HARRIETT BALDWIN (United Kingdom) - GENERAL REPORT
22 November 2024
The defence industry long functioned as a critical engine of technological innovation and often “spun off” technologies it developed into the commercial realm. Today the reverse is increasingly the case. More and more, militaries depend on technologies developed initially for commercial markets and then spun into the defence sector. Commercially developed emerging technologies hold enormous potential for armed forces even when not originally developed for them. These technologies not only bolster the lethality of defence platforms but can also increase the efficiency of defence spending. When the private sector initially funds technology development for commercial markets, it covers a significant part of the initial development costs. Scale economies from commercial sales also drive down unit costs. Those countries that develop, commercialise and integrate these technologies into products national militaries need stand to derive compelling economic and strategic advantages.
China possesses considerable economic and technological capacities that have generated mounting concern. Beijing has a demonstrated ability to leverage its commercial power and technological prowess to achieve its strategic objectives. Reducing its reliance on Western technology represents one of Beijing’s most fundamental ambitions. Beijing, however, confronts considerable barriers to achieving its goals, and Western capacities to compete with China on the technology front remain considerable. China seeks shortcuts and uses espionage and intellectual property theft as well as massive investment programs to keep pace with the West. Allied governments and partners have had to redouble efforts to restrict Chinese access to a range of the most militarily sensitive technologies without relying on blanket protectionism. For its part, Russia is currently engaged in widespread export control evasion and sanctions circumvention to acquire restricted Western technologies needed to conduct its war on Ukraine and develop its energy sector. China is abetting this effort and preventing this requires a united international effort.
In addition to dedicating sufficient funding to research and development and exploring ways for further strengthening defence trade among NATO Allies by eliminating existing obstacles, Allies and partners need to impose tighter export controls, generate more funding to underwrite sanctions enforcement, enhance counter espionage efforts, and, in some cases, impose secondary sanctions to maintain strategic technology-capability advantages over competitor nations. Allies are now working both to strengthen technology export controls and address a range of critical supply chain vulnerabilities that leave members vulnerable to economic coercion. But they also need to maintain their technological lead. NATO’s DIANA program and its EUR 1 billion innovation fund demonstrates that the Alliance views technology innovation as fundamental to security and requires a collective supplement to national technological development programmes. Artificial intelligence will become a critical agent for speeding the pace of technological advance, and this is precisely why NATO allies must sustain coherent and well-funded innovation programs in partnership with the private sector and universities to put all allies into a better position to exploit the commercial and strategic advantages technology confers.
