Investments in internal security and defense capability are urgent in light of the growing threat environment. NATO member states committed in June 2025 to the 5% target. For Germany, this would mean more than €200 billion annually in public defense spending.

To ensure Europe’s and Germany’s defense capability, the growth of the security and defense industry must be financed.

Against the backdrop of global sustainability goals - particularly the European Union’s ESG taxonomy - the German Federal Association of the Security and Defense Industry has therefore adopted the guiding principle:

“Peace is the mother of sustainability.”

With the paradigm shift from sustainability toward defense capability, however, uncertainty remains. There is still no clear, legally grounded orientation for financing security-relevant, defense-related, and dual-use projects through public financing institutions.

A suitable guiding formula is:

What is permitted under international law is financeable.

Prohibited weapons are incompatible with international law, national legislation, conventions, and embargo regimes and are therefore excluded from financing. Projects that involve the development, production, trade, or maintenance of such weapons cannot be supported.

Future and Security: No War – But No Peace Either

Targeted sabotage of power pylons and large-scale fake news campaigns aimed at discrediting politicians and authorities illustrate the current threat environment.

Russia’s active measures within NATO countries remain below the threshold of open warfare. However, the escalation of hybrid campaigns represents a deliberate posture toward the transatlantic alliance following Russia’s invasion of Ukraine.

Based on the sabotage acts observed, NATO is currently no longer in a genuine peacetime condition.

NATO heads of state and government agree that Russia’s hybrid operations are directed against society and democracy. NATO was founded to counter Russian aggression, and Russia’s attempts to undermine the security and stability of allied states constitute an attack on the alliance’s core mission.

If the situation further deteriorates, conscription and call-ups could place additional strain on an already tense environment.

Germany, as NATO’s central logistics hub, plays a key role, as in an emergency up to 500,000 soldiers may need to be transported in all directions.

Such a defense effort would consume massive resources and raises new questions:

Who guards critical infrastructure if military forces are mobilized?
Who secures hospitals, energy supply, and public spaces?

Demographic change affects public and private organizations alike. If the state draws on additional capacities, fewer personnel remain available for the private sector.

OPLAN DEU is a concept designed to strengthen Germany’s defense and security capabilities in response to new threats. It integrates military, civilian, and infrastructure measures to protect the country against hybrid threats such as cyberattacks, information warfare, and attacks on critical infrastructure.

A key component is cooperation with private security providers, particularly in surveillance and security technology.

The plan explicitly seeks to integrate private service providers into security structures, define clear responsibilities, and regulate data exchange in compliance with data protection law.

Financing Rules and Prohibited Weapons

Repairs of prohibited or controversial weapons, or key components of such weapons, are excluded from financing or classified as controversial.

A strict separation between conventional weapons and controversial weapons is often not clearly possible. Financing aimed at defense companies must therefore be examined on a case-by-case basis.

What is developed within the Bundeswehr’s innovation ecosystem and its associated institutions is, in principle, eligible for financing. This requires adjustments to guidelines at federal and state level so that administrative decisions are based on objective, verifiable legal foundations.

The goal is uniform, transparent, and legally secure handling in practice.

Financing Ban Applies To:

• ABC (nuclear, biological, chemical) weapons
• Anti-personnel mines (Ottawa Convention)
• Cluster munitions
• Radioactive munitions / depleted uranium for weapons purposes
• Other weapons of mass destruction
• Potentially future treaty-prohibited systems (e.g., lethal autonomous systems)

Legal basis includes the UN Charter, Geneva Conventions, Convention on Certain Conventional Weapons (CCW), Chemical Weapons Convention, Ottawa Convention, Nuclear Non-Proliferation Treaty, and the EU Dual-Use Regulation.

Projects that fall under internationally outlawed weapons or technologies are excluded from financing. This list is exhaustive.

All projects that are legally permissible are financeable, especially those involving development, production, maintenance, or trade of goods and technologies for defense or security.

No additional political, ethical, or institutional value judgment is applied beyond legality.

The result of each review is documented and references the relevant legal basis.

This framework is intended as a white paper for all professional and decision-making levels and applies to financing instruments such as loans, guarantees, equity investments, and programs.

Changes in international or national law are centrally reviewed and incorporated to ensure ongoing legal certainty.

Core principle:
The legality of a project is the sole criterion for its eligibility for financing.

This ensures a pragmatic, efficient, and responsible administrative practice that meets modern security and technology policy requirements.

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