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Launched in the early 1990s in the United Kingdom, Public-Private Partnerships (PPPs) induced radical changes in both the public-private boundaries and the production of state-provided services. Such ‘budgetary revolution’ impacted the biggest state spender in capital expenditures, that is, the Ministry of Defence. Today many MoDs are expected to leverage on the British experience and develop their own approach of PPPs to overcome both the ineffectiveness of their defence spending and today’s stalemate in public budgets. This chapter leverages on British experiences over the past two decades to analyse the benefits and limits of PPPs in the realm of defence. Does such contractual arrangement fit defence-related investment? This chapter explores the on-going redefinition of public and private realms in military matters and it puts into relief the key dimensions of PPPs in terms of contractual arrangement.

Since the end of the cold war, the arms industry has been experiencing a deep structural transformation. The logical consequence of such short-term and structural evolutions is that companies in the arms industry are looking to access markets beyond national borders. Such transformation becomes a policy concern, since the core regulatory framework has been built on a national basis and there are very limited structural and regulatory means for dealing with an international, or even a transnational, industry in such a sensitive activity as weapons development and production. This chapter wonders whether it is possible to qualify such transformation of the arms industry as an internationalisation process and whether it can be compared to the globalisation of commercial activities. It compares what has happened and continues to happen in the arms industry with the globalisation experienced by commercial industries.

The European defence industry has changed considerably since the late 1980s. The end of the Cold War required the industry to undertake major restructuring, especially when governments, expecting to reap a “peace dividend,” drastically cut procurement spending. In the early 2000s this restructuring was also influenced by the new context of international security, even though defence budgets have started to increase again since 1998. The European defence industry could not expect to escape from a radical transformation, beyond the specific crisis engendered by the end of the Cold War.

There are two main doctrines about the relation between war and national economy. The first considered that economy based on the market is a cause of war. The second one established that market and economic knowledge are essential for the realization of peace.