Zeitenwende
for a Sovereign Europe
and a Revitalized NATO: “We Are Ready”

The Russian war clearly represents a turning point. It has fundamental and long-term implications for the global security architecture, as Russia has unequivocally posed systemic questions. More acute than ever is the question of what rules will govern the way states deal with each other in the future – the law of the strongest or the strength of the law. This is the core of the systemic competition that we are seeing more and more clearly between liberal democracies, on the one hand, and authoritarian and dictatorial regimes, on the other. China’s aspiration to become a superpower, in particular, is significantly destabilizing the global order. Thus, I share the assessment of many experts that we are heading for the foreseeable future toward a persistent, diffuse conflict order in which there is no real peace even when the weapons are silent. For the foreseeable future, therefore, we will have to be more vigilant than ever before.

Of course, the world is looking first and foremost to Taiwan and the South China Sea. Even if the fears of an immediate escalation have not materialized, this does not change the fact that China is pursuing its interests in the very long term, and the relationship with China is the central geopolitical power issue. In addition, we are experiencing very immediate, tangible knock-on effects of the war against Ukraine when perceived Russian weakness causes conflicts to flare up in former spheres of influence, such as in Kazakhstan or between Kyrgyzstan and Tajikistan. Or when states with a strong energy policy, such as Azerbaijan, exploit their new power of influence to exert pressure. But war also holds enormous conflict potential for our Western democracies right on our doorstep, if the energy crisis, inflation and thus the question of future living standards further fuel dissatisfaction with democratic institutions and possibly bring extremist parties all the way into government. The level of instability we are currently dealing with globally is enormous. And we’re not even talking about the many asymmetric conflicts that have arisen in recent years, especially in Africa and the Middle East, and which of course won’t end just because new, larger crises are in the public spotlight.

This brutal assault is often described as a renaissance of conventional war. But that’s only half the truth. In fact, classic methods of warfare that were thought to be outdated are being used in Ukraine. Above all, however, the enormous importance of digitalized weapons systems, data-driven information superiority, and electronic warfare is becoming apparent. For with these modern technologies, Ukraine can successfully defend itself against a purely numerically superior opponent. On the other hand, attacks on critical civilian infrastructure and societal trust are also increasingly taking place in the digital space – through cyberattacks and disinformation campaigns.

Unity and determination remain the order of the day. How closely the Western community of nations has stood together since February 24, 2022, has surprised many. We must continue to do so even as the price of war becomes ever more palpable to ourselves – as hard as that is. Russia is waging a war of aggression with a nuclear threat and must not be allowed to succeed. This is another reason why supporting Ukraine is in our very own interest and means a great responsibility for Germany and Europe. We at HENSOLDT contribute with our high-performance radars for the air defence and artillery detection of Ukraine. A second central aspect, especially for us in Europe, is to achieve further progress in cooperation in the defence sector, on a political and industrial level. After all, with the war, security has once again become a central task of the state. We can only do justice to this task by standing shoulder to shoulder as a strong Europe. And third, we must think of defence and security in a more comprehensive way than we were used to in the past. Today, we are talking about overall resilience, from military defence to the question of how robust the digital checkout system in the supermarket is. Our resilience as an economy is about putting supply chains to the test. Finally, Russia’s war has also put an end to hopes that economic dependencies could prevent conflict. Today, we see how China is becoming increasingly isolated. This makes it all the more important for us as Europe to work on our technological sovereignty, especially in the digital sphere.

It is essential that what our partners already take for granted becomes more and more accepted here in Germany: namely, the realization that Germany has a natural leadership role in Europe – if only because of our geographic location, population size, and economic strength. We must accept this role and actively assume it as an anchor of stability that assumes responsibility in Europe. In doing so, we should use our weight above all as a unifying actor for common positions in the EU, also with the US. We should be honest with ourselves and learn from past mistakes when it comes to dealing with authoritarian states and our own defence capabilities. We can no longer afford to close our eyes to reality.

