Big Defence Spending In Spain Fuels Investment Opportunities

Big Defence Spending In Spain Fuels Investment Opportunities

Big Defence Spending In Spain Fuels Investment Opportunities

Spain’s defence spending has remained buoyant in recent years despite the economic crisis, which has led to savage budget cuts in areas like health and education. The government’s defence budget for 2013 was initially set at 5.937 billion euros, but two additional credits have boosted this by 24 per cent in the last nine months to 7.396 billion.

This year’s extra spend is not a one-off.  Spain has consistently posted a budget overspend for the last six years,  which reached a record 28 per cent in 2012. Last year, an additional credit of 1.78 billion euros went exclusively to covering a series of contracts signed by the government with the Spanish weapons industry between 1996 and 2004.

These contracts, named Special Programmes for Weapons, allow major Spanish defence contractors to obtain loans at zero interest to build tanks and missiles,  as well as combat planes, helicopters and warships. The government is obliged to purchase these armaments.

The Special Programmes for Weapons amounts to 30 billion euros, to be paid until 2025. A raft of Spanish companies have benefitted from this investment drive.

INDRA, NAVANTIA TOP DEFENCE EXPORTERS

Spain’s Indra, one of the world’s largest technology multinationals, is a flagship company in the defence sector. It is a supplier of integrated global solutions for implementation and management of critical real-time systems currently operating in the Spanish Armed Forces and Security Forces.

Indra is one of the leading exporters of Spain’s defence industry, providing systems to defence ministries in various countries around the world.

Military ship builder Navantia has also helped boost Spain’s defence exports over the last few years with the sale of warships to Norway and Venezuela. At the end of last year, it signed a deal with the Russian agency Rosoboronexport to supply Spanish Avante-class patrol ships with Russian weapons for further export to third-party countries.

HOMELAND SECURITY

Over the last 20 years, Spain’s defence industry has undergone reforms to reorientate its strategy away from just guarding NATO’s southern flank to becoming an expeditionary force,  ready to intervene in global conflicts.

Investment in new equipment is ongoing, including the procurement of armoured vehicles and combat aircraft, while the Spanish Armed Forces are revamping their training methods to make them more agile in responding to sudden crises. The government’s focus is on modernising its armed forces, participation in peacekeeping operations and counterterrorism activities and disputes with neighbouring countries.

Homeland security threats posed by terrorist organisations are also major drivers of Spain’s defence industry.

For more information on investment in Spain and its defence industry, contact corporate law firm Argali Abogados.

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