The Savings and Investment Union is the critical mechanism for financing radar systems, shipyards, and dual-use technologies, as national budgets are insufficient.
The European defense industrial base remains fragmented and tailored to peacetime conditions, a fact that requires centralized procurement, multi-year contracts, and uniform specifications.
The speech
Below is the full speech by the Minister of National Economy and Finance:
“Ladies and gentlemen,
Over the past three decades, most of Europe treated security as an afterthought in the budget—whatever was left over after everything else had been funded. That era is now over. The question before us today is not whether we should spend more on defense. Across the Union, we are already doing so. The more difficult question is whether we will be able to translate this spending into operational capability with the speed that circumstances demand.
Deterrence, in 2026, is no longer solely a function of national budgets. It depends on how quickly capital —public and private, domestic and cross-border—can be mobilized, allocated, and converted into ships, satellites, ammunition, and the industrial base that produces them. And here, to be frank, Europe faces a challenge of implementation.
Let’s look at the facts. Member states are now committed to levels of defense spending that were unthinkable five years ago. However, the European defense industrial base was built for a different era— fragmented among national champions, adapted to peacetime rhythms and conditions, and lacking sufficient funding relative to the volume of orders it now receives.
Procurement cycles that are still measured in years. Production lines that cannot be expanded without predictability in demand. Suppliers —many of them small and medium-sized enterprises—who cannot secure bank financing because the defense sector is still considered off-limits by many institutional investors.
This is where the bottleneck lies. Not in credit. In execution.
Allow me to make three observations on how we can address this.
First, capital markets must do the work that budgets cannot. Mario Draghi was right: European savings are abundant, but the channels through which we strategically direct them are not.
The Savings and Investment Union is not an abstract discussion in Brussels. It is the mechanism through which a Greek retired saver, a German insurance company, and a French family office can finance the radar systems, shipyards, and dual-use technologies that safeguard the continent on which they live. Deeper and more integrated markets are, in themselves, a strategic security advantage.
Second, we must remove certain artificial barriers that still treat defense as an unacceptable sector for investment. Regulatory frameworks that exclude defense companies from investment portfolios were designed for a world that no longer exists. Sovereignty requires a balance sheet, and we should not hesitate to finance it.
Third—and this is the most important point for implementation—capital alone cannot solve the supply problem. When funding is channeled into fragmented demand, the result is inflation, not operational capability.
This is precisely where joint European procurement takes on crucial importance. Today, the twenty-seven member states largely purchase according to their own schedules, their own specifications, and from their own preferred suppliers.
The result is predictable: duplicated research and development, small-scale production, interoperability gaps in the field, and an industrial base unable to justify the investments needed to expand. In practice, we have organized our defense market so that it is smaller than the sum of its individual parts.
The solution is not complicated in principle, although it is demanding to implement. Centralized procurement on a European scale. Multi-year contracts and frameworks that provide industry with the certainty of demand it needs to invest in production capacity.
Uniform specifications so that a supplier in Thessaloniki, Tallinn, or Toulouse can serve different national buyers without having to redesign for each case. A true single market for defense goods, with the corresponding regulatory and export control framework.
The tools are beginning to take shape—SAFE, EDIP, the work of the Defense Commissioner. What is needed now is the political will to use them on the scale required by the circumstances, as well as the necessary fiscal discipline so that joint procurement attracts private capital rather than replacing it. The capacity for government borrowing is finite, while the capacity for market-based financing, when properly mobilized, is far less so.
Let me conclude with this. The countries that prevailed in past major strategic contests did not succeed because they had larger budgets, but because they built the institutions capable of transforming national resources into national power. That is our task today. Markets, capability, implementation—three words, one agenda.
Europe has the necessary savings. Europe has the technology. Europe has the industrial heritage. What is needed is the discipline to bring them together.
Thank you.”