Last week felt like a journey through time. Together with Christian F. Hirsch, my school fellow and co-initiator of this blog, I attended the 58th Security Policy Information Conference of the Clausewitz Society in Hamburg. Under the theme “Images of Future Warfare,” we explored current developments in Germany’s military defense in the context of NATO. It felt like a trip back in time because such events traditionally take place on military bases, reminding me of my own service—albeit with one key difference: the conference was held at the Bundeswehr’s Leadership Academy, which resembles a university more than a traditional barrack.

Discussions on building a whole-of-government defense capability are currently happening across many levels. Ever since the Bundestag relaxed the debt brake and approved a €500 billion special fund through 2036, the topic has become omnipresent. The German government links these credit-financed funds to two objectives: first, the development and rehabilitation of infrastructure to strengthen the Federal Republic’s resilience; second, the stimulation of the German economy to restore growth. In plain terms, this means a significant portion of the funding will be spent directly or indirectly on military purposes. As a result, many companies that previously had no connection to the defense or armaments sector now hope for full order books.

This is understandable, as traditional German core industries such as mechanical engineering and the automotive sector are currently struggling and seeking alternatives. In the automotive sector, there are clear synergies: the defense industry faces the challenge of transitioning from artisanal production processes to serial mass production. Here, the automotive industry can contribute experience and, in some cases, obsolete production lines. Dual-use goods also present opportunities, allowing civilian products to be adapted for military purposes. Drones are a prime example: their military potential in the Ukraine conflict only became fully apparent due to the civilian boom in affordable drones.

However, challenges primarily lie in contractual pitfalls—keyword: precautionary clauses—and in the often time-intensive security clearances required under the German Security Clearance Act (Sicherheitsüberprüfungsgesetz, SÜG) for many services or deliveries. The various clearance levels, Ü1 to Ü3, are complex and represent major hurdles, particularly for mid-sized companies.

Moreover, the defense industry has its own highly insular culture. Trust is based on established networks, information is shared sparingly, and every newcomer is closely scrutinized. Start-ups are generally not welcome. For companies, this means that access requires time, patience, and a certain “military DNA” in corporate culture. Anyone entering this field must also be aware that they operate within a socially sensitive and politically charged environment, as defense remains a topic of strong emotional and political resonance.

Against this backdrop, entering the security and defense industry is not a short-term lifeline for struggling markets. Effort and risk far outweigh immediate benefits. At the same time, it is clear that this turning point marks a paradigm shift. European industry will increasingly develop technical solutions collaboratively, and the 2036 time horizon provides a stable framework. Recent political initiatives, such as the deepening of the German-French partnership by Macron and Merz, indicate that security and defense industrial cooperation is being elevated to a new level.

The sector is likely to gain greater societal acceptance and continue to grow, as evidenced by Rheinmetall’s development over the past twelve months. Nevertheless, corporate leaders should not naively venture into defense. Mid-sized companies without strong financial backing can quickly reach their limits, not to mention the potential reputational risks. My visit to the Clausewitz Academy demonstrated that civil-military collaboration is already functioning and that the challenges to achieving whole-of-government defense capability have been identified. Concepts for accelerating and simplifying this cooperation are already being developed. For the German economy, the defense industry offers interesting long-term opportunities—but it is not a quick lifeline.