Spain Defence and Security Industry Update Quarter 2 2012

  • March 2014
  • -
  • Business Monitor International
  • -
  • 81 pages

Includes 3 FREE quarterly updates

The Spanish defence community finds itself in a similar position to many nations throughout Europe. On
the one hand, Spain's government is attempting to manage a serious economic downturn, while
simultaneously modernising the country's armed forces.
At the strategic level, Madrid continues to support NATO's efforts in Afghanistan although it is now
looking ahead to a withdrawal from the country in the 2014/2015 timescale in line with the Alliance's
goal of handing over an increasing burden of the internal security situation to the Afghan authorities.
While supporting its continued missions in Afghanistan, Spain's armed forces, notably its air force and
navy, demonstrated that it could offer timely support to NATO's Operation Unified Protector in 2011 to
protect Libyan civilians against armed forces loyal to the Libyan leader Colonel Muammar Qadhafi.

The end of NATO's Afghan operation will free up some much-needed finance for other government
spending priorities, and for additional defence modernisation efforts. This is important given that Spain is,
like many other NATO nations, part way through a protracted process to reorientate its forces away from
a post-Cold War posture, mainly configured to participate in multilateral operations close to home, or in
the wider European region. Spain is now working hard to reconfigure its forces towards conducting
counter-insurgency operations, assisting disaster relief efforts and projecting power far beyond its shores
in support of NATO, United Nations and European Union operations.

In terms of hardware, this reorientation has translated into the procurement of new force projection
systems. These include amphibious support vessels and turboprop airlifters. It terms of more kinetic
equipment, Spain is continuing to role out its infantry soldier modernisation systems, new multirole
combat aircraft and amphibious support ships. Furthermore, the command and control architecture of the
Spanish army, air force and navy have recently undergone important modernisations with the introduction
of new systems in this regard. The efficiency of state-of-the-art defence systems is severally hampered if
the connectivity to timely distributed intelligence, surveillance and reconnaissance data to the personnel
operating these platforms and equipment is neglected.

Spain is in a fortuitous position in this regard as it has an emerging defence electronics base which is able
to fulfil several of the current, and future, requirements of the Spanish armed forces in terms of C2
architecture. This expertise is also supporting pan-European defence research efforts in the unmanned
aircraft domains.
Looking to the future, although the overall economic situation does offer challenges to the Spanish
government in terms of defence modernisation efforts, Madrid is in a relatively good position. A number
of the country's defence modernisation programmes are in full swing, reducing the number of new
programmes that the country will need to launch over the next two decades. This will thus help to reduce
the overall burden on the country's future defence budget.

Table Of Contents

Executive Summary ..... 5
Industry SWOT Analysis . 6
Spain Political Environment and Risk Analysis .. 6
Spain Economic Environment and Risk Analysis 6
Spain Business Environment SWOT ..... 7
World Political Outlook ..... 8
Landmark Political Events Looming In 2012 ... 8
World Flashpoints: Eurozone, Syria, Iran, Afghanistan, Korean Peninsula ... 8
Data : Election Timetable, 2012 .. 13
United States .. 17
Russia 17
China . 19
Wild Cards To Watch . 20
Europe Security Overview ..... 23
Europe In A World Context... 23
Europe's Key Security Issues Over The Coming Decade . 23
What If The Eurozone Collapses? Political Risks Assessed ... 29
Security Risk Analysis ..... 34
BMI’s Security Ratings .... 34
Data : Europe Security Risk Ratings . 34
Data : Europe State Terrorism Vulnerability To Terrorism Index ..... 35
Political Overview . 36
Short-Term Political Outlook . 36
Long-Term Political Outlook . 39
Domestic Security Overview . 42
Internal Security . 42
Domestic Terrorism ... 42
Data : Background Brief - ETA ... 44
Corruption ..... 45
Latest Developments .. 45
External Security 46
International Terrorism ... 46
Timeline: External Threats .... 47
Armed Forces And Government Spending . 50
Armed Forces 50
Defence Posture ... 51
Defence Reform ... 52
International Deployments ..... 59
Data : Spain’s Foreign Deployments . 60
Coordination And Joint Operations ... 60
Weapons Of Mass Destruction ..... 60
Market Structure ... 61
Arms Trade Overview 63
Latest Developments .. 66
Timeline: Defence And Procurement . 67

Market Projection Scenario ... 70
Armed Forces 70
Data : Spain’s Armed Forces, from 2001 to 2009 ('000 personnel, unless otherwise stated) 70
Data : Spain’s Available Manpower For Military Services, 20010-2016 (aged 16-49) ... 70
Government Expenditure . 71
Data : Spain’s Government Defence Expenditure, from 2009 to 2016 .... 71
Data : Spain’s Defence Expenditure Scenarios, Related To Gross Domestic Product Growth, from 2009 to 2016 (US$mn) 72
Defence Trade 73
Data : Spain’s Defence Exports, from 2009 to 2016 (US$mn) ..... 73
Data : Spain’s Defence Imports from 2009 to 2016 (US$mn) 74
Data : Spain’s Defence Trade Balance, from 2009 to 2016 (US$mn) 74
Macroeconomic Projection 74
Data : Spain - Economic Activity, from 2011 to 2016 ..... 79
Company Profiles . 80
EADS CASA ... 80
General Dynamics Santa Bárbara Sistemas .. 83
Indra .. 85
ITP ..... 87
Navantia (formerly known as Izar) .... 89
Country Snapshot: Spain Demographic Data ... 91

Section I : Population . 91
Data : Demographic Indicators, 2005-2030 .. 91
Data : Rural/Urban Breakdown, 2005-2030 . 92

Section II : Education And Healthcare 92
Data : Education, from 2002 to 2005 92
Data : Vital Statistics, 2005-2030 92

Section III : Labour Industry And Spending Power .. 93
Data : Employment Indicators, from 2001 to 2006 .... 93
Data : Average Annual Manufacturing Wages, from 2000 to 2012 ... 93
Data : Consumer Expenditure, from 2000 to 2012 (US$) 94
BMI Methodology . 95
How We Generate Our Market Projections .... 95
Defence Market .. 95
Sources .... 96

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