Irish SMEs could benefit from Europe’s extra defence spending

It has taken less than two months of Donald Trump being back in the White House for long-standing alliances and international security arrangements to be upended, forcing the EU, and by extension Ireland, to massively rethink its own defence spending policies.

As a result, European nations are ramping up defence spending offering a potential boon to companies both on the continent and in Ireland. While Ireland does not have a domestic defence industry producing hardware, it does have a range of software firms already working in the sector.

The changing dynamic between the US and its European allies is encapsulated by the radical difference in Mr Trump’s approach to the war in Ukraine compared to his predecessor Joe Biden.

Last month alone, Mr Trump appeared to blame Ukraine for Russia’s invasion, called the country’s president Volodymyr Zelenskyy a “dictator” and voted against a resolution in the UN condemning Russia’s invasion of Ukraine on its three-year anniversary.

All this culminated in Mr Zelenskyy being berated in the White House by both Mr Trump and vice-president JD Vance. Despite some rollbacks in recent weeks, and further talks between the US and Ukraine, it has become clear to the EU and other European leaders that the US cannot be relied on in the same way it has been before.

To that end, the EU has moved fast in its efforts to try and build up the defence spending of member states in an attempt to re-arm Europe.

EU defence plan

Earlier this week, the European Commission presented a White Paper for European Defence Readiness 2030 as well as details of a defence package providing financial levers to EU Member States to drive an investment surge in defence capabilities.

As part of ReArm Europe Plan/Readiness 2030, the EU Commission is proposing spending €800bn on various defence and security measures.

In presenting these plans, EU Commission president Ursula von der Leyen said the “era of the peace dividend is long gone” and “security architecture that we relied on can no longer be taken for granted”.

The EU Commission’s white paper proposed a number of solutions to close capability gaps and build a strong defence industrial base. It proposes ways for member states to massively invest in defence, procure defence systems and build up the readiness of the European defence industry over the long run.

Irish neutrality

These moves in Europe come as the Irish Government looks set to make changes to Ireland’s neutrality arrangements in response to Russian aggression in Ukraine.

Under the current system, Ireland cannot deploy any more than 12 Defence Forces peacekeepers overseas without a mission being approved by a vote of the UN Security Council, as well as approval by the Government and the Dáil.

Russia and China are both permanent members of the UN Security Council and have the power to veto future peacekeeping missions. The Government is proposing to remove the requirement for a UN mandate to send Irish troops abroad.

On top of this, last month, Simon Harris, Tánaiste and minister for defence, said Ireland’s military spending should reach the highest possible level of around €3bn annually in the coming years. It currently stands at around €1.35bn.

The Irish defence and security sector may not be as big as in other countries but there some companies operating in this space, just not in the traditional equipment side of things.

Pat O’Connor, co-founder and managing director of Irish technology firm VRAI, said that if Ireland is going to spend €3bn a year on defence and security, with more potentially coming from the EU, wouldn’t it be better to invest that money in indigenous Irish companies rather than send it abroad.

A 22-year veteran with the Irish Defence Forces, Mr O’Connor established VRAI with his friend Niall Campion. The company utilises virtual reality and simulation tools to train people in a wide range of specialty equipment.

On top of the simulation training, Mr O’Connor said their system “allows our customers to capture, store, analyse and visualize human performance data that’s generated in simulation” in order to further tailor training programmes to individuals.

Co-founders of VRAI Pat O’Connor and Niall Campion. VRAI develops virtual reality simulation technology for training purposes in a variety of sectors.

“We work in aerospace and defence, but also work in the likes of offshore wind. So bringing simulation to more people, and the more people you bring it to, the larger the data set you can build up,” Mr O’Connor said.

For its defence and security sector work, VRAI works through a Norwegian company Kongsberg which makes military equipment.

“Training people on that military equipment requires there to be a real piece of equipment, instructors, and training lands. Having a simulator allows you to remove the bottleneck around the numbers of vehicles, numbers of instructors, and you can allow training to happen at scale,” he said.

“You can allow people to get competent in a ‘hands on manner’, without actually having to be hands on the piece of equipment.”

