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EU Nudging SMEs Toward Dual-use Projects

Dec. 19, 2013 - 03:45AM   |  
By JULIAN HALE   |   Comments
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BRUSSELS — The European Commission and the European Defence Agency (EDA) are striving to encourage small to medium-sized enterprises (SMEs) across the EU to develop dual-use projects, in particular by helping them to access €325 billion (US $447.5 billion) in EU structural funds for the 2014 to 2020 programming period. The two organizations set out many of their proposals at a news conference here ahead of the Dec. 19-20 defense summit of EU heads of state, where the role of SMEs in the defense sector will be part of discussions.

“A big defense industry is important, but SMEs are an essential source of innovation and key enablers for competitiveness and growth, even more so if they are part of a cluster,” EDA Chief Executive Claude-France Arnould said.

EU member states have collectively cut their defense spending between 2007 and 2011 from €205 billion to €190 billion. With such dramatic cuts in Europe’s defense spending, Arnould said, “research and technology is the first area to suffer. ... And lack of investment in technology will put future competitiveness at risk. Exports are more and more based on transfers of technology.”

Part of the EDA’s plans for 2014-2020 is to enable government and industry actors to gain access to EU resources, in particular EU structural funds, for dual-application security and defense projects. Work on this is well underway. Of 72 potential projects sent in by 12 EU countries, the EDA has given advice on 44 as to how project holders could improve eligibility to secure EU structural funds. To access EU structural funds, projects must be dual-use; solely defense projects are not eligible.

Six pilot projects have been selected according to research and technology priorities identified by EU member states. They include a Bulgarian project to improve urban security and defense using an advanced detection sensors system; a Portuguese one to increase the sustainability of operations at the bottom of the sea by developing key technologies; a Spanish underwater signature monitoring and analysis center; and a Polish intruder-detection and collision-avoidance system for aircraft in flight.

The Polish project is about ensuring the safety of small UAVs in general air space. There is a risk of UAVs flying at low altitude colliding with small aircraft or gliders that lack transponder signals or other anti-collision systems.

“We want to research technology based on numerical image processing,” said Janusz Michalcewicz, CEO of Eurotech, a Polish SME that designs and produces small UAV systems. “We are convinced that we can detect obstacles in the area and change the UAV’s flight path to avoid collision.”

In 2014, Eurotech aims to submit a proposal to secure EU structural funds for the second part of its project and to start production.

The pilot projects emerged from workshops organized by the EDA in various EU countries, which the EDA intends to continue to hold.

“The idea is to help the defense community to benefit from structural funds by knowing about the criteria and the processes,” Arnould said.

The EDA has also produced a guidebook on how to use EU structural funds for SME and entrepreneurship policy.

At the defense summit, a commission paper on establishing a strong EU industrial base is to be discussed.

“You can’t have a defense policy if you don’t have a strong industrial base,” said Daniel Calleja Crespo, director-general of the European Commission’s Directorate-General for Enterprise and Industry. “You can’t have a strong one if you don’t take account of SMEs as they are the backbone of the defense industry.

“Behind every big project, there is a network of suppliers who are SMEs,” he said, citing as an example the production of the German Leopard tank, which involved a large number of suppliers, most of them SMEs.

Helping SMEs gain access to credit is among other areas that the commission is working on.

“An SME without credit is like a river without water,” said Calleja Crespo, citing other potential streams of funding, such as the commission’s COSME and Horizon 2020 programs. The latter has a stream for thematic security research programs, such as UAVs and cybersecurity, worth €1.6 billion.

The commission is also looking to promote clusters, which are made up of SMEs but also potentially research institutes, universities and regional authorities, to help SMEs develop business outside the EU. Next year, the plan is to have a European strategic cluster partnership for defense-related companies, Calleja Crespo said.

“If there is a certain number of defense companies in the region, they can join forces,” he said.

Asked what she hoped EU leaders would agree on at the EU summit, Arnould said, “agreement on programs as that will benefit all enterprises, especially SMEs.” She also wants leaders “to address the question of giving SMEs incentives and giving them a fair chance to be in the supply chain if they are competent and can provide innovations and to come back regularly to check that this is done.”

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