COLUMN: Hanwha squeezed out of NATO contracts — European protectionism disguised as collective rearmament

Introduction: The rearmament that protects only European factories

A continent rearming — but on whose terms?

Europe is rearming. That much is clear and welcome. NATO members are increasing defence budgets. Parliaments are passing emergency procurement legislation. Defence industry stocks have soared. The rhetoric of collective security and industrial sovereignty fills every summit communiqué. But there is another story running beneath the headlines of European rearmament — a story about who gets the contracts, and who gets squeezed out.

The answer, increasingly, is that European rearmament is being structured to benefit European defence industrial champions at the expense of non-European alternatives — even when those alternatives are cheaper, already combat-proven, and backed by allies whose troops are fighting alongside NATO forces. The victim of this trend in 2025-2026 is Hanwha Aerospace and its South Korean defence industrial partners.

Hanwha's track record and the contract they didn't win

South Korea's Hanwha Aerospace has sold more K9 Thunder self-propelled howitzers in Europe than any other single system — 698 units ordered across European countries, making it the continent's dominant artillery platform by volume. Its K239 Chunmoo MLRS has been purchased by more than eleven European countries, with Poland alone committing over €10.2 billion to Korean defence systems. South Korean defence exports to Europe are not a marginal phenomenon. They are a defining feature of post-2022 European rearmament.

Yet Hanwha lost the Romanian IFV contract — offering 298 units of its Redback Infantry Fighting Vehicle against Rheinmetall's 232 units of the Lynx, with Hanwha's bid reportedly 14% cheaper and offering higher local production content. It lost. The Rheinmetall Lynx won. The explanation offered was industrial partnership and European procurement frameworks. The reality, less diplomatically stated, is European industrial protectionism exercised through procurement decisions.

The Romanian IFV decision — 14% cheaper and still lost

Redback vs Lynx — the technical comparison

The Hanwha AS21 Redback is a modern IFV that has been through extensive evaluation, including an intense Australian defence competition where it was a finalist against the Rheinmetall KF41 Lynx. Its characteristics — protection level, firepower, electronic architecture, and logistics support — are comparable to or competitive with the Lynx across most assessment categories. Hanwha proposed 298 units to Romania, significantly more than Rheinmetall's 232-unit offer.

Hanwha's Romanian bid also included a commitment to 80% local production content — meaning most of the manufacturing value would flow into the Romanian industrial base. This is precisely the local industrial development benefit that European procurement frameworks rhetorically prioritise. On price, quantity, local content, and technical capability, the Hanwha offer was objectively competitive. It lost anyway.

The real reasons — unstated but legible

The Rheinmetall Lynx's victory in Romania reflects several factors that official procurement language does not state explicitly. Rheinmetall is a German company — the EU's largest economy and a country with enormous influence over European procurement policy. The SAFE programme and EU defence financing mechanisms are more easily accessed for European-origin systems. Political relationships between defence ministries tend to favour established European suppliers. And there is an explicit EU industrial policy preference for building European defence industrial capacity rather than Asian supply dependency.

None of these factors are illegitimate in isolation. The problem is that they are applied selectively and inconsistently — in ways that welcome South Korean systems when European alternatives are unavailable or too expensive, and exclude them when European industrial interests are at stake. That is not a principled procurement policy. It is industrial protectionism with NATO branding.

France's LRU contract — Sundart over Hanwha

The MLRS competition France decided differently

France's LRU (Lance-Roquettes Unitaire) contract — for a wheeled MLRS system to replace aging artillery — was awarded to Sundart, a consortium involving MBDA and Safran, over Hanwha's competing offer. The decision preserved French industrial content in a programme financed partly through French defence budget and EU mechanisms. The result is a system that serves French industrial interests but that was not necessarily the best available option on military terms.

The French decision follows a consistent pattern in French defence procurement: France builds what France can build, buys what France must buy elsewhere, and consistently priorities domestic industrial content over alliance interoperability or cost efficiency. This is a legitimate sovereign choice. It is not cost-free: French taxpayers pay more, French forces sometimes get less capability per euro, and allied systems that proved their worth in Ukraine are excluded from French procurement.

