Keynote speech Defense Industry Forum

Ministers, excellencies, ladies and gentlemen,
It is good to see you all today and to be here at this conference.
Many thanks to the U.S. Chamber of Commerce for hosting us all here today. 

This week, NATO heads of state and government will convene in Washington to celebrate NATO, the 75th anniversary of the most successful Alliance in history. But we will do more than celebrate, we will also take important decisions for the future.

That will be decisions on how to step up our support for Ukraine. It will be decisions about how to further strengthen our partnership with countries around the globe in particular with our Asia Pacific partners. And of course, it will be decisions on NATO’s core task: deterrence and defence.

NATO's main purpose is to prevent war and to preserve peace by providing credible deterrence every day to ensure that there is no room for miscalculation and misunderstanding in any capital about NATO's ability to defend and protect all Allies. 

As long as we have that credible deterrence, there will be no armed attack against any NATO Ally. And that is why we have been able to preserve peace for 75 years with no armed attack against any NATO Ally. And we will be able to ensure that also in the future, as long as we ensure that we have the strong defence and credible deterrence that we need.

The reason this conference is so important is that there is no way to provide strong defence without a strong defence industry. We are totally dependent on you, because you actually deliver and produce the capabilities we need, the weapons, the ammunitions, the systems we need to have a strong defence.

The defence industry is also key to ensure that we have the ingenuity to maintain the technological edge that has always benefited the Alliance. And you’re also important because it's only when the cooperation between the government and the defence industry is working well that we are able not only to deliver the capabilities and the ingenuity but also the interoperability we need to function as an Alliance. So for all these reasons we are very dependent on you.

The good news is that you are also very dependent on us because we are your only customer. The only way you get contracts and someone to buy products is actually when governments decide to invest more in defence. That's the source of your business. And therefore the good news is that Allies are actually investing more.

National Security Advisor Jake Sullivan mentioned some of the numbers, they are quite impressive. Because you have to understand that to for a politician to allocate more money to defence, then you need to allocate less money to something else. So the difficult thing is not to be in favour of increasing defence spending. The difficult challenge is to tell what will then get less. Or we will increase taxes or increase deficits.

But despite those difficulties, and despite the challenge that it is actually hard to allocate billions of extra for defence, that's exactly what Allies have done. We made the pledge 10 years ago at the Summit in 2014 in Wales. At the time, three Allies spent 2% of GDP on defence. This year, 23 Allies will spend 2 percent or more and some will actually spend significantly more than 2% of GPD on defence. 

And this has added billions to our defence budgets. And a lot of that is actually going into contracts with the defence industry.

And this is a result of a collective decision and of collective responsibility, demonstrated by NATO Allies, agreed some years ago and then repeated again and again and then we mobilized the additional money for defence.

Those Allies that are not yet at 2% have promised to be there soon.

Ten years ago, we agree that 2% should be something we should strive towards. The language in the declaration we agreed 10 years ago was that we should strive towards reaching 2% of GDP for defence. And that has made a big difference. 

Now we have changed that language to say that 2% is a minimum. So 2% is no longer some kind of ceiling but 2% is now the floor for our defence spending. So we're not complacent, it’s not good enough what we do now, so we will do more. So there is a good market outlook for you. Because defence spending will continue to increase and Allies will continue to invest in things you are delivering. 

This pledge to invest more is also reflected in a decision we'll make at the NATO summit this week. That is that all NATO Allies will sign a new defence industrial pledge.

And that will be a pledge that will help to make our industries across Europe and North America stronger, more innovative and capable of producing at scale.

The first element to that pledge is increased defence spending.

The other main element in that pledge will be that we have to spend better by spending more together. That is partly to ensure that we are able to actually sign the big contracts for the long-term and also partly to ensure that we are able to utilize economies of scale, working together with the defence industry. 
We have some good examples of how NATO allies are working together in signing contracts and developing capabilities in different ways. 
The F-35 fighter jets are manufactured in the United States, of course, but also in Belgium, Canada, Denmark, Germany, Greece, Italy, Finland, the Netherlands, Norway and the United Kingdom. So it's actually something we do very much together as Allies.

Saab’s Grippen planes are of course Swedish ingenuity, but there are also American components in that plane. 

We have the Storm Shadow, or SCALP which has proven so extremely critical in Ukraine, a joint effort produced by Franco-British companies which again demonstrate how we are doing things together.

We have the NATO Support and Procurement Agency which is helping to facilitate that Allies go together and buy things together.
Last year, the NSPA agreed contracts worth over $11 billion for ammunition and capabilities. And just today, the NSPA signed new multinational contracts for Stinger missiles worth almost $700 million.

So we strongly believe that by utilizing the strength of this Alliance to bring Allies together. There are many other examples we can utilize economies of scale, we can give increased demand for long-term contracts and by working together, we're also ensuring interoperability which is so critical for this Alliance. 

The reality is that the war in Ukraine has demonstrated not only that the stocks are too small and have been too small, and that the production capacity has been too little, but has also demonstrated serious gaps in our interoperability. 

And the best-known example is the Dutch German brigade, where the whole idea is that this brigade should be able to operate together, but the reality is the 155 standard ammunition which the Dutch have, cannot be used in German howitzers and vice versa. And that's the opposite of interoperability. And this is something we take extremely seriously as government and as industry. So we will also as part of this pledge step up what we do to enforce to ensure that Allies actually deliver on interoperability and interchangeability of our capabilities.

There are many other messages in the defense industrial pledge we’ll agree this week but let me mention one final one here today: that is the need for us to work more closely with partners. That's partly Ukraine. and we are stepping up our cooperation with Ukraine. We are now taking over the lead as NATO for the provision of security assistance and training. We’ll have the command in Germany and 700 people there and in some logistics hubs in the eastern part of the Alliance. 

We are doing that also to help to not only support but also to invest and develop projects together to increase the capability of Ukraine to produce weapons and munitions themselves. And again, some of you are already part of that. I met Rheinmetall they told me about investments in Ukraine, other Allies and companies are also investing in Ukraine. That is good because you bring capital and knowledge. But this is a two-way street. Because the Ukrainians also teach us a lot. They have combat experience and ingenuity that I strongly believe also strengthens our defence industry. So we will work more closely with the Ukrainians and we welcome all initiatives and proposals you may have. 

We also work more closely with other partners. Part of the summit will be that we have one session where we have the heads of state and government from our four Asia Pacific partners, Australia, New Zealand, Japan and South Korea. They all have advanced defence industries. And part of what we have agreed as Allies will be to step up our cooperation with them also when it comes to defence industry capability developments. So, this summit will be a celebration Summit. But as you understand, the only way to celebrate the most successful Alliance in history, is to demonstrate that we are fit for purpose also for the future. NATO is the most successful Alliance in history because we have been able to unite around our core task to protect and defend each other, but also because NATO has always been able to adapt and change when the world is changing. Now the world is changing. We face serious security challenges, and therefore we need to step up our cooperation, we need to invest more, and we need to work closely with the defence industry. Thank you so much.