The special fund for the Bundeswehr is an important step toward filling critical gaps and creating planning security, especially for major innovation projects. We should not play this down either. At the same time, of course, words must be followed by deeds: A sustainable increase in the defence budget is needed to develop the Bundeswehr into an army fit for the future. Otherwise, the special fund will quickly fizzle out. In terms of implementation, the Zeitenwende means a joint show of strength, because credible military deterrence is based on three pillars: political will, well-equipped armed forces, and an efficient defence industry. As a technology leader and strategic partner of the German government, HENSOLDT is excellently prepared to make its contribution. We have grown massively in recent years, expanded our team and international production network, and can now provide decisive support. It is important to me that the epoch shift strengthens the capability development and industrial base in Germany and Europe. We must work with policymakers to ensure this happens, because competitors from other regions have naturally also rediscovered Europe as a market.

We should be clear that ultimately Germany’s credibility and our partners’ trust in us are at stake. And let’s be clear: We as an industry are also rightly measured by the success of the special fund. At the same time, it is well known that the procurement processes for the Bundeswehr must be simplified and accelerated. We saw what is possible here with the delivery of our German air defence system to Ukraine, when politics and industry were able to report completion at record speed. We also need much more innovation-friendly processes. Up to now, many tenders for the cyber sector, for example, have included unnecessarily narrow technological specifications from the political side instead of specifying the goal and giving technological pioneering spirit free rein. So a lot can already be achieved through processes and structures. But one point is crucial for me: The Zeitenwende can only succeed in the long term if it is supported by broad social acceptance. In addition to the shift, we also need a change of mentality for defence. We must finally engage in an honest debate about what we expect of the Bundeswehr and what price we as a society are prepared to pay for it. We owe this to the people who risk their lives for us. But we have not yet reached that point. We are discussing tank deliveries to Ukraine very intensively, but we have so far avoided a real understanding of the role of our own armed forces.

It is also up to us whether this debate takes place in society. In the past, we have been too reluctant to explain our contribution to security and the protection of democracy and freedom. We are changing that – for example, with a social media campaign in which our employees regularly have their say and talk about why their work makes the difference for a safer tomorrow. And of course, as a reliable partner, the defence industry must deliver reliably. At HENSOLDT, we have proven that we can manage demanding large-scale projects in a disciplined manner and deliver them on time, within budget, and to the agreed quality standard. This strong focus on implementation is also related to our history and positioning. On the way to HENSOLDT’s independence, the cooperation with KKR as a financial investor has greatly driven our entrepreneurial development professionally. Today, the combination of the German government’s holdings and entrepreneurial investors is a model for success.

There is no doubt that it is important to define a long-term strategy beyond the immediate reactions to the Ukraine war. The fact that this is being done in this form for the first time speaks for itself and documents the new status of security and defence in German politics. Whether it will lead us as a society to seriously address these fundamental issues remains to be seen. The preceding white papers have also addressed many correct and important aspects, but have remained largely inconsequential in this respect.

This look in the rearview mirror fails to recognize the scope of today’s challenges. While alliance defence is once again NATO’s primary purpose, crisis management through out-of-area operations continues to gain relevance. After all, the systemic conflict between the West and China and Russia is being fought globally and is also taking place beyond the alliance’s borders. It is not for nothing that the new strategic concept describes a fundamental realignment and transformation of NATO. In addition to increasingly crucial cyber resilience, the focus is on defending the technological edge in seven disruptive technologies – from quantum computing to hypersonic threats to space-based warfare. The impact of climate change on security preparedness and vice versa are now also among NATO’s core tasks. It is back to full strength, and only as strong as its member states make it. The planned accession of Sweden and Finland is also historic because it strengthens both sides.

I see no conflict of goals here – on the contrary: The Strategic Concept envisages a strong European pillar in NATO. And I am convinced that transatlantic cooperation will only function in a stable way if Europe is not perceived in the US as a freeloader in terms of security policy. The EU must take its security more into its own hands. The US will foreseeably focus more on the Indo-Pacific region, and no one knows what the US presidential election in 2024 will mean. For this reason, too, strategic autonomy must not remain a declaration of intent for us. And Europe is moving in the right direction: The EU reacted quickly to Russian aggression, launched strong sanctions, and provided military support to Ukraine. With the Strategic Compass, since March 2022 we have had for the first time a basic security policy document that has been adopted by all EU states and contains a common vision and clear goals. This is a major step toward greater commitment and capacity to act. This momentum for a European security architecture must be used now! Politically, the Franco-German partnership must remain the strong driving force. And we must also implement the European idea at the technological level – through coordinated procurement and development, but also through harmonized export control regulations.