Poland's different calculation

The contrast with Poland is instructive. Poland, facing a direct Russian threat and prioritising rapid rearmament over industrial politics, has become Hanwha's largest European customer. The €10.2 billion commitment to Korean defence systems — K2 tanks, K9 howitzers, Chunmoo MLRS, FA-50 fighters — reflects a procurement strategy that explicitly prioritises capability, speed of delivery, and combat relevance over European industrial solidarity.

Poland has made a different bet: that the security environment is too urgent for industrial politics to drive procurement decisions. Warsaw has also calculated that Korean systems, proven in actual conflict through South Korea's extended experience and built with Ukraine war lessons incorporated, represent better value for a country that genuinely faces the threat NATO is supposed to deter. The Polish calculation may be correct. It is certainly rational. And it is being watched closely by every European defence ministry wondering which approach to follow.

The SAFE programme — designed with European winners in mind

€150 billion with built-in exclusions

The EU's SAFE programme — a €150 billion defence investment framework — was designed with procurement rules that effectively exclude non-EU defence industrial base products from subsidised purchase. Systems built by South Korean, American, or other non-EU manufacturers cannot be funded through SAFE loans and grants on equal terms with European-origin systems, even when those systems are already in service with EU member state militaries.

The result is a perverse procurement dynamic: a NATO ally facing the Russian threat can buy K9 howitzers and Chunmoo MLRS — proven systems, faster to deliver, competitively priced — but if it wants EU financing support through SAFE, it faces pressure to choose a European alternative that may be slower, more expensive, and less combat-validated. SAFE financing functions as a procurement incentive for European industrial champions, regardless of what the threat environment actually requires.

The engaged rate — 1% of 150 billion

SAFE has engaged approximately €1.4 billion of its €150 billion announced total — a rate of less than 1% — with only 9 of 19 eligible members participating. The slow implementation reflects the genuine difficulty of coordinating European defence procurement under unanimity constraints, but it also reflects the practical limitation of a system that excludes the most available, combat-proven systems from its procurement incentives. If SAFE's industrial policy criteria exclude the systems most rapidly available at competitive prices, SAFE's implementation will be slow almost by design.

Canada's accession to SAFE in June 2026 expanded the programme's political coalition without resolving its structural procurement problems. A broader coalition financing a restrictive industrial policy framework does not solve the speed-versus-sovereignty tension. It just enlarges the debate.

Rheinmetall's F126 cancellation — when European industrial policy fails itself

Eight Meko A-200 frigates instead

The irony in European defence industrial politics was sharpened when Rheinmetall's F126 programme — the German naval build — was cancelled, causing Rheinmetall stock to drop 19% in a single session. The German navy opted instead for eight Meko A-200 frigates — a more conventional approach to the frigate capability requirement. The cancellation demonstrated that even the champion of European industrial protectionism — Rheinmetall, whose Lynx defeated Hanwha's Redback — is not immune to procurement reversals.

The F126 cancellation is relevant to the Hanwha story because it illustrates the risks of industrial policy-driven procurement: ambitious programmes designed to develop national industrial capability can fail to deliver, leaving capability gaps and shareholder losses. Hanwha's Redback, by contrast, is in production, has been through rigorous evaluation, and is available for delivery. The contrast between available proven capability and ambitious programmes that collapse is not abstract — it is a defence planning problem that European governments must resolve.

The Rheinmetall paradox

Rheinmetall is genuinely one of Europe's most capable defence industrial companies. Its KF41 Lynx, its Boxer modular vehicle, its ammunition production capacity are real assets for European rearmament. The company has been a primary beneficiary of European rearmament politically and financially. But the F126 cancellation is a reminder that even established European champions are not infallible — and that the assumption that European industrial champions automatically provide superior outcomes is not always warranted by the evidence.

