While NATO allies strive to bolster their respective defense industrial bases, countries such as China and Russia are significantly outproducing them, with increased arms cooperation with Iran and North Korea adding urgency to the task. NATO allies must prioritize strengthening their defense industrial base, integrating allies and partners into a cohesive transatlantic ecosystem that sharpens their edge in innovation, enhances deterrence, and delivers capabilities directly to the hands of allied warfighters.
In light of this, the Atlantic Council, in partnership with the Ministry of Defense of the Netherlands, SpaceNed, and the Netherlands Industries for Defence and Security, convened a two-day conference at the Embassy of the Kingdom of the Netherlands, bringing more than one hundred defense industry leaders together with US and Dutch government officials, leading experts, and other key stakeholders to discuss the importance of accelerating transatlantic defense innovation in an era of strategic competition. As Vice Admiral Jan Willem Hartman, national armaments director of the Ministry of Defense of the Kingdom of the Netherlands, aptly stated during the conference, “If we fight together, we should innovate and produce together.” Many conversations during this conference delved into what the path forward should be for allied cooperation. Here are some of the important takeaways.
Strong: Adopting a strategy of deterrence through production
A big theme throughout the conference centered on the need for allies and partners to boost their defense industrial production by prioritizing both resilient supply chains and shifting toward a mass-first mindset, which means focusing on rapidly producing large quantities of essential military equipment to sustain prolonged operations, emphasizing quantity over high-tech features. Both priorities will require significant allied buy-in to produce at the same speed and scale as adversaries.
- Make ally-shoring a reality: Resilient supply chains are a prerequisite to establishing deterrence through production. To this end, the Alliance should prioritize ally-shoring critical military components and other dual-use technologies, such as rare earth materials, which are critical for the production of advanced semiconductors, and military subcomponents such as nitrocellulose, which is used to make ammunition. NATO allies and partners should aim to bake in redundancy across critical supply chains to ensure that defense production and logistics will not be easily disrupted and can be replicated at both speed and scale.
- Start building mass today: From ammunition to attritable systems, such as unmanned vehicles, the Alliance must invest in rapidly scaling up production of these critical capabilities to ensure the warfighters are equipped with the necessary capabilities to fight a war of attrition. One such way to achieve mass is to pool resources to jointly procure needed capabilities, like the European Union’s Act in Support of Ammunition Production program. Greater emphasis on coproduction and co-assembly will equip the Alliance with the necessary capabilities to deter its adversaries.
Smart: The battlefields of tomorrow will be won in the laboratory
Conversations over both days of the conference laid bare the importance of devising a strategy that leverages the Alliance’s innovative edge, aiming to make NATO’s forces not only stronger but also smarter. Alles need to lead in the innovation race across emerging domains such as cyber and space, while seamlessly integrating new technologies into military capabilities.
- Look to the private sector for technology-driven solutions: Allies and partners must capture innovative solutions across the Alliance, particularly within the commercial sector. Emerging domains, such as cyber and space, will play an outsized role in future battlespaces—and technologies such as artificial intelligence and quantum offer untold opportunities and challenges. However, the bulk of research in these spaces takes place at the commercial level—requiring allies and partners to turn toward dual-use capabilities and to partner with commercial firms. Allies and partners must look for future paths toward cooperation on these technologies, particularly in artificial intelligence and quantum, as advancements in these areas will likely play an outsized role in the future battlespace.
- Win the software advantage: Equipment is only as durable as the systems on which it operates. Hardware systems are complex, take longer to build, involve more bureaucracy, and depend on discrete supply chains. In contrast, software offers rapid adaptability and enhanced opportunities for collaboration. Software iterations are faster, more innovative, and modular. Investing heavily in advancing software advantages will improve precision-strike capabilities and increase system autonomy to counter jamming activities and Chinese space advantages.
- Integrate new technologies into military capabilities: Procurement and acquisition processes at the national level are often too slow to keep pace with the speed of technological innovation. To keep up, process innovation must accompany technological advancement, enabling defense systems to evolve as swiftly as new technologies emerge.
- Protect strides in technological advancement: Cooperative technological innovation, particularly research and development and technological integration taking place at a multistate level, requires enhanced measures of economic security. Allies and partners must adopt similar approaches to export controls and licensing requirements to ensure that technologies do not fall into the hands of malign actors. For example, the Netherlands recently expanded export controls on ASML chipmaking equipment to bolster its national security, providing a blueprint for other allies to do the same. Clearing hurdles to transatlantic cooperation will require tighter economic security measures across the Alliance.
Together: Industrial synergies give NATO an edge in an era of strategic competition
The largest takeaway from the conference was the need for NATO allies and partners to make use of both the US and European defense industrial bases to ensure that the Alliance is fit for purpose. NATO must prioritize deeper industrial cooperation to deliver military capabilities to warfighters at the speed and scale required for the battlefields of tomorrow.
- Strengthen collective efforts: Significant economic and defense-related barriers hinder a truly transatlantic approach to defense industrial cooperation, and policymakers should address the drawbacks of overly restrictive policies that constrain innovation with close allies and partners. The rollback of some additional restrictions of the International Traffic in Arms Regulations for AUKUS partners (Australia, United Kingdom, and the United States) presents a promising path toward greater transatlantic cooperation. However, the road to fully realizing this potential remains long and challenging, with AUKUS partners still working through significant policy hurdles and potential new roadblocks. In the meantime, officials in capitals across the Alliance should seek current collaborative opportunities. Streamlining regulatory requirements and expanding co-assembly efforts could further contribute to allied capabilities, enhancing NATO’s interoperability and collective defense.
- Increase transatlantic awareness of policies and programs: Defense production and innovation breakthroughs are too often isolated on either side of the Atlantic. The Alliance must do a better job of communicating the advancement of new technologies and opportunities to partner in production. For example, programs like the Foreign Comparative Testing (FCT) initiative enable the US Department of Defense to test and field high-tech allied products. This process identifies advanced technologies that meet specific operational needs without requiring investment in additional research and development. The program benefits both the United States military and allied industries by streamlining technology integration. Allies and partners should raise mutual awareness of each other’s policies and programs designed to harness the collective strength of the Alliance’s technology sector.
- Give industry a seat at the table early: Public-private partnerships will play an essential role in this framework, ensuring that industry expertise and innovation inform NATO’s strategic planning from the outset. Allies must integrate industry partners earlier in the defense planning process, allowing NATO to leverage the agility of the commercial sector. Early industry involvement provides a crucial advantage in keeping pace with rapid innovations in critical areas such as cyber and space.
As the Alliance seeks to contend with mounting threats, conversations like these are vital to the long-term health of transatlantic defense cooperation, which is crucial for producing at speed and scale. Reinforcing the credibility of allied deterrence hinges on robust defense industrial cooperation that not only enhances collective capabilities but also amplifies the innovation edge of all allies. To match its adversaries, the Alliance should leverage existing initiatives and explore cooperative solutions to address the pressing demands of defense production and innovation.
Kristen Taylor is a program assistant with the Transatlantic Security Initiative at the Atlantic Council’s Scowcroft Center for Strategy and Security.
Luka Ignac is an assistant director for the Transatlantic Security Initiative.
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Image: Former Dutch Prime Minister Mark Rutte speaks next to Jens Stoltenberg (not pictured) on the day he succeeds Stoltenberg as NATO Secretary General, at the Alliance headquarters in Brussels, Belgium October 1, 2024. REUTERS/Yves Herman