COMMENTARY: Hanwha Edged Out by the "European United Front" — When Protectionism Weakens NATO

K-Defense and its recent setbacks

The Korean defense industry — "K-Defense" — has spent recent years accumulating spectacular commercial successes in Europe. Poland, Romania, Norway, and other nations had seemed ready to embrace South Korean weapons for their obvious qualities: competitive prices, rapid deliveries, battle-proven equipment. But a wall has now gone up. According to The Chosun Daily of June 24, 2026, Hanwha Aerospace and Hanwha Ocean have lost several major European contracts to European competitors, despite objectively more advantageous commercial offers.

The numbers speak for themselves. In Romania, Hanwha Aerospace submitted a bid for 298 Redback infantry fighting vehicles, priced 14% cheaper than Rheinmetall's offer and with a local production rate of 80% — versus 40% for the German competitor. Result: Rheinmetall won the contract with its 232 Lynx vehicles at €2.59 billion. In France, Hanwha Aerospace had a competitive offer for the M270 LRU multiple rocket system with its K239 Cheonmu missile. Result: the Franco-British consortium "Sundart" (MBDA + Safran Electronics) won the contract. In Poland, Hanwha Ocean had bid for the submarine contract worth 8 trillion Korean won (approximately €6 billion) — the contract was awarded to Sweden via Saab.

The SAFE program: the catalyst for protectionism

The common thread in these defeats is the EU SAFE program (Safe and Affordable Finance for Europe). Launched last year, endowed with an envelope of €150 billion, it offers low-interest loans and subsidies to member states that purchase weapons manufactured in Europe. This program, designed to stimulate the European defense industrial base, creates a de facto barrier to entry for non-European suppliers — even when their offers are commercially superior. Canada, the first non-European country to join SAFE, immediately saw Hanwha Ocean disadvantaged in the competition for the Canadian 12-submarine contract — estimated at 60 trillion Korean won over 30 years of maintenance — against Germany's TKMS, which can offer subsidized financing through SAFE.

I understand the European logic: build an autonomous defense industrial base, reduce dependency on outside suppliers, create jobs and production capacity on the continent. It is a legitimate policy. But when that logic results in buying 14% more for a less well-specified product, simply because the supplier holds a European passport — there is a problem with priorities. Especially when NATO is loudly demanding that we rearm faster and at lower cost.

Rapid deliveries in a world in defensive urgency

The strongest argument in favor of K-Defense is precisely the one NATO has been hammering since the invasion of Ukraine in 2022: delivery speed. While European manufacturers are swamped with orders and struggling to scale up, South Korea has demonstrated an impressive ability to produce and deliver rapidly. Hanwha Ocean committed to delivering the first four submarines to Canada between 2032 and 2035. Germany's TKMS, for its part, proposed to Canada submarines originally ordered by Norway and a joint operation of 24 shared submarines with Germany, Norway, the Arctic, and the North Atlantic. That is not a delivery — it is a renegotiation of operational availability.

In a context where NATO urgently demands a capability build-up against the Russian threat, preferring a slower and more expensive supplier in the name of "European preference" is a glaring strategic contradiction. Should not the same reasoning that condemns Berlin for insufficient weapons procurement also apply to countries that reject capable and fast suppliers for political-industrial reasons? Intellectual consistency demands the question be asked.

A local production rate that exceeds requirements

Hanwha's Romanian offer provided for a local production rate of 80% — far exceeding the typical 40% standard that host nations generally require to strengthen their national industries. In proposing this, Hanwha was not merely selling equipment: it was offering to create a local defense industrial supply chain in Romania. This is precisely the type of economic investment and technology transfer that Eastern European countries need to develop their own defense industrial base. Losing it to an offer with a lower localization rate, simply because the manufacturer's flag is "European," reflects a short-term vision.

When Romania buys a Lynx at 40% local production rather than a Redback at 80%, at a higher price, subsidized by SAFE funds that actually come from European taxpayers — who is really paying? The Romanian taxpayer, funding through taxes a less efficient solution with fewer local economic benefits. The pure economic logic is hard to defend. This is not industrial policy — it is economic nationalism dressed up as defense policy.

The "European united front": lobbying and national politics

Industry sources cited by The Chosun Daily are explicit: a defense sector official mentioned "close communications between Romanian and German political circles" during the IFV contract award. For the Canadian submarine competition, "a 'European united front' is intensifying because Norwegian defense companies produce key components for TKMS submarines, forging political and industrial ties among European nations." In other words, European industrial solidarity does not rest solely on the technical merits of equipment — it is actively built through coordinated political lobbying between capitals.

This reality is not necessarily surprising: defense markets have always been political. What is new is the institutionalization of this preference through the SAFE mechanism — which transforms what was an informal bias into an explicitly structural financial advantage that discriminates against non-European suppliers. This institutionalization changes the nature of the problem: it is no longer a case of circumstantial protectionism, it is a deliberate and acknowledged policy.