The sustainable answer is not to choose between European champions and Korean alternatives, but to build procurement frameworks that allow genuine competition on merit — with industrial co-production arrangements that build European capacity over time without sacrificing near-term capability and cost efficiency. That framework does not currently exist.

The Poland submarine programme — another Korean loss

Saab wins over Hanwha Ocean

In November 2025, Poland awarded its submarine acquisition contract to Saab — the Swedish company — over Hanwha Ocean's competing bid. Poland is seeking to acquire up to twelve submarines, a programme of enormous strategic significance for a country now positioned as NATO's eastern frontline. The Saab victory was framed partly in terms of European industrial solidarity — Sweden is an EU member state and a new NATO member, and Polish-Swedish defence industrial cooperation fits neatly into European procurement frameworks.

The Hanwha Ocean bid was competitive on technical and cost grounds. The Korean submarine industry, which has built dozens of submarines for the Republic of Korea Navy, has a proven industrial track record. The loss in Poland — following the losses in Romania and France — is part of a pattern that Hanwha and Korean defence analysts have explicitly documented: systematic exclusion from European programmes through procurement rules rather than competitive evaluation.

Canada's 12 submarine programme

Canada is evaluating bids for twelve new submarines — a programme that has been discussed for years and is now approaching actual procurement decisions. Hanwha Ocean is a serious contender, competing against TKMS (German) and other bidders. Canada's decision will be watched closely as a test case for whether non-European allies apply the same industrial protectionism as the EU or whether they evaluate bids on competitive merit.

Canada has already joined SAFE, which creates some pressure to align procurement with European industrial preferences. But Canada also has a direct security interest in acquiring submarines as quickly as possible, and its relationship with South Korea is strong. The Canadian decision will help answer the question of whether European industrial protectionism is a European phenomenon or a broader Western trend.

Joint ventures as adaptation — Hanwha's response

LIG D&A and Rheinmetall — competing and cooperating

Korean defence industry has begun adapting to European industrial preferences through joint ventures and partnership arrangements designed to embed Korean technological capability in European corporate structures. LIG Defence and Aerospace (LIG D&A) has entered a partnership with Rheinmetall that simultaneously makes the two companies competitors in some markets and partners in others. The partnership allows Rheinmetall to benefit from Korean engineering capability while Korean industry gains access to European procurement networks.

The joint venture approach is pragmatic but not without tensions. Technology transfer through partnership carries risks for the Korean partner: capabilities shared in a joint venture can be reproduced by the European partner for future competitions where the Korean company is excluded. Intellectual property protections in defence joint ventures are imperfect, and the track record of junior partners in asymmetric technology alliances suggests caution about how much is shared and under what conditions.

Hanwha Systems and Diehl Defence radar cooperation

Hanwha Systems has also entered a cooperation arrangement with Diehl Defence on radar systems — another example of Korean defence industry seeking to embed itself in European industrial structures rather than competing externally. The Diehl arrangement focuses on radar and electronic warfare systems, where Korean technology development has been significant but European market access has been limited by procurement preferences.

These partnership strategies reflect a mature corporate response to a structural market access problem. They do not eliminate the fundamental tension between European industrial protectionism and alliance-wide procurement efficiency. They manage it, through a gradual process of Korean industrial capability integration into European corporate structures — an approach that benefits both sides over time but resolves neither the near-term procurement efficiency problem nor the underlying policy issue.

K9 Thunder — the European dominant platform nobody discusses

698 units and still not "European enough"

The K9 Thunder self-propelled howitzer is, by unit count, the dominant artillery platform in the European rearmament cycle. With 698 systems ordered across European countries — including Poland, Norway, Finland, Estonia, and others — the K9 has become the de facto standard for European heavy artillery despite being produced by a South Korean company. Its European market penetration has been achieved through competitive pricing, established production capacity, and proven performance.

The K9's European dominance is an anomaly in the industrial policy narrative: a Korean system that has successfully become the European artillery standard precisely because it was ordered before the current SAFE and EU industrial framework was fully operationalised. Countries that bought K9s before the industrial protectionism framework was built got proven systems quickly at competitive prices. Countries making procurement decisions under the current framework face more pressure toward European alternatives.

