Keynote address

So good morning,

Deputy Secretary Norquist,

Under Secretary Lord,

General Lanata, Generals, Admirals,

Ladies and gentlemen, your Excellencies,

Welcome to all of you, it’s great to see you all and it’s great to be back in Washington and to meet people who are so important for our Alliance.

Last time I was in Washington was in April to celebrate the 70th anniversary of our Alliance and this time it’s great to be back and meet with all of you. And also meet with the representatives of the industry which is so important for our Alliance.

Over the last seven decades, NATO Allies have stood together, defended each other and created the conditions for unprecedented prosperity on both sides of the Atlantic.

We have done this by investing in the capabilities needed to ensure an effective deterrence and defence.

Our security – our freedom – depends on having the sharpest minds, the best equipment and the latest technology.

And much of that comes from you, the men and women of the defence industry. Our cooperation with industry has been at the forefront of NATO’s adaptation through the decades. Without the private sector, without the industry, NATO would not have become the strongest military alliance in the world. So the first thing I want to say… is thank you.

The defence industry is important for NATO. But NATO is also important for the defence industry. NATO Allies are your largest customers, the bulk of your market. Procurement decisions are mostly made by national governments. But NATO plays a decisive role in three particular ways.

First, NATO sets guidelines for how much Allies spend on defence.

Second, NATO determines on what much of this money is spent.

And third, NATO often facilitates how this money is spent.

So first, how much.

After the end of the Cold War Allies reduced defence spending. But in the last few years the trend is reversed. All Allies have stopped the cuts. All Allies have increased defence spending. More Allies are meeting the guideline of spending 2% of GDP on defence. And the majority of Allies now have plans to do so by 2024.

This is a major achievement. Defence spending has now increased across European Allies and Canada for five consecutive years. By the end of next year, these Allies will have added an additional one hundred billion dollars to their defence budgets. That’s billions of dollars for new equipment. New investment in the latest technologies. And new research and development to make sure we remain at the cutting edge.

This in return means new opportunities for our defence industries. Europe is already the United States’ second largest export market for defence. And it’s growing. So we have established an upward trend. But we must keep up the momentum.

Which brings me to my second point.

NATO helps to determine how those extra billions of dollars will be spent. We are not only committed to spend more. But also about spending better.

Allies agreed to invest at least 20% of their budgets in research and development, and new equipment. More than half are already meeting this commitment. And more Allies are doing so every year. This is a powerful driver for the Alliance to continue to invest in new equipment and new technologies. And it is essential to do so.

Through the NATO Defence Planning Process, Allies agree on which capabilities to invest in. This enables different Allies to provide the required forces and capabilities in the most effective and efficient way. Including new, disruptive technologies such as Artificial Intelligence, Machine Learning and Autonomous Systems.

These present incredible opportunities for our security.

But these technologies also pose risks to our ability to work together, to our interoperability. That is why NATO requires common standards across the Alliance. And that is why we hold regular exercises to test our ability to work together.

In last year’s Trident Juncture in Norway, we successfully tested new technologies in the field, such as micro-drones and 3D printing. Earlier this month, NATO conducted our  largest maritime electronic warfare exercise.  Testing how allied navies can defend themselves against anti-ship, cruise and hypersonic missiles using state-of-the-art electronic defences. And another recent NATO exercise tested new ways of generating and distributing energy in military operations. Helping our military to become more self-efficient, more effective, and to reduce our impact on the environment.

More than ever before we see that the latest and most advanced technologies come from countries that are outside of the NATO Alliance.

Notably, from China. China is now the world’s second largest economy and the second largest spender on defence. It is modernizing its military. We all saw the advanced intercontinental nuclear missiles it paraded through the streets of Beijing recently. As well as new supersonic cruise missile, an assortment of new drones, anti-ship missiles and hypersonic gliders.  

But China is also becoming a global leader in the development of other disruptive technologies. From facial recognition to quantum computing. And it is able to gather vast amounts of data not only from China, but from around the world, including from NATO Allied countries.

