June Defense Trade and Arms Export Newsletter Highlights

Poland Becomes First Nation to Sign EU SAFE Loans – Poland became the first country to sign the EU’s Security Action for Europe (SAFE) defense loan program, allowing for Poland to begin receiving $51.6 billion in defense funding by the end of May. Poland is planning to use the funds to finance over 120 defense-related projects, including new contracts and amendments to existing contracts. Poland is also planning to sign an additional 40 agreements that can be covered under the SAFE program. It is expected that companies like the Polish Armaments Group (PGZ) or the WB Group will benefit from the expenditures due to their production of the San anti-drone system, the construction of the Ratownik rescue vessel and off-road ambulances, as well as ammunition, military equipment and anti-drone shields, respectively.

NATO to Cultivate Vetted Counter-Drone Vendor Pool – NATO is looking to establish a pilot program that would allow alliance members to “shop” for counter-drone systems as an effort to increase production speed and help countries adopt new technology faster. NATO invited companies to pitch counter-unmanned aerial systems (C-UAS), and it plans to select 18 systems in the next one-to-two months. It hopes to have the contracts in place “by the summer” to ensure nations can quickly begin to procure C-UAS through the marketplace. NATO hopes that the program will help member countries move beyond requirement-based procurement to start using a mechanism based on challenges and use cases. The pilot program follows the agreement NATO members made during the June 2025 meeting: the Rapid Adoption Action Plan

Baltic Nations Ready to Spend $14 Billion on Arms Spending Spree – Baltic nations Estonia, Latvia and Lithuania are ready to spend around $14 billion from EU’s SAFE loans on military equipment in the coming weeks. The state officials insist that a significant portion of production must be located within the three countries, with an intent to pool their resources and international support.

AUKUS Unveils the First ‘Pillar Two’ Signature Project – Secretary of War Pete Hegseth announced that the United States, Australia and the United Kingdom will jointly develop new undersea drones as the first AUKUS ‘Pillar Two’ signature project. The program is focused on fielding advanced uncrewed undersea vehicles (UUVs) designed to support undersea operations and improve the AUKUS alliance’s capabilities in the maritime domain. AUKUS ‘Pillar Two’ is also focused on U.S.-UK-Australia cooperation to develop advanced technologies, artificial intelligence (AI), quantum computing, cyber capabilities and other undersea or defense systems. In the statement about the AUKUS meeting on the sidelines of the Shangri-La Dialogue in Singapore, Secretary of War Pete Hegseth, Australian Deputy Prime Minister and Minister of Defense Richard Marles, and British Secretary of State for Defense John Healey also agreed to expand the AUKUS license-free environment between AUKUS partners. They also highlighted Australia’s planned investments into its defense industrial base.

Key Takeaways from the 2026 Shangri-La Dialogue – Countries in attendance at the Shangri-La Dialogue in Singapore all agreed to the importance of increasing defense spending, with Secretary of War Pete Hegseth calling on attendees to spend at least 3.5% of their GDP on defense. Many also discussed the importance of increasing defense capabilities due to “rightful alarm” about China’s military buildup. For the second year in a row, China did not send its defense minister, and many attendees criticized the decision to send a different official to the conference. The delegation was led by Major General Meng Xiangqing from the People’s Liberation Army National Defense University. Meng used his session to criticize Japan’s rise in defense spending and expansion of weapon sales, as well as emphasized stability in the Taiwan Strait “because on both sides of the Taiwan Strait it’s Chinese territory.” The Philippines, the Netherlands and other countries also looked toward lessons learned from the war in Ukraine, especially how “asymmetric warfare” has shaped global defense strategies.

Congress Expresses Concern about Acquiring Foreign-Built Ships – On May 19, the Senate Armed Services Committee convened to consider the Department of the Navy’s budget request for fiscal year 2027 where senators expressed concern about plans to acquire foreign-made ships as the United States looks to revitalize the maritime industrial base. Some members of Congress argue that the strategy could leave the United States dependent on foreign shipyards and vulnerable to Chinese attacks. Acting Secretary Hung Cao argued that acquiring foreign-made ships could solve urgent problems like working with available domestic shipyards to rapidly produce naval vessels. He also emphasized the administration’s desire for foreign shipbuilding powers and U.S. allies to invest in U.S. shipyards and the maritime industrial base. Sen. Mark Kelly (D-AZ) warned that the strategy does not fix the underlying issues within the U.S. shipbuilding industry, highlighting workforce limitations and outdated infrastructure. Members of the House Armed Services Committee expressed similar concerns during their hearing on May 14, with some calling for more investment in the United States and others demanding more support for efforts to increase the skilled workforce. U.S. Automaker in Talks to Supply Trucks to North American and European Armed Forces – Ford Motor Co. provided an update on the ongoing discussions to supply the armed forces in Europe and North America with pickup trucks and software for their armed forces. Ford is planning to offer its F-Series pickup truck, as well as the Super Duty pickup trucks, for military use. The talks were described as “productive” despite the lack of a yielded contract. In April, Ford CEO Jim Farley noted the early discussions with the U.S. government on “defense related needs” and now negotiations have expanded beyond the United States. The exact countries Ford is in negotiations with are unknown, but Ford said the “governments recognize that the vehicles, features, and software we provide to construction fleets, utility crews and other workers … through Ford Pro are exactly what they need to modernize their own vehicle fleets.” The Department of War previously called on industry to support its efforts to diversify its contractors to improve service and reduce costs. Earlier this year, Army Secretary Dan Driscoll cited Ford and General Motors Co. as companies the Pentagon hopes to work with.