De redactie van NRC selecteert de beste artikelen uit The Economist voor een breder perspectief op internationale politiek en economie.
America’s new defence-tech industry should be a model for Europe.
Dit artikel komt uit The Economist
The world is rearming fast. Military spending has increased in real terms every year for the past decade. The leap in 2024 was the largest, in inflation-adjusted terms, since the cold war. European members of NATO, their bare armouries exposed by Russia’s invasion of Ukraine, will spend an additional €300bn ($353bn) per year by the end of the decade. China’s military spending grows each year by an amount equivalent to Taiwan’s entire annual defence budget, even as the rest of Asia scrambles to keep up. But it is arms, not budgets, that deter. And producing those arms requires the right sort of defence industry, tailored to the wars of the future.
The wars in Ukraine and Iran appear to hold different lessons. Ukraine has pioneered the use of low-cost drones, whose software is updated weekly, to stave off a much larger Russian army. Israel and America have used expensive F-35 jets, B-2 bombers, air-launched ballistic missiles and scores of refuelling tankers to attack Iran. In fact, they have much in common.
One message is that Western countries need more defence-manufacturing capacity. In just 40 days of war America used up half its stocks of high-end air-defence munitions. Another is that armed forces need to balance a few high-end systems and a much larger number of cheaper, more numerous and easily replaceable weapons. A third is that, regardless of whether a weapon is big or small, expensive or cheap, crewed or uncrewed, what increasingly matters is the software inside. The most effective weapons are those infused with the best algorithms, trained on the best data and updated most frequently.
All this explains why America’s defence industry is in the throes of dramatic change. Palantir, a data firm which builds the core of America’s and NATO’s command-and-control software, is now worth more than RTX (formerly Raytheon), the most valuable of the defence primes. Palantir, SpaceX and Anduril form a trio of „neo-primes”.
De redactie van NRC selecteert de beste artikelen uit The Economist voor een breder perspectief op internationale politiek en economie.
They behave like software-first firms competing with armsmakers who came late to the software revolution. To make weapons, the neo-primes have drawn from modern manufacturing methods, including those of the car industry. Though their ability to scale up is unproven, they are hungrier than the incumbents, and spend heavily on in-house R&D.
The neo-primes have shaken up the defence industry for the better, even as the Pentagon has descended into chaos. Pete Hegseth, America’s secretary of war as he styles himself, has carried out purges that have been the largest politically motivated mass sackings of top brass in modern American history. He appears to revel in war and violence rather than treating them with sobriety. Mercifully, though, he also has the right ideas about procurement, which should help America adapt to the new era of warfare.
In November last year, Mr Hegseth said the Pentagon would buy things faster, speeding up its Byzantine processes. He gave front-line commands a greater say in what gets bought. And he promised to draw more on commercial, rather than bespoke, technology. The changes should create the conditions in which upstarts can compete with the legacy firms to forge a more diverse and dynamic industry.
Alas, Europe is far behind. It has hardly any big new defence-tech companies. Small and innovative firms are stifled by a fragmented market, limited access to venture capital and low demand from governments. Nearly all of Germany’s €100bn special defence fund will go on traditional kit.
Last year Britain’s defence review said 10% of equipment spending should go to „novel” technologies. Astonishingly, some insiders argued this should include the F-35, a jet which first left production lines 20 years ago. Skycutter, a British drone company, recently won a big Pentagon contract, but the firm may have to leave Britain for want of orders there.
It need not be this way. If Europe rebalances its spending and reforms procurement, its firms might compete with America’s at a time when the NATO alliance is strained. The remarkable Ukrainian defence-tech ecosystem that has sprouted up since 2022 is a valuable asset. As America steps back from Ukraine, Europe should lean in.
Britain already works with Ukraine to develop interceptor drones. Germany also has a new drone agreement with it and this month Rheinmetall set up a joint venture with Destinus, a Dutch firm making long-range missiles at a fraction of the cost of other models. Ukraine has offered to share battlefield data to train artificial intelligence, vital for the next weapon systems. Much more of this is necessary if the arsenal of democracy is not to depend on a handful of American firms.
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