Keynote address

Deputy Prime Minister Reynders, ladies and gentlemen. First of all I would like to say that I’m very pleased to be here tonight and to meet NATO Industry Forum and especially to be here together with Federica and Elzbieta because I think that we share this stage reflects the close cooperation between NATO and the European Union but also between NATO, the European Union and the defense industry both in Europe and in North America. And that’s exactly why forums like this are so important because this is a way to create a platform for politicians, for decision makers in NATO and the European Union to meet with the defense industry and to sit down together with you and to find out how we can work more closely together because we are totally dependent on you. The defense industry provides the equipment, the capabilities we need and you have actually provided us with the best equipment in the world and the most advanced capabilities in the world for decades. But we have to make sure that it continues to be like that in a more dangerous and more challenging security environment. And that’s the reason why I welcome very much that we this year have the highest level of participation from industry ever at this NATO Industry Forum reflecting the increased interest both from NATO and from the industry in how we can enhance our cooperation. And as you know NATO’s main core task is to protect close to one billion citizens living in Europe and North America and I think that on a day like this when the United States has elected a new President that provides me with the opportunity to congratulate Donald Trump as the new President of the United States and I look forward to work together with President-elect Trump in continuing to adapt NATO to a more challenging security environment. And a strong NATO is important for Europe but it’s also important for North America and United States because we have to remember that two World Wars have taught us that peace and stability in Europe is important for Europe that’s obvious, but it’s also important for North America. And we have to remember that the only time we have invoked Article 5, our collective defense clause, was after an attack on the United States and thousands of soldiers from Europe and Canada have participated, contributed to the NATO presence there and more than a thousand have been killed in an operation that was triggered by an attack on the United States. So I think this is a day just to underline the importance of NATO, of strong institutions providing the platform for strong Trans-Atlantic cooperation. Then of course NATO can only be able to continue to provide deterrence, provide collective defense if we continue to have a strong defense industry and I know that this industry is full of people with a lot of skills, competence, ingenuity and you know a lot about what should I say technical measures which is far beyond what I will ever be able to understand. But that’s not my task; my task is not to understand all the technicalities of the defense industry. My task is to find out how can I as Secretary General and NATO as a military political alliance provide the best possible framework for the industry to develop and to deliver the capabilities we need. And there are many ways to do that but our outline and focus on three areas where NATO plays a key role which is of great importance for the defense industry. And they are in different ways related to defense spending because NATO is decisive when it comes to how much allies spend on defense and on what allies spend and how they spend. And all of this is important for the defense industry. So let me start by defense spending, how much we spend. In 2014 we made a decision in ways to stop the cuts to gradually increase and to move towards spending 2 percent of GDP on defense. And I’m actually very proud to be able to tell you that NATO is delivering, NATO allies are delivering because just a few months after we made that pledge in 2015 we were able for the first time in many years to have no cuts in defense spending across Europe and Canada combined. It was not a big increase in 2015 but it’s a big difference between going down and going up and in 2015 we started to go up across Europe and Canada. Then in 2016 the latest estimates indicates 3 percent real increase and that’s something. So we have even stronger increase in 2016. Then of course we have a long way to go and the picture is still very mixed, some allies are lagging really behind but some allies are really stepping up so in total we are moving in the right direction. I’m not underestimating the challenges and I’m not underestimating the efforts we have to put in place to be able to reach a 2 percent target but we didn’t promise to reach the 2 percent target immediately. We promised to stop the cuts, to start to increase and to move towards a 2 percent within the decade, and at least we have started to do the first steps in that process. I can promise you that I as Secretary General will in all my meetings with leaders, Ministers, Prime Ministers and also Ministers of Finance continue to focus on the importance of increased defense spending in Europe and in Canada. So all nations reached a 2 percent target, some European allies already do that but many are what should I say still have a long way to go. We will also report on progress or lack of progress on defense spending on the defense investment pledge on our Ministerial meetings and defense spending will be an important issue at the NATO Summit next year where we will also welcome the new elected President of the United States here to Brussels. The reason why I am so focused on this is that it matters. If we are able to what should I say, reach the 2 percent target for all European allies and Canada that will provide 100 billion more U.S. dollars for defense and a 100 billion more U.S. dollars for defense is roughly the same amount for defense spending as France and U.K. combined spend on defense. So that would really add something to the total amount of defense spending. And I would also very much welcome the strong message from the European Union and from European leaders on the need to strengthen European defense also by increasing defense spending. I’m not underestimating the challenges and the difficulties but I’m only telling you that we have started to move and I will promise to continue to be as focused as I’ve been since I became Secretary General in October 2014 on the issue of defense spending.

