Sovereign export decisions are perfectly legitimate exercises of national policy, and other partners’ frameworks may change in either direction over time. The lesson is structural, and it is about how Malaysia organises its future defence purchases.

Earlier in May, Malaysia received word that a Norwegian-supplied missile contract – six littoral combat ships’ worth of Naval Strike Missiles, plus launchers for two of our Lekiu – class frigates, under an agreement signed in 2018 – would not be delivered.

Oslo had tightened its national export control regime, limiting exports of its most sensitive defence technologies to allies and closest partners.

Norway invoked force majeure, the contractual mechanism that releases both parties from obligation under extraordinary circumstances. The Malaysian government, which had already paid more than 95% of the contract’s value, is now pursuing compensation of around US$251 million for the direct and indirect losses.

The situation has been described, accurately, as unfortunate. But sit with it for a moment and it becomes more than that. It is the clearest signal we have had in some time that defence procurement in the second half of this decade is no longer the commercial transaction it once was. Treating it as one will keep costing us. Treating it as a sovereignty transaction will not.

Until recently, defence procurement functioned much like industrial procurement with classified specifications attached. A government identified a capability gap, opened a tender, evaluated bids on technical and commercial criteria, awarded a contract, paid in tranches, took delivery and integrated the asset. The risks were familiar: delivery delays, integration issues, cost overruns and end – user training gaps.

The risk that the supplier government would withdraw the export license after most of the money had been paid sat far down the list, behind dozens of more probable concerns.

That risk is now near the top. Three things have moved it there.

The first is the rapid evolution of national export control regimes. Across Europe, North America and parts of the Indo – Pacific, governments are tightening the rules on what their domestic defence industries can sell, to whom and under what conditions.

These are sovereign decisions made for sovereign reasons. They reflect each country’s reading of its own security environment, its alliance obligations and the strategic value it places on its indigenous technology.

They are not aimed at any particular buyer. But the practical effect, from the buyer’s perspective, is the same: a contract signed in 2018 can be reviewed under rules adopted in 2026, and the answer can change.

The second is the redefinition of what counts as “sensitive technology”. A precision strike system that was an unremarkable export a decade ago may now sit within a narrower category of items that a supplier government wishes to keep among its closest circle. This is not a judgment about the buyer. It is a judgment about the technology and the moment.

The third, and this is the structural shift, is that the supplier – government decision has become as material to the procurement outcome as the supplier-company decision. The company can want to deliver. The contract can be valid. The buyer can have paid. And the export license can still be revoked.

In a defence context, the license is the deal. Everything else, frankly, is paperwork.

This brings us to Malaysia’s own G2G procurement framework, the policy adopted in August 2025 that channels major defence acquisitions through state-to-state agreements rather than direct commercial contracts.

When the G2G framework was first announced, the most common interpretation was that it was about efficiency, accountability and reducing the role of intermediaries. Those are real benefits. But the deeper benefit, the one that becomes obvious only after a story like the one we have just lived through, is this: a G2G contract carries a sovereign – to – sovereign commitment behind the commercial transaction.

The supplier government has explicitly endorsed the export. The buyer government has explicitly accepted the technology. The transaction is, by design, anchored at the political level, making it considerably less exposed to later regulatory adjustments within the supplier country.

This does not mean a G2G contract cannot be unwound. Sovereign decisions remain sovereign, and that is as it should be. But the political cost of unwinding a G2G commitment is substantially higher than the political cost of revoking a commercial export license because the former is, at its core, a question of national credibility between two governments rather than a regulatory compliance issue within one of them.

So what is the lesson?

Not that we should turn inward, or that any particular supplier country is now off – limits. Sovereign export decisions are perfectly legitimate exercises of national policy, and other partners’ frameworks may change in either direction over time. The lesson is structural, and it is about how we organize our future defence purchases.

Three things follow from it.

First, every major defence acquisition from this point should be routed through the G2G framework wherever the option exists. The architecture is there. Use it.

Second, our procurement strategy should diversify on a supplier – government basis, not merely a supplier-company basis, with multiple sovereign endorsements behind the major capabilities we field. That way, a regulatory change in one jurisdiction does not strand an entire program.

Third, the bilateral relationships we have already been building with partner countries whose frameworks have, to date, remained predictable and accessible – across several European partners and the wider Indo – Pacific – deserve greater attention, stronger institutionalization and more visible political backing.

The cost of this lesson, financially, is recoverable. The compensation process will run its course through the proper channels.

The substantive cost lies in the timeline. A navy program already managing earlier delays must now absorb another, and in the wider lesson the region has just been asked to learn at our expense.

But here is the silver lining, and it is a real one.

We learned this lesson before signing several other major contracts on commercial-only terms. We learned it while our G2G framework is still young enough to absorb the implications. And we learned it at a moment – defined by the Cebu summit and the wider EU – ASEAN reset – when the architecture for new partner relationships is actively being built.

Sometimes you pay tuition before you appreciate what the lesson was actually about.

This was that kind of moment.

Ts. Dr. Manju Appathurai holds dual PhDs in Artificial Intelligence (2026) and Crisis Economics, is a licensed clinical psychologist and a Licensed Technologist (Ts.), and is the founding principal at Mahat Advisory and a strategic adviser to the Dutch Coalition for Defence and Security (Malaysia).

• TwentyTwo13