by Secretary General Jens Stoltenberg at the NATO-Industry Forum
Minister Jonson, General Lavigne, Excellencies, ladies and gentlemen,
First of all, it's great to see you all here today, representing NATO Allies and partners. Also Ukraine is present and for the first time, our Indo-Pacific partners Japan, South Korea, and Australia are also present at this conference. And it demonstrates the importance of bringing together governments and industry from across the Alliance, but also from partner nations.
Then, a special thank you, to you Pål, for hosting us all, for the wonderful evening yesterday in the Stockholm City Hall, but also for everything you do to move and to ensure that Sweden becomes a full-fledged member of NATO.
You are now for the first time hosting this conference, the first time an invitee nation is hosting the NATO-Industry Forum and that demonstrates how close you already are to this Alliance. But I totally agree with you that next time we meet, we should ensure that you don't meet us as an invitee, as a close partner, but that we meet together as members, that Sweden is a full member of this Alliance. And as I said at the reception yesterday, we are moving now with the decision by the Turkish president to submit the papers for ratification to the Turkish parliament. The time has come to find Sweden’s membership process to NATO.
Then we would like to have Sweden as a full-fledged member for many reasons, not least because you have a lot to offer when it comes to innovation, the defence industry and top-tiers of technology. And [we] therefore very much look forward to welcome you as a full member. This will make NATO stronger and Sweden more secure. For me, it is important to attend the NATO-Industry Forum because I know how important industry is to our defence. I know that not everyone sees this in the same way. Actually, some investors have the misguided idea that the defence industry is somehow unethical. But there is nothing unethical about producing weapons to defend NATO Allies. There is nothing unethical about defending our freedom. And there is nothing unethical about helping Ukrainian soldiers to defend the country. Indeed, without industry, there is no defence, no deterrence and no security.
So therefore, I'm actually extremely grateful for what you do as defence industry every day. Thank you so much.
And therefore, the relationship between governments, nations and the defence industry has always been important.
But today, it is vital, for three reasons: to support Ukraine; to strengthen our own deterrence and defence; and to maintain our technological edge.
First, Ukraine. When Russian forces crossed the border, many expected Ukraine to be defeated in a matter of days. But they stood strong and fought hard. The extraordinary courage and heroism of the Ukrainian people has seen them exceed expectations again and again. But courage alone does not stop drones. And heroism cannot intercept missiles. To defend itself, Ukraine needs capabilities. High quality. High quantity. And quickly.
Therefore I welcome that NATO Allies are providing unprecedented levels of support to Ukraine. With everything from tanks and drones, to F-16s and ammunition. But we have mainly done this by depleting our own stocks. And that is not sustainable.
So now we need to ramp up production. To meet Ukraine’s needs. But also to strengthen our own deterrence and defence. This is the second reason why NATO’s relationship with industry is so vital now. Because when this war ends, there is no turning back to where we were before. We face a more aggressive Russia. A more coercive China. And a more unstable world. So we must adapt for the long term.
And therefore I’m glad that for the last 10 years, since the illegal annexation of Crimea and the first time Russia went into eastern Donbas in 2014, NATO has implemented the biggest reinforcement or collective defence since the Cold War. And we have increased defence spending. We now have nine consecutive years of increased defence spending across European Allies and Canada. And I really understand the need to further increase, but it is a good move, a good trend that after years of cutting defence budgets until 2014 all Allies have started to increase defence spending since 2014. We need more, but you should also recognise the progress that has already been delivered by NATO Allies.
They have added in total across Canada and Europe 450 billion extra dollars for defence, including a rise of 8.3% in real terms, meaning adjusted for inflation, the biggest increase in decades this year. Allies have now committed to invest at least 2% of GDP for defence. They did that at the Vilnius Summit.
We made our defence investment pledge first in 2014 in Wales after the illegal annexation of Crimea, then the language was more like a move towards spending 2% of GDP on defence and many Allies have moved towards that that goal. And then almost all Allies have now plans in place to be there soon.