The Chunmoo's eleven-country footprint

Similarly, the Chunmoo MLRS has been purchased by more than eleven European countries, providing a platform interoperability baseline that makes continued Korean system procurement logistically rational. Countries that have Chunmoo systems, K9 howitzers, and associated logistics chains have a natural industrial continuity argument for continued Korean procurement — their training pipelines, spare parts infrastructure, and technical expertise are already calibrated to Korean platforms.

The industrial logic argues against European protectionism in artillery and MLRS precisely because European militaries are already deeply integrated with Korean systems. Forcing a transition to European alternatives would impose retraining costs, logistics restructuring, and readiness gaps that would actually reduce European military capability during the transition period. This argument has not yet prevailed in procurement policy. But it is a real one.

The R&D funding gap — 49% vs 40-45% vs 5-10%

Who invests in the underlying technology

A structural dimension of the Korean defence export challenge involves research and development funding allocation. European and American defence procurement typically requires significant offset and local R&D content — demanding that suppliers invest a percentage of contract value in local research, technology transfer, or industrial partnership. The approximate allocation for major contracts runs: approximately 49% local content requirement, 40-45% direct procurement, and 5-10% for R&D transfer.

Korean defence companies, whose home market R&D is funded substantially by the South Korean government, can offer lower prices partly because their development costs are partially socialised. European industrial policy sees this as unfair competition — state-supported Korean systems competing against commercially funded European alternatives. The argument has merit in a purely commercial sense. It ignores the reality that European defence companies also receive substantial state support through guaranteed national procurement, research grants, and industrial policy incentives.

The civil-military integration gap

South Korean defence industry benefits from a tight civil-military integration — technology developed for commercial electronics, shipbuilding, and automotive sectors flows into defence applications with relatively low additional R&D cost. Samsung's electronics technology informs Hanwha's guidance systems. Hyundai's manufacturing technology informs Korean military vehicle production. This integration creates a structural competitive advantage that is difficult for European defence industry to replicate quickly.

European defence companies have historically operated in more segmented industrial environments, with defence and commercial technology development kept separate by export controls, classification requirements, and corporate structure. The gap is closing — European companies are investing in dual-use technology development — but it represents a genuine productivity disadvantage in cost-competitive procurement contexts.

Ukraine's experience as the decisive validation

Combat-proven on the most demanding battlefield

The Ukraine conflict has provided the most demanding real-world test of military equipment since the Second World War for European defence industry. Systems that perform well in Ukraine — in terms of durability, logistics, ammunition supply, and combat effectiveness — are being validated as the gold standard for European rearmament. Systems that have not been tested in high-intensity conflict face questions about their real-world performance.

Korean systems — K9 howitzers, Chunmoo MLRS — have been purchased extensively by Ukraine's direct neighbours and integrated into their defence planning precisely because they are proven, available, and manufacturable at scale. The combat validation argument works against systems that have not been stress-tested in high-intensity warfare. Korean systems, while not directly employed in Ukraine, have been purchased and deployed by the countries most directly threatened by the same adversary.

The transformation argument

Korea's Ukraine battlefield experience has been transformative not as a direct participant but as a close observer and system supplier. Battlefield feedback from Ukrainian and allied users of Korean systems has been incorporated into rapid development cycles — updating systems with lessons from actual high-intensity warfare on European soil. This feedback loop, combined with the existing industrial integration of Korean systems into European militaries, represents a genuine military capability advantage that procurement policy should incorporate rather than exclude.

The argument for Korean systems in European procurement is not about replacing European industrial development. It is about acknowledging that allied democracies with proven, combat-relevant systems deserve fair procurement consideration — not systematic exclusion through industrial policy frameworks that prioritise European corporate interests over collective defence capability.