The NATO dimension: an alliance fragmenting economically

Here is the fundamental contradiction: NATO is a military alliance whose credibility rests on the collective ability of its members to equip, train, and fight together. If European members systematically exclude non-European suppliers from their defense markets — including reliable allies like South Korea, which has supplied weapons to Ukraine and shared valuable intelligence — they create an economic fracture in the Alliance that ultimately weakens its political cohesion. South Korea is a declared "NATO global partner." Excluding it de facto from European defense markets sends a signal about what that status is actually worth.

I am not saying that a European preference in defense procurement is always wrong. Building European strategic autonomy is a legitimate objective. But when it translates into less efficient and more expensive purchases for nations that do not yet have the means to arm their militaries properly — I wonder whether we are sacrificing NATO's immediate effectiveness on the altar of a European autonomy that will take decades to materialize.

Beyond the industrial passport

Professor Jang Won-jun of Jeonbuk National University, a specialist in the advanced defense industry, offers a nuanced analysis. Exporting finished products by relying on delivery speed and price competitiveness is increasingly insufficient in the face of political and institutional barriers like SAFE. To genuinely penetrate the European market, K-Defense companies must move toward creating joint ventures with local companies and R&D collaboration to meet "Made in Europe" requirements. This is not capitulation — it is realistic strategic adaptation.

This approach is already underway, but slowly. Hanwha has exploratory discussions with several European companies for integration partnerships. The question is whether the pace of this adaptation will be fast enough to avoid losing key contracts being decided right now. A Canadian submarine contract with TKMS, if signed in the coming months, could close the Canadian door to Hanwha for a generation.

The domains where K-Defense can still break through

Experts advise South Korea to focus its European ambitions on advanced technology domains where Europe has no clear superiority: military drone systems, cybersecurity, AI applied to weapons systems, precision-guided munitions. An analysis by the Korean National Assembly Research Institute notes that only 5 to 10% of the Korean defense R&D budget is allocated to universities, research institutes, and civilian companies — compared to 49% to the government defense development agency and 40 to 45% to major industrialists like Hanwha. This imbalance deprives K-Defense of dual-use civilian innovations that could prove decisive in breaking into the least protectionist technology segments.

Jang's advice is sound, but it takes time. And while Korean industrialists adapt, contracts are being signed — creating lasting industrial ties that make markets even more closed to new entrants. K-Defense faces a window that is closing. If it does not establish itself in Europe as an integrated actor within the next two or three years, it risks being permanently confined to the role of emergency supplier for member states that need urgent equipment but buy European in normal times.

Rearm fast or rearm European: are both compatible?

NATO demands its members rearm rapidly — the 5% of GDP defense spending target adopted at the last summit is a historic break from the decades of post-Cold War military austerity. But at the same time, European mechanisms like SAFE direct purchases toward European suppliers who cannot always deliver within the timelines necessary to meet these goals. There is a real tension between "rearm fast" and "rearm European" that governments generally resolve in favor of European preference — even at the cost of delayed deliveries.

In a context where the Russian threat in Eastern Europe is real and immediate — as the war in Ukraine demonstrates every day — this delay has a strategic cost that European Union accountants do not calculate in their SAFE models. If an allied nation is less well-armed in 2027 because it waited for a European supplier rather than buying quickly on the international market, the Alliance as a whole is weaker. This calculation should be integrated into European defense industrial policy — it is not yet.

At bottom, the question posed by the Hanwha affair is this: is NATO a military alliance that optimizes its collective capability — or an industrial club whose members protect each other from outside competition? If it is the second, then our adversaries — Putin and Xi — can sleep peacefully. Because an alliance that buys on political rather than military grounds weakens itself every time it refuses better equipment for reasons of national flag.

Rearm fast or rearm European: are both compatible?

NATO demands its members rearm rapidly — the 5% of GDP defense spending target adopted at the last summit is a historic break with the decades of post-Cold War military austerity. But European mechanisms like SAFE simultaneously direct purchases toward European suppliers who cannot always deliver within the necessary timelines. There is a real tension between "rearm fast" and "rearm European" that governments generally resolve in favor of European preference.

In a context where the Russian threat in Eastern Europe is real and immediate — as the war in Ukraine demonstrates every day — this delay has a strategic cost that EU accountants do not calculate into their SAFE models. If an allied nation is less well-armed in 2027 because it waited for a European supplier rather than buying rapidly on the international market, the Alliance as a whole is weaker. This calculation should be integrated into European defense industrial policy — it is not yet.

I understand the European logic: build an autonomous defense industrial base, reduce dependency on outside suppliers, create jobs and production capacity on the continent. It is a legitimate policy. But when it results in buying more for a less well-specified product, simply because the supplier holds a European passport — there is a problem with priorities. Especially when NATO is loudly demanding that we rearm faster.

What NATO should do

NATO should develop procurement criteria based on delivery capacity, industrial reliability, and technical compatibility — not on the manufacturer's nationality. The Alliance's "global partners" such as South Korea, Australia, and Japan — all of whom have demonstrated their reliability and democratic values — should receive equivalent status to EU members in defense procurement tenders from NATO nations.