In Vilnius we actually strengthened that commitment by referring to 2% not as a kind of ceiling, but a floor, a minimum. And that's a big new important step by NATO Allies agreed in July this year. And then it's our task, my task to ensure that Allies deliver on that commitment, 2% as a minimum. And let me also add that, of course, 2% is more than they spent before, at least for most Allies. But 2% is not very much compared to what they spent during the Cold War. The average in Europe has been like 1.5% over the last years.
The average during the Cold War until at the beginning of the 1990s was 3%, twice as much as percentage of the GDP. So it is possible to spend minimum 2%, if you realise how important it is and that's exactly what we are in the process of telling the broader public, parliaments, governments that they have to ramp up and they are in the process of doing so.
At the Vilnius Summit in July this year, we didn't only agree to increase defence spending further, but we also agreed robust plans for the defence of Europe. With 300,000 troops on high readiness, backed by substantial air and naval power. And we also agreed a new Defence Production Action Plan. To aggregate demand, boost capacity, strengthen engagement with industry, and increase interoperability. We will substantially increase capability targets for battle-decisive ammunition. And boost our work on standards and their implementation. So the demand is there. Now we need to meet that demand with substantially increased supply.
And then the challenge is that when we increase demand, what we want is more supply. We don't want higher costs and higher prices. And I think we have a kind of joint responsibility as governments, as industry to look into how can we increase supply without unacceptable high increases in prices and costs. And I have now a better understanding of some of the challenges we meet because, as you know better than I, even though there are national regulations across the Alliance that are as I say more or less a kind of standardised approach that the defence industry is more regulated than other industries, meaning also that profits and return on investments are more regulated.
And we have to ensure that these regulations which are there for different historical reasons, are not then disincentive to invest long-term. Because if there are disincentives to invest in long term, we are actually undermining our own security. And the challenge is that this industry has a kind of strange demand. When there's peace there's a kind of relatively low level of demand. And then suddenly there is a crisis and this enormous need to boost and to make available quickly and suddenly enormous amounts for instance of ammunition. We have seen that during this war against the Ukraine. And therefore we either need huge stocks or we need big spare capacity which is not used in peacetime.
That is a real cost for our societies. It's a cost that doesn't disappear. If we want spare capacity, there is a cost. And the answer is that we want that spare capacity, because we need to be able to boost production when there is need. So the question is how do we pay? And then fundamentally, there are two ways of paying that either through market, but then maybe we need to adjust the regulations for the industry so they can put prices in different ways than they do today. Or we need the state, the governments to pay, to buy the service of spare capacity. I don't know the answer, but I know that we have not enough spare capacity today. So we need more of that to ensure that we have the production when we need it.
So I look forward to you going in panels and solving that question for me. If you should, please submit it to NATO and then we will fix it.
Then, finally, NATO needs industry as we navigate a world shaped by disruptive new technologies. Technologies like artificial intelligence, autonomous systems, biotech and quantum are changing the character of conflict as much as the industrial revolution. As our strategic competitors invest heavily, they are becoming new arenas for global competition. So we must constantly sharpen our technological edge. By developing and adopting new technologies. Cooperating with the private sector. Shaping global standards. And embedding principles of responsible use that our democratic values enshrines.
This is what NATO’s Defence Innovation Accelerator for the North Atlantic is doing – our DIANA. DIANA is a network of test centres and accelerator sites across NATO countries.
Last month, I opened an accelerator site in Copenhagen. The ‘Quantum Lab’ helps innovators to develop new technologies to solve some of our biggest security challenges.
We also have the NATO Innovation Fund. The world’s first multi-sovereign venture capital fund, to support innovators across NATO.
And Allies recently agreed strategies on artificial intelligence and autonomy. We are developing others, including on quantum technologies.
Next spring, we will celebrate NATO’s 75th anniversary in Washington. Our Alliance is vibrant, dynamic and fit for purpose today as it was on the day it was founded. Because we constantly adapt. And constantly innovate. Together with you, the private sector.
Cooperation between NATO, Allies and industry is growing stronger by the day. Because now more than ever, security is a shared responsibility. So I continue to count on you to help create a future of peace and freedom.
Thank you so much.