Video tele-conference message

Good afternoon Ladies and Gentlemen,

It’s a great pleasure to address you this afternoon. I regret that I cannot be with you in person today. But I did not want to miss the opportunity to speak to you at this crucial time for our Alliance, for our member nations, and for our defence and security industry.

We are going through the worst financial crisis in living memory.  Governments continue to face tough decisions to get their economies back in order.

Across our Alliance today, defence budgets are under severe pressure. I have warned – and I will continue to warn -- against cuts that are too large and disproportionate.

Without security there can be no prosperity.

So we must maintain the security on which our economic prosperity rests. And we must ensure the financial crisis does not turn into a security crisis.

In the current fiscal environment, there are some people who say that the price we pay for our security is too high. We should remember that our brave men and women in uniform are prepared to pay the ultimate price for our security. They put their lives at risk on a daily basis. If we cut too much, we risk putting them into even greater danger. And we risk making our streets, our airports, and our homes much less secure.

Last week, NATO Defence Ministers met here in Brussels, and there was broad agreement that when it comes to defence spending, we must “hold the line”. And that we need to identify how we should prioritise our resources – both those that we spend nationally and those we commit within the NATO framework.

We also agreed that we should do this in a way that unites the Allies and cements the transatlantic relationship. It is vital that we work through this challenging period together – and that we are prepared to increase defence spending once our economies recover, which they will.

Not long from now, the Afghan Security Forces will be ready to assume full responsibility for the Afghan security, and we will therefore end our combat operations in Afghanistan. We must leverage the experience, the achievements and the lessons learned from this mission so that we can build the foundation for strong, flexible and deployable NATO forces by the end of this decade – forces that are well equipped, well trained, and well connected. This is the goal we set ourselves with NATO Forces 2020.

Our Chicago Summit in May set us on the right course. With our Connected Forces Initiative, we will place greater emphasis on NATO-led training and exercises. We want to make full use of the formidable array of national and NATO educational and training assets.

At Chicago we also embraced the concept of Smart Defence. This is all about multinational cooperation. Allies working together to deliver capabilities that would be too expensive for any of them to deliver alone. It is about agreeing what we may cut from our defence, while also agreeing what we need to keep, so we can meet the Alliance's strategic goals today AND tomorrow.

There is a clear role here for our defence and security industry. Let me share with you my views.

So far, industry appears to have been rather sceptical of Smart Defence. There are worries that it will lead to fewer and smaller contracts.

But let me be clear: there is only one alternative – and that is no contract at all.

So there is a clear incentive to look for multinational solutions. And I do not just mean in equipment development and procurement.

If we also cooperate more closely in areas such as logistics and communications, we can improve our capability in those vital areas. And at the same time we can free up resources for other activities, including for acquisition. So I see Smart Defence as an opportunity for Industry – at both sides of the Atlantic.

Smart Defence is not just a slogan. It is the only way to ensure we have the necessary capabilities for our Alliance to do its job. And for us to do that job properly we need better cooperation WITH defence industry – and we need better cooperation WITHIN defence industry.

We want to engage with you, to hear from you, and to work much more closely with you.

We want to make it easier for governments and industry to work together from the early stages of capability projects.

And we want to give industry maximum transparency throughout our NATO Defence Planning Process.

This should help defence industry develop capabilities that are more flexible by design. Capabilities that can be adapted to multiple operational requirements. And capabilities that can be modified or upgraded by integrating new technology when that becomes available.

Another advantage of making our defence planning process more transparent is that it will allow industry to be more pro-active. For example, when responding to bids, we hope you will have had more opportunity to come together to propose multinational solutions, instead of individual solutions.

Also, we would like to see you anticipate our requirements. We would welcome unsolicited proposals coming from industry outside the traditional contract process. We understand that this could create concerns about industrial confidentiality, so we would need to develop a “code of conduct” to handle such proposals. But I am confident that can be done without too much difficulty.

Of course, for Smart Defence projects, participating Nations would retain full control on their acquisition strategy. But they would be able to take their decisions with the best possible knowledge and insight into what industry has to offer.

Finally, I believe there is a need to promote greater participation by small and medium-sized enterprises, in particular in NATO countries with a limited defence industrial capability. The question is: How can we encourage this? Perhaps NATO could help by offering certain incentives. I am sure there are many other ways too.

Ladies and gentlemen,

These are challenging times. Times when we must all be smart about defence. Times when we must get the most out of our defence Dollars and Euros. And times when we need to sustain security so we can sustain prosperity.

A strong, enduring engagement between NATO and our defence and security industry will be key in addressing this challenge. I am confident that your meeting today will bring us closer to such a solid NATO-industry partnership.

Thank you.