Europe’s Defense Industry Must Stop Privatizing Profits and Socializing Risk

European defense firms have a nanny state problem: they refuse to accept responsibility for their own physical security. They are used to depending on the government because they are part of the national security industrial base. But they need to accept that security measures are part of the cost of doing business. That’s what American firms do.

In a good example in the Czech Republic last week, a Czech manufacturer who supplies drones to Ukraine was hit by an arson attack. A group claiming responsibility for the attack accused LPP Holding in Pardubice, Czechia, of cooperating with Israeli firm Elbit and claimed to be motivated by anti-Israeli sentiments. LPP Holding denies any association with Elbit. Analysts suspect the Israel-centered claims may be a clumsy attempt to divert attention from potential Russian involvement.

The relevant question, however, is not who lit the match. It is who should bear the responsibility to anticipate and neutralize the threat. European establishment media expressed surprise at the attack and are calling for greater government protection of defense firms. But their call for government protection is misplaced.

A Predictable Threat

LPP Holding’s revenues have increased substantially because of the war in Ukraine. Their facilities are part of Europe’s expanding wartime industrial base, and they play a key role in Ukraine’s defense against Russia. Any claim that this attack was a surprise is laughable.

For more than two years, NATO briefings, intelligence agencies, and the media have sounded the alarm over escalating hybrid warfare tactics, targeted sabotage of critical infrastructure, and covert attacks on defense supply chains. Yet a high-value defense production site was easily hit by a low-tech attack. This is a glaring indictment of corporate complacency.

The “Socialized Security” Delusion

Following the attack, Czech Prime Minister Andrej Babiš did something shocking by European standards: he told the defense firms to take responsibility for their own security. This drew outrage from parts of the European media, whose knee-jerk instinct is to demand state intervention for every problem. But Babiš is right: defense contractors are not public utilities. They are private, profit-generating corporations that benefit from wartime demand and government spending. They are independent operators choosing to do business in a high-risk environment.

In Europe, these companies currently enjoy massive profit margins driven by the Ukraine conflict and rushed rearmament programs. But they want to keep all the wartime upside while passing the wartime responsibility onto the taxpayer.

The American Contrast

The implicit argument from companies is “We are critical to national security; therefore, the government must protect our property.” But that’s not how the American defense industry operates.

In the United States, whatever other flaws the military-industrial complex might have, major contractors like Lockheed Martin or Raytheon do not expect the local police or federal troops to guard their perimeter fences. They know that if their assets are critical, protection is a cost of doing business. They pay for layered physical security and armed guards, aggressive counterintelligence measures, and hardened cyber defense systems.

The American model understands a basic capitalist principle: If you own the asset, you own the risk. Government support is a supplement, not the provider. Europe, however, is still infected by a socialist mindset where private defense firms expect public protection to scale up automatically with their strategic importance.

No More Excuses

European bureaucrats love to invoke “gray zone warfare” to excuse their own incompetence, treating it like bad weather they can’t control. But the gray zone is the permanent reality. If your company is churning out military hardware for an active war, making massive profits on NATO-aligned supply chains, and publicly parading as a military asset, you are a target. Period.

When a facility like LPP’s burns, the right question isn’t, “Why didn’t the government stop this?” The question is, “Why didn’t this highly profitable company lock its own doors against a known threat? Especially when it was announcing all over the internet its deep strike technology.”

The Bottom Line: Stop Privatizing Profits and Socializing Risk

Here is the uncomfortable truth that Europe’s political class refuses to admit: Defense firms are gorging on surging procurement budgets and accelerated contracts, yet they still are operating with a peacetime, welfare-state mentality.

This is unsustainable. If profit margins are soaring because of geopolitical risk, then corporate security budgets must rise right alongside them. Allowing these companies to effectively privatize their wartime gains while socializing their security risks is a scam on the taxpayer.

The Czech prime minister’s demand for corporate responsibility is the only sane path forward. If European defense companies want to operate in a wartime economy, they need to assume they are targets, recognize that attacks are inevitable, and pay for their own security. Anything less is strategic denial. And denial is exactly what our adversaries are banking on.