Slovenia launches state-owned company to boost defence R&D and industry

Slovenia is setting up a state-owned company to spearhead investment in defence-related research and manufacturing, a significant step amid national and broader European efforts to strengthen defence capabilities in light of rising geopolitical tensions and new NATO spending commitments, CE Report quotes The Slovenia Times.

In the context of NATO efforts to increase defence spending, Slovenia has adopted its first national strategy for the development of the defence industry, aiming to support domestic firms, ensure a more reliable national supply of defence technology, and reduce dependence on foreign suppliers.

Incorporation of a new holding company

At the heart of the strategy is the creation of a new state-owned limited liability company under Slovenian Sovereign Holding (SSH), the custodian of state assets. This wholly state-owned company, due to be formally incorporated in the coming months, will invest in Slovenian defence industry firms and development projects.

It will act as a strategic investor in R&D and production, with the goal of fostering innovation, forming international partnerships, and creating jobs.

It is intended to help Slovenian companies access growing EU defence funds and participate more actively in NATO and EU-wide industrial and technological initiatives.

The government plans to deploy a range of financial tools to support the industry, including affordable loans, interest rate subsidies, grants and capital injections into key companies, long-term repayment terms and moratoriums, and insurance for loan protection.

Banks are also expected to play a larger role in financing development efforts. Additionally, the strategy envisions closer cooperation between defence firms and research institutions, both domestically and through international projects.

Strategic objectives

The overarching goals include increasing national defence capabilities, strengthening technological independence, and making Slovenian-made defence products more competitive on international markets. Special emphasis is placed on involving micro, small, and medium-sized enterprises in global value chains.

A new Strategic Council for Defence, Technology, Industrial Base and Resilience has been established to guide implementation. This body will assess which companies and technologies are eligible for support, after which the new company will begin its investment activity.

Slovenia's strategy also emphasizes the development of dual-use technologies that serve both civilian and military purposes. Planned investments include upgrades to transport infrastructure, cybersecurity measures, and critical healthcare facilities, such as a national emergency centre for civilian and military use.

Exports of defence-related products will be carefully regulated. The strategy explicitly prohibits exports that could fuel regional conflicts or violate international human rights norms, aligning with Slovenia's foreign and security policy commitments.

Questions about oversight

The strategy has broad governmental support, but outside government circles there are stark warnings about the potential for waste and corruption.

The Democrats, an opposition party, warned that the company risked becoming a hotbed of corruption without sufficient oversight.

Klemen Grošelj, a defence studies professor, likewise warned that there are insufficient checks, making the holding a potential "budget Eldorado" for predatory elites.

And Erik Kopač, a defence expert and former ambassador to NATO, has argued that the company should be subject to direct political oversight given its importance, either through the Defence Ministry or the National Assembly.