The resurgence of global tensions has driven the EU and its member states to modernize their militaries and enhance domestic industrial capabilities. Key factors influencing this shift include the rise of China, the U.S. pivot to the Indo-Pacific, threats from Russia, and ongoing conflicts in the Middle East. These geopolitical dynamics highlight the urgent need for improved operational readiness and military investment. Consequently, the EU must reduce its dependency on imports in critical sectors like energy, healthcare, and military technologies.
In this context, the Dutch Ministry of Economic Affairs commissioned research by HCSS and PwC to assess supply chain vulnerabilities for the Air Defence & Command Frigate (Luchtverdedigings- en Commandofregat – LCF). This study by Irina Patrahau and Benedetta Girardi focuses on identifying geopolitical vulnerabilities related to critical raw materials and offers policy recommendations to enhance resilience against disruptions.
The LCF was chosen due to the Dutch Defence Industrial Strategy’s emphasis on maritime capabilities and the high percentage of Dutch-designed systems within the platform. The research indicates that the Dutch MoD maintains a solid overview of its tier-1 suppliers, which are all based in EU and NATO countries, presenting a low-risk profile. Although security cooperation with these suppliers is strong, monitoring geopolitical changes—particularly protectionist policies, U.S. policy shifts and tensions with Russia—is essential to mitigate potential supply disruptions.
However, the MoD has limited information regarding supply chains beyond tier-1 suppliers. Industry interviews revealed gaps in the understanding of raw material dependencies, with discussions about critical raw materials (CRM) in the defence sector lagging behind those in high-tech, automotive and energy sectors. Based on open-source data, the analysis identified 29 raw materials used in the LCF. Many of these materials face risks related to supply concentration, unstable sourcing countries, and low recyclability, raising concerns about their long-term availability and price stability.
Semiconductors, vital for defence applications like communication and radar systems, are particularly susceptible to disruptions due to reliance on geopolitically unstable regions for raw materials. Interruptions in the semiconductor supply chain could have broad implications for the Dutch and European military resilience.
To address these vulnerabilities, 5 high-level recommendations have been proposed for the Dutch defence sector:
- Enhance awareness and understanding: Increase transparency regarding defence supply chains.
- Integrate the defence industry in CRM activities: Foster collaboration between the MoD and the defence industry to align their needs with supply chain resilience policies.
- Improve response to supply chain disruptions: Develop a roadmap to bolster the LCF’s supply chain resilience, focusing on both immediate and long-term strategies, including circular manufacturing.
- Use procurement levers for resilience: Utilize the defence sector’s unique position to encourage industry efforts towards enhancing supply chain resilience through tailored procurement procedures.
- Expand the defence industrial base: Strengthen coordination at national and international levels to build a robust defence base, collaborating with EU and NATO partners to optimize inventories and counteract national protectionism.
These recommendations aim to enhance the resilience of Dutch military supply chains, equipping the Netherlands to effectively address contemporary geopolitical challenges while maintaining a strong defence posture.
- Authors: Irina Patrahau and Benedetta Girardi, in collaboration with PwC
- Contributors: Michel Rademaker, Julia Döll, Bart Vossebelt
- Reviewed by Peter Handley
This HCSS report was commissioned by the Netherlands Ministry of Economic Affairs. The conclusions and recommendations presented in this study are the result of independent research. Responsibility for the content rests with the authors and the authors alone.
*The price graphs in this report have been updated in April 2025
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