Hanwha Ocean (042660.KS) suffered defeat in the bidding contest for Canada's patrol submarine project, worth up to 60 trillion won. It appears to have been edged out by Germany's advantage of being a NATO ally with Canada. While technically it was not inferior to Germany's Thyssenkrupp Marine Systems (TKMS), which was selected as the preferred negotiating partner, analysts say strategic considerations such as interoperability with NATO took priority.
In this bidding contest, the Korean government lent its support by proposing incentives worth billions of dollars through the so-called "Project Beaver," which included hydrogen freight truck production and related infrastructure development. It is regrettable that the loss came despite such an all-out effort by both the public and private sectors.
Although it failed to win the submarine contract, it holds great significance that K-defense demonstrated its competitiveness in the global defense market. The Korean consortium formed by Hanwha Ocean and HD Hyundai Heavy Industries reached the final round of candidates alongside TKMS, after competing against world-class submarine builders such as France's Naval Group, Spain's Navantia, and Sweden's Saab. Simply being able to stand shoulder to shoulder with European firms, 34 years after the domestic construction of the Chang Bogo-class submarine in 1992, already confirms the elevated standing of K-defense. President Lee Jae-myung also said of the result, "I believe we have once again clearly shown our potential to the international community."
The advance toward the leap of K-defense must continue in the future. It is our hope that President Lee's tour to attend the NATO summit, which began Sunday, will become a meaningful turning point for penetrating the European Union (EU) defense market. To this end, President Lee and the diplomatic team should pursue defense diplomacy more aggressively during this tour, targeting NATO member states, which account for 55% of the world's total defense spending. In particular, it is worth noting that although the EU launched SAFE (Security Action for Europe) last year, strengthening intra-regional defense-first policies, expanding cooperation with Korea will likely be urgently needed given the need to quickly fill the void left by the United States. The government should expand NATO standard sharing and joint development cooperation to bring about K-defense's entry into the NATO supply chain, while defense firms should enhance their technological competitiveness in advanced weapons fields. Now is the time to accelerate the leap of K-defense through strategic defense diplomacy that mobilizes the full capabilities of both the public and private sectors.