Then NATO also plays a key role not only when it comes to the total amount of money we spend on defense but we also play a key role when it comes to on what we spend. And NATO plays a key role in different ways when it comes to on what we spend. We do that, that’s okay because I’m looking for another page, we do that page 6 oh that’s a good page, I do that because we have as part of the defense investment pledge decided not only to spend more but also to make sure that 20 percent of total defense spending goes to investments, equipment and research and development. Can allies deliver?  But we have a long way to go and of course the more we can invest in research and development and on equipment the better for industry because then you have the market and then you have also more investments in innovation. But of course NATO is also important when it comes to on what we spend through our defense planning process and we are now in the midst of a new defense planning cycle. We are sitting down with all the 28 allies and identifying what do we need, what kind of capabilities, what kind of equipment does NATO need and this defense planning process is quite a bureaucratic process but it is extremely important. It’s perhaps one of the most important things NATO does and that is to coordinate allies so we really work together and we fill the gaps when it comes to different kinds of defense capabilities and to make sure both that we have enough capabilities but also the right kind of capabilities and some kind of divisional responsibilities between the different NATO allies. When we have finished this defense planning cycle our task, my task, the task of the governments will be to make sure that we implement and that we follow up the guidelines and the defense planning conclusions. This is about for instance a guidance related to capabilities like joint intelligence, surveillance and reconnaissance, precision guided munition and strategic airlift so of course we all understand that it is important that we not only have defense planning but we also as I say, implement and follow the plans we have agreed.

Then also NATO influence on what allies spend and what NATO spends on by our common funded projects; things like AWACS but also the successor the new Alliance Future Surveillance and Control System will be a big investment, big project and we have started to work on that project which shall than succeed the AWACS plane. I actually in a meeting saw that the plan is to have the new system in place by 2035 and for me as a politician that’s far into the future; it’s after at least the next election. But for people dealing with defense investments 2035 is just around the corner. So, it’s the way things work in this industry. Then we also of course will work on projects like missile defense and alliance ground surveillance and other common funded and planned and implemented projects.

The third area where NATO plays a key role in creating the framework for a strong defense industry in Europe and in United States is when it comes to how we spend. And both Federica and Elzbieta have already addressed that issue because there’s a gap when it comes to defense spending between Europe and United States. But as Federica said there’s also output gap meaning that we don’t get so much out of what we invest being it dollars, no we don’t invest dollars in Europe but it is perhaps not yet, euros, pounds and kroner. We don’t get as much out of that as we should because the the defense market, the defense investments are too fragmented especially in Europe. So spending together is a way to spend smarter and we have to both spend more but we have to also make sure that we spend in a better way. And again NATO can make a big difference by encouraging greater multi-national collaboration and better coordination of allies’ requirements. And we all understand that need. In Europe we have 19 different types of infantry fighting vehicle, in the United States they have 1. In Europe we have 13 different types of air to air missiles, the United States has 3 and European nations have 29 different types of naval frigates, the United States has 4. So not only does the United States have more but they have, what should I say, divided into not so many different types while in Europe we have in total less and we are divided into many more types. And that makes it more expensive, it reduces the potential for a common economical scale, it makes training, research and development more expensive and it reduces the competitiveness of our industry. We need competition, we need different industries but we need some greater degree of coordination when it comes to requirements and investments from the European governments so we can get economical scale and reduce the unit costs of the different kinds of capabilities and equipment. And again I can tell you that I understand that this is not easy because I told some of you before that when I was Prime Minister back in 2000 in Norway we had a big discussion about buying 5 new Norwegian frigates for the Norwegian Navy and in Norway we are used to not building tanks we are used to not being, what should I say, advanced when it comes to constructing airplanes but we look upon ourselves as an advanced shipping nation and we have built ships and frigates for decades or actually centuries but then we decided to build the Norwegian frigates at a Spanish shipyard because they actually had the best and the cheapest offer and we decided to go for the best and the cheapest. One of the reasons why I lost the elections back in 2001 was because of that so I understand that this is not easy but sometimes we have to lose some elections and then come back.  So there is something in between doing things which are absolutely impossible but also sometimes you need some political courage and to go for the best and the most effective things and then you also increase the competitiveness of your own industry if you are able to challenge and sometimes not only protect them.

Then we can also improve the way we do our investments by working more closely with the European Union. And this is really something I welcome that we have been able to strengthen the cooperation with the European Union in so many different ways and not only was I the first to receive the Global Strategy from Federica, but one of the first, as we started almost the same day and we have been together not every day since but I think there’s hardly anyone else I met so much as Federica and I also now working more and more with Elzbieta.  And I think that reflects a true will both in the European Union and NATO to work together and to overcome some of the obstacles and to find pragmatic solutions for many different reasons but when I speak about defense industry this is also important for your industry. And we know that for instance several European nations are now working together on a multi-role air refuelling tankers that will serve both NATO and the European Union and we know that Denmark is in the lead when it comes to developing precision guided munition together with several other European countries. So there are some examples where we are able to work together and this is also part of what we do together with the European Union.

In July I signed a declaration together with President Junker and President Tusk - it’s a declaration about NATO-E.U. cooperation in many different fields. Federica mentioned some of them but one of the areas where we have decided to work together is capabilities and Federica and I are now working on the implementation follow up and we will present our conclusions in December and she told me when we went into this room that we are, what should I say, making good progress so I always trust Federica so this is going to go good. So, Federica and I are working on the implementation of the declaration and one of the issues we are addressing is exactly how we can also make some progress on capabilities and close cooperation in the development of capabilities between NATO and the European Union. And we are going to present our conclusions in December and we will then start to turn the declaration into concrete actions and the NATO Foreign Ministers will be asked to approve an implementation plan when they meet in December and we are preparing that meeting in December.

So, let me end by stating once again that the defense industry is full of capable people and by harnessing their talents and ideas and by putting the most advanced technologies in the hands of our brave men and women in uniform and by working more effectively together we are all more secure and therefore I appreciate so much this cooperation with the defense industry. Thank you.