Mr O’Connor said defence and security training is just one part of his company’s work and it has other uses in areas such as aerospace, off-shore wind and the emergency services.

The Irish Defence and Security Association

VRAI is a founding member of the Irish Defence and Security Association (IDSA) which consists of a number of companies who work either exclusively in the defence and security sector or who produce products and services which overlap with the sector.

The IDSA said that it has identified a number of areas the Government should address to facilitate its ambition to improve its defence capabilities.

It has been lobbying the Government for stronger engagement with the industry in a number of areas including the capabilities it is planning on prioritising as well as the procurement models that will be applied, including to domestic and foreign suppliers.

The IDSA is offering to facilitate engagement with industry in these areas.

The association said that there is a need to create opportunities for local enterprises as well as small and medium-sized enterprises (SME) to solve strategic dual-use security and defence challenges, not just in Ireland, but also for the EU and other international partners.

The IDSA said there is a need for a defined industry strategy for the sector from the Government in order to support the country’s defence responsibilities and contribute to EU security.

“At a basic level, I think Ireland has under-invested in defence for decades,” Mr O’Connor said.

“Looking at the global increase in threats, and I think an increase in great power conflict, the world is getting more dangerous. It makes sense to invest in our defence capability, not just in Ireland, but also in Europe,” he said.

Corballis Technologies

Mr O’Connor’s sentiment is echoed by Timothy Kelly, managing director Corballis Technologies which is also a member of IDSA. Corballis is an enterprise software company working in aviation and defence.

“We’re a general software development company, but we have a core competency around safety management, compliance, and risk,” he said.

Corballis first became involved in defence when it won a tender to implement the safety management software system for the Irish Air Corps.

“We came in via a safety management system for the Irish Air Corps, but we’re now working with the compliance department, occupational health and safety,” he said.

Mr Kelly said they would hope to further expand their operations to other defence organisations.

“The capabilities that we’re implementing now for the Irish Defence Force is not being done in others, or at least it’s in a very early stages in other defence organizations. Defence is definitely a space that we want to expand into in the next year or two, as we further develop the work we’re doing with the Irish Defence Forces.

“We’d hope to take that offer to other national air forces or broader defence organizations,” Mr Kelly said.

Defence and security is just one area Corballis works in. It is also seeking to expand its operations into products for commercial airlines, air traffic control, airports and aircraft maintenance.

On the current state of Irish defence, Mr Kelly said the State has “under-invested in defence for decades so the infrastructure is struggling”.

“The downside of the under investment is that the system isn’t fit for purpose and that’s nothing to do with the geopolitical situation that’s emerged. This has been happening for, I mean, a long time,” he said.

Trooper Niall Frain and Trooper Shane Dorane on a Mowag armoured personnel carrier at the Curragh Camp, Co Kildare: Ireland spends the least on defence out of 38 European nations and this under-investment is a threat to national security in an increasingly volatile world. Picture: Colin Keegan, Collins Dublin

Ireland has been in a comfortable position for years when it comes to defence. The country relied on an established world order reinforced by close allies like the US.

However, in just a few short months that is no longer the case and the reliability of the US as an ally has been radically damaged. The Government is well aware of its short-comings in this area.

The National Risk Assessment 2024 said that the risks to Ireland posed by armed conflict, terrorism and other security threats are “potentially compounded by our having one of the lowest levels of investment in military and defence capabilities in Europe”.

A study published last month called The Military Balance 2025, showed that Ireland has the lowest spend on defence as a proportion of its economic wealth out of 38 European states.

It shows Ireland spends less than other neutral countries, such as Austria and Switzerland, neither of which have a navy or huge maritime areas to monitor and safeguard.

Mr O’Connor said this investment is an opportunity to support Irish businesses whose products have more uses than just in the area of defence and which might create more value down the line.

“No one in Ireland is going to be making armoured vehicles or aircraft but what Ireland does have is an incredibly rich technology base, a SME-led technology base… Our increased defence spend can actually be seen as an investment, and that investment is a local, indigenous, SME-based economy.”