We must achieve both goals and not play them off against each other. The ability to act quickly follows directly from European cooperation. It would be extremely short-sighted if the current pressure to act were to lead to a relapse into national egoism. Today, more than ever before, it is true that no EU state is in a position to maintain all capabilities for the multiple challenges and scenarios. We can only achieve technological sovereignty and interoperability by working together, not by each acting on its own and buying off the shelf outside Europe. European cooperation also gives us the strength to get the best results from the capabilities of all partners in our key national technologies. And, of course, it’s also about preventing waste of money. In times of great economic stress, we cannot afford to make less than ten percent of our investment in armaments jointly at European level.

Here, too, the Strategic Compass gives me cause for optimism. In the past year, we have seen a number of other developments that point in the right direction such as the Joint Defence Procurement Task Force as an EU initiative or multilateral cooperation programmes such as the “European Sky Shield” initiated by Germany for joint air defence. These are all important steps that we should support – for example, by further strengthening European procurement structures. I am also very pleased that the interim blockades on FCAS, the central system for the air superiority of the future, have now been cleared. This project stands like no other for the ambition of future-oriented European defence! At HENSOLDT, we have always been committed to actively shaping European cooperation. We are currently intensifying our cooperation with our anchor shareholder LEONARDO from Italy and also see this alliance as a possible nucleus of a broader European partnership.

We are also keeping our word on the realization of our strategy and implementing what we announced to our shareholders. Three years after our IPO, we can now say: We have kept all our promises and achieved some of our goals much faster than planned. In terms of sales, we grew twice as fast as the overall defence electronics market, more than doubled our order backlog, and expanded our presence in key international markets. Above all, however, we have further strengthened our focus on technology and innovation and invested significantly in research and development. The fact that HENSOLDT is now moving forward powerfully as a strong company is not only good news for us. After all, we develop mission-critical components for the defence systems of the future. You can also see this in HENSOLDT’s central role in key national and European projects such as FCAS, MGCS, the Eurodrone, and PEGASUS.

With the changing world situation, a new era lies ahead for the defence industry. It brings with it new expectations of us, and we are ready for them. The Zeitenwende shows that we are on the right strategic course. We will further accelerate our development into a solutions provider for end-to-end information superiority based on the plug-and-play principle. The fact that we have expanded our portfolio in key areas to achieve this has also been confirmed by the war in Ukraine: The further digitalization of sensor technology, the fusion of sensor data, data analysis, cyber security, and the progressive integration of artificial intelligence are our focal points here. However, it is just as important to me that HENSOLDT has remained a focused pure-play provider of sensor solutions and will continue to be so in the future. This is because we have created a strong, long-term growth platform. With the aim of creating the most comprehensive situation report possible, the networking of platforms is also gaining further momentum across domain boundaries. Defence electronics will thus play an even greater role in growing defence budgets.

That would be fatal. We must not let up on climate protection. In the defence industry, we create a basic prerequisite for sustainability with security and, conversely, must understand sustainability as an elementary component of security provision. As HENSOLDT, we are not alone in this attitude: In addition to NATO, many of our customers also focus on this dichotomy. HENSOLDT’s ambition is to set new standards in sustainability in our industry as well. We see ESG as an important factor for our business success. For example, we already ensure that our products are as compact, lightweight, and energy-saving as possible. This will increasingly become a competitive factor in the future. With our ESG strategy, we have also analyzed our own carbon footprint and defined clear interim targets to become carbon neutral by 2035 at the latest. We are achieving this with persistence and many large and small measures such as at our sites. In Kiel, we will save up to 40 tons of CO₂ per year in the future by supplying electricity via photovoltaics and hydrogen. In Oberkochen, our new building for HENSOLDT Optronics will achieve a degree of self-sufficiency of more than 70 percent with an intelligent energy concept. The fact that our diverse initiatives lead to measurable results is also shown by the latest ESG rating by Sustainalytics. HENSOLDT is once again listed there as the only company in the aerospace and defence industry with a “low risk” rating, thus making it the leader. We have once again improved on our very good rating from the previous year. So you see: HENSOLDT is firmly going its way.