This reform is technically feasible and strategically desirable. It would clash with powerful industrial interests in Germany, France, and Italy. That is why it has not yet been seriously proposed. But the budgetary pressures of the 5% GDP target, combined with the demonstrated competitiveness of Korean systems in the Polish and Australian markets, could force this conversation in the next two years.

Beyond the battle of percentages

Defense procurement policy experts point out that the debate over localization rates — 80% for Hanwha versus 40% for Rheinmetall in the Romanian offer — risks obscuring more fundamental considerations. Localization creates jobs and local industrial capabilities, but does not automatically guarantee better operational fitness, better long-term maintenance, or superior interoperability within NATO. The entire life cycle of a weapons system must be examined.

Poland, which has already ordered 1,000 K9 howitzers and 648 K2 tanks from Hanwha, has resolved this dilemma by requiring substantial technology transfers as part of its contracts — allowing the Polish industry to absorb Korean know-how while obtaining equipment rapidly. This "transfer and co-production" model could be a viable path for European nations that want both Korean competitiveness and local industrial development.

The real question is not "Hanwha or Rheinmetall." The real question is: how can Europe build a competitive defense industry over the next five years without sacrificing its immediate security? The answer does not lie in tariff barriers or national preferences — it lies in ambitious industrial partnerships with nations that have proven they can deliver. South Korea is one of them.

The political stakes of the final vote

The European Parliament vote on the SAFE regulation is scheduled for this autumn. The defense industrial lobbies of the major member powers — France, Germany, Italy, Spain — will push to maintain strict European content thresholds. Smaller member states, notably in Eastern Europe, which most urgently need to rearm and have already purchased Korean equipment, will advocate for more flexibility.

The outcome of this vote will have concrete implications for nations like Romania, the Baltic states, and Poland — countries that directly face the Russian threat and have chosen Korean equipment not out of ideology but out of operational necessity. Their voice should weigh more heavily in this debate than that of defense industrialists in Western Europe who do not bear the consequences of insufficient rearmament.

Industrial identity and economic sovereignty

European resistance to Hanwha and other non-European suppliers does not reduce to poorly disguised protectionism. It reflects a conception of sovereignty that includes the capacity to produce one's own weapons — a conception that was deeply eroded by the decades of post-Cold War defense austerity, but which remains politically and culturally entrenched. For many European capitals, depending on Korean weapons means accepting a form of strategic vulnerability in the defense domain.

This logic has a certain coherence. Imagine that South Korea chose to stop exporting spare parts for its K9 howitzers in response to a diplomatic crisis with the European Union — an unlikely but not impossible scenario. Technological dependency has long-term costs that initial purchase contracts do not always reflect. That is why technology transfers and co-production arrangements are essential to transform a simple purchase contract into a lasting partnership.

At bottom, this debate about Hanwha reveals an uncomfortable truth: Europe did not rearm sufficiently after the end of the Cold War, and now that it must do so rapidly, it cannot always afford the luxury of buying only from itself. This is a situation of its own making — and there are no easy solutions. Only painful compromises between industrial sovereignty and immediate military effectiveness.

Toward a balanced solution

The most realistic path is a system of "conditional European preference" — granting a price or scoring advantage to European suppliers in procurement tenders, but only if the performance gap does not exceed a defined threshold (10%, for example) and delivery timelines are comparable. Beyond these thresholds, the preference does not apply and the best product at the best price wins.

This system would support the European defense industry without sacrificing military effectiveness in cases where the performance difference is significant. Hanwha and other Korean suppliers would continue to compete — and to win when their offer is sufficiently superior. European industrialists would have an incentive to invest in closing the technology gap rather than relying solely on regulatory protections. It is demanding. It is necessary.

The real stakes of this debate

The debate over Hanwha's access to European markets is not a simple commercial dispute between South Korea and the European Union. It is a revealing indicator of tensions between two legitimate objectives: building European defense industrial autonomy, and maximizing the Atlantic Alliance's effective military capability in the shortest possible time. These two objectives are compatible over the long term — but they create short-term friction that current mechanisms manage poorly. Strategic intelligence means finding solutions that advance both objectives simultaneously, rather than sacrificing one for the other.

The call for consistency

European allies who fault others for not meeting their NATO commitments should examine their own practice when they prefer a more expensive and slower supplier for domestic industrial reasons. Consistency is a virtue in geopolitics as in personal ethics. And in a world where Russia bombs Ukrainian cities every night, where China builds platforms at Scarborough Shoal, and where North Korea improves its missiles using Russian data — it is hard to afford the luxury of sacrificing military effectiveness for domestic industrial comfort.

The debate over Hanwha's access to European markets is not a simple commercial dispute. It is a revealing indicator of tensions between two legitimate objectives: building European defense industrial autonomy, and maximizing the Atlantic Alliance's effective military capability in the shortest possible time. Strategic intelligence means finding solutions that advance both objectives simultaneously — rather than sacrificing military effectiveness for domestic industrial comfort. In a world where Russia bombs Ukrainian cities every night, that is hard to afford.

By Maxime Marquette, columnist

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I am not a journalist but a columnist and analyst. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

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