Technology is changing warfare, but also our societies. Recent developments in 5G technology are a pertinent example. The ‘Internet-of-Things’, connecting the physical world to the internet, depends on 5G. This will impact every aspect of our societies. Transportation, energy, food, health, manufacturing. It provides enormous opportunities. But it can also make us more vulnerable. That is why ensuring the security of our 5G infrastructure is so crucial.

Last month, at the NATO Defence Ministerial meeting, we agreed to update our baseline requirements for civilian telecommunications, including 5G. This is not about a specific country or a specific company. But it does mean that all Allies will have to take into account the need for thorough risk and vulnerability assessments. Identifying and countering cyber threats. And the consequences of foreign ownership, control or direct investment. To increase the resilience of our supply chains. And the resilience of our nations and our Alliance.

The third reason why NATO is important for the defence industry is by facilitating how defence budgets are spent. Our world is changing. All of us need to work harder and faster to make sure we exploit new technologies. And deliver programmes on time and on budget.

NATO brings Allies together to invest in joint projects. Some projects are funded by all 29 Allies working together. Since 2016, NATO has funded investments worth over 5 billion dollars. Everything from facilities for prepositioned equipment to satellite time for more secure communications are funded over NATO common funded budgets.  NATO funds research projects in areas such as Artificial Intelligence, Big Data and cryptology. And Allied Command Transformation, our home here in the United States and the co-organiser of this event today, works with companies to improve decision-making for defence planning. But there are also collaborative projects by smaller groups of Allies. Not all the 29, but the smaller groups. Combining their resources to maximize their investment potential.

The fleet of NATO AWACS aircraft has been our eyes in the sky, supporting our airborne operations for decades. From patrolling American skies after 9/11 to our operations in Afghanistan and as part of the Global Coalition against ISIS. We are planning for its replacement in 2035. Which will include many of the technologies we are talking about today, such as autonomous systems, Artificial Intelligence and Big Data.

Other examples of how Allies invest together include Alliance Ground Surveillance, where 15 Allies have bought 5 Global Hawk drones. Which will soon be flying from their base in Sigonella, Italy. And Strategic Airlift Capability, where 12 countries have pooled their resources to share access to C-17 flights. None of those nations could afford this on their own.

At practically every Defence Ministers’ meeting more Allies are signing up to work together on new multinational programmes. Only this year Ministers signed joint agreements: to purchase a fleet of aircraft for air-to-air refueling, the first of which will come into service in May. To purchase and store precision guided munition ready for combat. And to develop unmanned maritime systems that will be able to do everything from mine clearance to tracking submarines.

So that’s actually one of the great things that happens at all the Defence Ministerials meetings, is that we bring together Allies and they sign agreements on how to develop different projects together and that helps to make us all stronger and it makes NATO an important platform for making Allies able to join forces, also when it comes to development of new capabilities.

Some of these projects also involve the European Union. I welcome the European efforts on defence. They have the potential to increase defence spending, provide new capabilities and improve burden-sharing within the Alliance. But NATO and the EU need to complement each other. Nations shouldn’t have two sets of capability requirements. Forces and capabilities developed under PESCO, the EU’s mechanism to increase military cooperation among member states, must also be available for NATO. And we need the fullest possible involvement of non-EU NATO Allies.

This will be even more important after Brexit. When 80% of NATO defence spending will come from non-EU Allies. NATO remains vital for delivering transatlantic security.

So ladies and gentlemen,

This year we have been celebrating the 70^th anniversary of NATO. NATO is the strongest and most successful Alliance in history. Not least because of the close relationship we have with industry. Much of our success is based on having a technological edge over our potential adversaries. And it is you who have enabled us to maintain that edge. A thriving defence industry is more important than ever. To nurture innovation. And to help manufacture the capabilities NATO needs.

This is essential if we are to maintain a strong deterrence and defence. To protect our nations and our citizens. And preserve our prosperity.

The relationship between NATO, Allies and industry has grown and developed over the Alliance’s 70 years. And it will continue to grow in the decades to come. So once again, thank you for your support. Both now and in the future.

Thank you so much.