What European rearmament should actually look like

The case for merit-based procurement with co-production

The sustainable framework for European rearmament is not one that excludes allies but one that combines merit-based competitive procurement with mandated co-production arrangements. A Korean company winning a European contract should be required to establish significant European manufacturing content — creating the industrial jobs and capability that European procurement policy legitimately seeks, without sacrificing the competitive evaluation that produces best-value systems.

This model already exists in some form — Polish procurement of Korean systems has involved significant local production transfer, with K2 tanks being produced in Poland under license and K9 howitzers assembled with increasing domestic content. The Polish model shows that it is possible to simultaneously get the capability, the price, and the industrial development — if procurement frameworks are designed to enable that outcome rather than to default to European corporate preferences.

The alliance cohesion cost

There is a final dimension to the Hanwha procurement story that transcends industrial economics. South Korea has been a steadfast partner in the collective Western response to Russian aggression — providing artillery ammunition, systems, and technical support to countries directly supporting Ukraine. Systematically excluding South Korean defence industry from European procurement while benefiting from Korean industrial output is not a sustainable alliance dynamic.

Alliance cohesion requires that burden-sharing be recognised and reciprocated. If South Korea contributes to European security and is excluded from European procurement markets in return, the incentive to continue contributing diminishes. The transactional logic of alliance maintenance suggests that European procurement policy should acknowledge the Korean contribution — not as charity, but as the rational recognition of alliance reciprocity.

Hanwha's European future — adapt or be excluded

The company's strategic response

Hanwha's corporate response to European procurement exclusions has been to accelerate Europeanisation — establishing European subsidiaries, entering joint ventures, seeking European industrial partnerships, and building local production capacity in European countries. Hanwha Aerospace Europe and related entities are designed to make Korean capabilities legally accessible through European corporate structures that satisfy local content requirements.

This Europeanisation strategy is expensive and time-consuming, but it reflects a realistic assessment of the political constraints. A company that wants European contracts in the current framework must become, in relevant legal and industrial senses, European enough to satisfy the procurement rules. Whether the full cost of Europeanisation preserves the cost advantage that made Korean systems attractive in the first place is a genuine question that Hanwha's financial planners are actively working through.

The long-term trajectory

The long-term trajectory of Korean defence industry in Europe is likely to be one of progressive integration — joint ventures, co-production arrangements, European subsidiaries — that blur the line between Korean and European defence industry over time. The K9 will eventually be produced substantially in European factories. The Chunmoo will have European components. The distinction that current procurement policy treats as a disqualifying barrier will become commercially and industrially moot.

That trajectory is good for European military capability and for alliance cohesion. The problem is the transition period — the years during which European procurement policy excludes proven Korean systems in favour of European alternatives that are slower, more expensive, or less combat-validated. During those years, European militaries pay a capability cost. The June 25 Korean weapons tests are a reminder that the threat environment is not waiting for the transition to complete.

The broader protectionism problem in allied defence

A pattern beyond Hanwha

The Hanwha story is the most visible current example of a broader pattern: allied industrial protectionism distorting collective defence procurement. American "Buy American" provisions have historically excluded allied systems from US procurement even when allied systems were superior and cheaper. EU "Buy European" frameworks replicate the same logic with the same adverse consequences for collective security efficiency.

The ideal collective defence procurement system would allow any democratic ally to compete fairly for contracts from any other democratic ally, with transparent evaluation criteria, mandatory co-production requirements proportional to contract size, and industrial policy goals pursued through technology transfer rather than market exclusion. That system does not exist. Building it would require political will that no current government has demonstrated.

What collective rearmament should mean

Collective rearmament, properly understood, means rearming collectively — meaning together, with the best available systems from across the democratic alliance, structured to build shared industrial capability over time. It does not mean each country rearming separately while using collective financing frameworks to advantage national industrial champions. That is domestic industrial policy dressed up as collective security.

Europe needs to choose: does collective rearmament mean collective capability, collectively built, or does it mean individual capability funded through collective mechanisms? The Hanwha story suggests Europe is currently choosing the latter. That choice has costs — in capability, in cost-efficiency, and in the alliance relationships that ultimately determine whether democratic solidarity holds under pressure.

