Belgium is making a strategic shift by investing public money into the defence industry, marking what officials describe as a “historic turning point”.
In an interview on RTL, Koen Van Loo, CEO of the country’s sovereign wealth fund, outlined the rationale behind the move.
The Federal Holding and Investment Company (SFPIM), which manages approximately €15 billion in state assets, has traditionally invested across a broad portfolio of around 230 companies. Its mission is to generate returns for the Belgian state while supporting key sectors of the economy.
Now, defence has been formally added to that portfolio.
According to Van Loo, the changing geopolitical landscape has forced a reassessment of priorities. “We have gone through a period where this sector was neglected,” he said, emphasising that defence should be seen not only in terms of weapons but also as a driver of innovation, resilience and national sovereignty.
Strengthening defence capabilities, he argued, was a prerequisite for securing investments in other strategic areas such as energy.
This policy shift is being operationalised through the creation of a dedicated subsidiary, SFPIM Defence.
Backed by €2 billion in capital, the fund will focus on supporting Belgian companies active in defence and security rather than directly financing military purchases. Its objectives include anchoring key industrial players in Belgium and fostering technological innovation within the sector.
The initiative originated during the 2024 government formation talks led by Theo Francken, now Belgium’s defence minister.
The final structure relies on a combination of annual funding allocations from SFPIM, unused European recovery funds and exceptional financing mechanisms.
Critics have raised ethical concerns and questioned the financial logic of investing in a sector traditionally seen as less profitable. Proponents, though, argue that the real challenge lies in rebuilding Europe’s industrial defence capacity after years of underinvestment.
“Stocks are too low. We must produce more, and faster,” Francken stated, highlighting growing demand for capital among defence companies.
The move comes as Belgium seeks to rebuild its military and industrial base after years of lagging behind NATO defence spending targets. The government has already pledged to increase defence expenditure to 2 per cent of GDP by 2029 and 2.5 per cent by 2034, in line with growing pressure on European allies to shoulder more of their own security burden.
Francken has also argued that defence spending should generate jobs and industrial activity inside Belgium, rather than simply flowing to larger arms producers abroad. Belgium has a long-standing defence tradition, including companies such as FN Herstal, but officials say the sector needs fresh capital, stronger supply chains and a broader industrial ecosystem.
Belgium’s approach reflects a broader European trend: Aligning economic policy with security priorities in an increasingly unstable global environment. After decades in which defence investment was often treated as politically sensitive, governments across Europe are now increasingly presenting it as a matter of sovereignty, industrial policy and strategic survival.
