Gilles Roth, Luxembourg’s Minister of Finance, Yuriko Backes, Minister of Defence, and Lex Delles, Minister of the Economy, have jointly presented a new national defence fund aimed at supporting innovation and strengthening the country’s industrial base.
The defence fund will be managed by the National Credit and Investment Company (SNCI). It forms part of Luxembourg’s broader defence industry strategy and is designed to support the development of a national ecosystem in this field over the coming years.
Finance minister Gilles Roth explained it should invest in young and innovative businesses, giving it a “dual use, so it meets our defence needs, but also permits civil use of the instruments we invest in.”
Roth included cybersecurity, space, automisation, and smart materials as some of the areas in which the government plans to invest.
Minister of the Economy Lex Delles added: “We won’t have huge shipyards in Luxembourg building ships. We won’t build aircraft carriers, tanks, or jets. We will use this fund to make investments in innovative companies which could become suppliers.”
This also applies to other European companies and corporations in the defence sector. The fund can either invest directly in such companies or through specialised investment funds active in this field, with the aim of integrating Luxembourg-based actors into wider European value chains and fostering international partnerships.
Luxembourg is required to invest five percent of its Gross National Income in defence as part of NATO. The new fund is intended to ensure that this money does not flow directly abroad. Defence minister Yuriko Backes explained: “We need a stronger defence industry that produces the capabilities we must buy. It’s therefore important that we have Luxembourgish options to buy from.”
The fund also aims to strengthen economic activity in Luxembourg, including the creation of highly qualified jobs and the development of research and innovation capacities, while ensuring a financial return on investments.
Half of the 150 million euro budget will be supplied by the SNCI, while the sovereign intergenerational fund will contribute 25 million, and the Innovation Fund of the Ministry of the Economy will contribute the other 50 million euros.
The fund is set to operate over a five-year period and will be overseen by an investment committee responsible for guiding its strategic direction and ensuring governance aligned with national priorities.