Strategic implications and the long view

The structural shift beneath the surface events

The events analysed in this article are not isolated incidents. They represent a structural shift in the strategic environment that has been building across years of incremental change. Understanding any single event in isolation misses the larger pattern — the convergence of pressures, the evolution of doctrines, and the gradual transformation of balances that underlie the headline developments.

That structural shift demands not only tactical responses but a reassessment of fundamental strategic assumptions. The alliances, institutions, and frameworks built in a different era are being tested against a reality they were not fully designed to manage. Meeting that test requires both the clarity to see the structural change clearly and the political will to respond proportionately.

The choices that remain available

This analysis would be incomplete without acknowledging that the choices described are not predetermined outcomes. Political will, sustained institutional commitment, and the decisions of individual leaders still shape how these structural forces resolve. Determinism about geopolitical outcomes is intellectually lazy and practically dangerous — it gives permission to passivity when action is available.

The situations described in this article are serious. They are not hopeless. The democracies, the institutions, and the alliances that constitute the rules-based order have demonstrated resilience and adaptability at critical moments before. Whether they do so again depends on choices that have not yet been made. That is what makes analysis — and the public understanding it aims to foster — worth the effort.

Conclusion: The cost of the wrong answer to European rearmament

What is being sacrificed for industrial politics

The cost of European industrial protectionism in defence procurement is not theoretical. It is the 14% price premium paid for the Romanian Lynx over the Redback. It is the slower delivery timeline for systems designed from scratch rather than already in production. It is the K9 and Chunmoo integration already embedded in European militaries being disrupted by procurement decisions that favour European corporate interests over military continuity. It is the alliance relationship with South Korea being slowly strained by systematic exclusion.

These costs do not appear in a single line item. They accumulate across hundreds of procurement decisions, across years of capability development, across the gradual erosion of alliance trust. They are real costs — paid in reduced military capability, higher defence budgets, and slower rearmament pace — even if they are invisible in any individual contract award announcement.

The alliance question

The ultimate question raised by the Hanwha story is about the nature of democratic alliance. A democratic alliance that systematically advantages its own industrial interests over its allies' industrial contributions is not fully living up to its stated values of reciprocity, solidarity, and collective purpose. South Korea is a democracy. It is an ally. Its defence companies are competitive, proven, and combat-relevant. Treating them as a threat to European industrial sovereignty rather than a resource for European security is a category error.

The correction does not require abandoning European industrial development. It requires building procurement frameworks honest enough to acknowledge that the best collective defence sometimes means buying the best available system, wherever it comes from — while building the co-production arrangements that develop European capability in parallel. That is not protectionism. That is what an actual alliance looks like.

Signed Maxime Marquette, columnist

Columnist's transparency box

My position and interests

I support collective Western security and believe allied democracies should be treated as genuine partners in defence procurement, not as industrial competitors to be excluded. I have no financial relationship with Hanwha Aerospace or any Korean defence company. My analysis is based on published reporting from Chosun English, EU Perspectives, CNBC, South Korean financial media, and European defence policy sources.

What I don't claim to know

I do not have access to the confidential procurement evaluation documentation for the Romanian IFV, French LRU, or Polish submarine competitions. My characterisation of the outcomes as protectionist is an inference from the patterns of publicly available information, not a statement about specific internal procurement decision criteria. Procurement decisions are complex, and factors I cannot observe may have influenced outcomes in ways I have not captured.

Sources

Primary sources

Chosun English — Hanwha defence industry European contract losses — June 24, 2026

EU Perspectives — SAFE but slow: why defence loans miss the target — June 2026

Nate News — Korean defence companies accelerate overseas production — June 22, 2026

Secondary sources

CNBC — Rheinmetall defence stocks and F126 programme cancellation — June 25, 2026

Seoul Economic Daily — Korea defence firms accelerate overseas production to win contracts — June 24, 2026

EU Perspectives — Paris saw the future of defence: can Europe keep pace? — June 2026