A Defence Industrial Approach for the Developing World – Ivor Ichikowitz, Executive Chairman and Founder of the Paramount Group
The global defence and security market is entering a period of unprecedented change. Force modernisation to meet 21st Century requirements will necessitate a step change in delivery and acquisition of equipment, training, logistics and support. The opportunities this presents will be driven by the developing world.
If developing countries are to build forces fit for this century, capability providers will need to respond by delivering solutions tailored to unique national requirements for domestic security, peacekeeping, force protection and agile Special Forces. This will require a new kind of relationship between governments and industry, beyond ‘one size fits all’ off-the-shelf platforms. It offers an opportunity to create a new kind of defence industry; rooted in developing countries and responsive to their requirements. Indeed, this shift is already taking place. In India and Azerbaijan, Paramount Group is partnering and stimulating new growth directly with domestic suppliers to deliver specialist equipment shaped by the specific needs of those countries. This provides additional economic benefits as defence industrial policy supports development through jobs, innovation and export potential.
The European defence industry will continue to contract as spending is squeezed while in the US, industry is geared towards the high end requirements of the Department of Defense. In most cases the solutions offered are expensive, include capabilities beyond what is really required, are difficult to integrate into existing force structures and often come with caveats about how they can be operated, maintained and up-graded.
But the developing world is different. Here there is often a greater potential for domestic unrest and insurgency only providers who understand the need for bespoke solutions can offer the kind of protection forces require.
Solutions providers must also understand the need for new approaches to financing. Budgets are limited and defence is only one priority for development. Funds may not be available upfront, but with a genuine partnership between governments and a trusted network of suppliers, conventional procurements can be supplement with offset, counter-trade and barter funding. Paramount, through its use of long term relationships and structured contracts, has demonstrated that funding shortfalls should not be a block to a country seeking the very best equipment.
As the 8th Sofex exhibition in Jordan illustrates, it is clear that the required leadership is in place and that innovation is increasingly coming from developing countries. We need to build on this leadership to create a defence industrial approach for the developing world. National governments and suppliers should come together to ensure that industrial capabilities are nourished and supported and that access to quality equipment and services is guaranteed. Only by taking a strategic perspective can we take full advantage of the opportunities presented by this period of modernisation and change.