There is money to be made in the defense sector and many Portuguese companies have recognized this.
The defense sector generated revenues of about €2.1 billion ($2.4 billion) last year, according to José Neves of AED Cluster Portugal, an industry association that includes more than 160 Portuguese organizations working in aeronautics, space and defence.
“And the trend is upward,” he said.
Portugal is also actively purchasing equipment abroad to meet a NATO-agreed target of spending 5% of GDP on defence. Lisbon is buying frigates from Italy, tanks and new fighter aircraft from Germany. With the latter, the country is undecided as to whether these should come from the US or Europe.
In 2025, Portugal’s Defense Minister Nuno Mello questioned the purchase of US F-35 fighter jets from Lockheed Martin, a deal that was practically finalized at the time.
Mello expressed doubt about the US’s commitment to the NATO alliance under President Donald Trump and argued that European solutions also needed to be considered. The oldest of Portugal’s 28 F-16 fighters is now more than 30 years old, and a decision should be made soon.
This is where Swedish defense company Saab comes in. They want to sell their Gripen-E series – they describe it as “a new combat aircraft system” – to Portugal.
“The Gripen-E will be a truly European solution,” Daniel Boestad, vice president of the Gripen program at Saab, wrote in response to a DW inquiry. “The Gripen-E will strengthen Portuguese and European strategic defense capabilities through long-term industrial partnerships and technological sovereignty.”
Unlike the Americans, Saab wants to involve the Portuguese defense industry in the Gripen project. Portuguese aerospace company OGMA could manufacture parts of the aircraft, as it already does for Brazilian company Embraer.
In return, Portugal purchases military transport aircraft from Embraer. “In addition, we are investigating the possibility of further cooperation in the areas of production and MRO,” Boestad said; The acronym MRO stands for maintenance, repair and overhaul.
european cooperation
Sweden is also dependent on Portugal in other areas. A Portuguese company, Critical Software, is developing a flight simulator for the Gripen-E.
Joao Carreira, chief executive of Critical Software, said, “We are working with Saab because it is an interesting challenge and because we can identify with the project.” His company started in 1998 with only three employees and has since grown to an international company with nearly 5,000 employees.
Initially, the business produced software for warships of the Portuguese Navy. Now, Critical Software operates joint ventures with companies such as BMW and collaborates with German defense companies such as Diehl and Rhinemetall.
“We develop software for military satellites, drones and missile systems,” Carreira explained. “We work with Airbus, both their military and civilian divisions.”
defense group growing
Other Portuguese companies do work such as making drones or components for large international defense corporations.
“A lot has happened in the last five years,” Neves said. “We have become a serious player with about 20,000 jobs.”
He pointed out that companies like drone manufacturer Techever or Critical Software are reliable partners for the international defense sector.
Portugal is now involved in almost everything in the European defense sector, either as a supplier or – increasingly – as a manufacturer of finished products. “Portuguese drones and communications systems are also being used in Ukraine,” Neves said.
The Swedes at Saab agree. The flight simulator that Critical Software is developing is not finished yet. “Our goal is to develop an AI co-pilot for the Gripen-E,” Carreira said. “It is designed to support the pilot and will make the jet even better.”
Boestad said that “Saab is ready to support Portugal in replacing its aging fighter fleet,” even though the Portuguese Air Force wants the far more expensive American stealth fighter F-35.
Forced to buy American?
Whether Portugal can actually afford this purchase of Swedish jets has been questioned by Bruno Oliveira Martins of the Peace Research Institute Oslo, or PRIO.
Oliveira Martins argued, “Portugal’s uncritical stance toward the US use of US airbases in the Azores during the Iran–Iraq War shows that the Portuguese government has little autonomy and is determined to stand up to the US in military matters.”
To put it bluntly: tiny Portugal can hardly afford to upset its key partner, the United States, by purchasing non-American aircraft.
Oliveira Martins said, “However, one of the prerequisites for creating a future-oriented European defense industry, even today, is the purchase of equipment, which is not necessarily state-of-the-art, but still good enough.”
He said that for many defense operations it is not necessary to have the latest technology or buy the most advanced equipment.
This story was originally published in German.