There is a lot of action around emerging disruptive technologies (EDT) in Brussels these days. Both EU and NATO are already running or are about to start new funding instruments.
The EU has set up a Directorate-General for Defence Industry and Space which is responsible for implementing and overseeing the European Defence Fund (EDF) comprising of approximately one billion euros a year funding for defence capability development projects.
In regard to NATO, surely EDTs started becoming more visible around 2019, but until that time NATO’s Science and Technology Organization, Industry Advisory Group (NIAG) and Allied Command Transformation (ACT) had certainly done their fair share of work but perhaps were not so visible at the strategic level and nor did they have such a solid focus on start-ups.
One can certainly wonder if NATO’s growing attention on EDTs appears as a response to EU’s ambitious institutional and financial investments in defence technologies.
Now there is NATO’s EDT roadmap, strategy and Advisory Group and this is one of the key deliverables of the NATO 2030 initiative. This year at the NATO Summit, the Allies agreed to foster cooperation by launching a civil-military Defence Innovation Accelerator for the North Atlantic (DIANA) and to establish a multinational NATO Innovation Fund that will allow interested Allies to support start-ups working on dual-use EDTs, with anticipated funding of one billion euros in next 10–15 years. At the summit, 17 Allies signed up to support the innovation fund. This sends a strong message that many Allies want to jointly strengthen the defence innovation ecosystem and also complement the support instruments they already have.
What Game Should Small States Play and Why?
Investments in any innovation, including defence and dual use products, carry a level of risk—it takes time and money for a platform or technology to go through the process to ensure technological readiness, and failure is always a possibility. There are many arguments as to why smaller EU and NATO nations with their limited defence budgets, even if they are above 2% of GDP as it is the case for all three Baltic states, should not even bother with ambitions to do something in the field of EDTs or the defence industry in general. But there is something more important at stake—the strength of the national (defence) industry affects a nation’s resilience and thus many other factors such as interoperability with Allies, supply chain security, challenging future vis-à-vis manpower requirements, job creation and simply the fact that no one wants to lag behind.
The next question is what should small NATO/EU nations do to stay abreast? First, the reasoning should be very clear why a small nation would want to be a part of the emerging disruptive technology innovation eco-system. Where is your (niche) innovative potential and what is your level of ambition? Where should you aim to position yourself to be part of the game? Or is the role of active or passive market monitor sufficient? Clarity at the policy level as well industry and university potential is useful.
Looking at the Baltics, there is an increasing number of policy initiatives and instruments in support of the development of a vibrant defence industry ecosystem, along with investments in defence innovation and government ambition to be part of EU and NATO funding mechanisms. There are also political and bureaucratic visionaries and industry players that have the ambition to be part of the wider Euro-Atlantic EDT innovation ecosystem.
Latvia and Estonia appear to have a number of similar support tools for their defence industries. In the case of Latvia, support for innovation already has permanent backing from the government — Start-up Law, start-up visas, an innovation voucher program, business incubators, and accelerators for the innovators have been in place for a number of years. The Ministry of Defence has additional instruments for specific defence/dual use industry—grants to university master’s students to get them interested in and thinking of their future, a state defence innovation program for universities, regular defence makeathons, innovation grants for higher Technology Readiness Levels (TRLs), testing environments, advisory assistance for the European Defence Fund and a commitment to take part in NATO’s DIANA and Innovation Investment Fund.
However, of the three Baltic nations, I am personally most curious about the results of the recently launched Defence Investment Fund in Lithuania—a national venture capital fund that aims to invest in Lithuanian defence or dual use start-ups. This is a fresh approach and different to the other two Baltic nations.
I also feel obliged to highlight the practical results the current initiatives are bringing to the defence industry—the Estonian and Latvian industry led consortiums are among the winners in the last two rounds of the European Defence Industrial Development Programme (EDIDP). The project of the Estonian led consortium, known as iMUGS, was an Integrated Modular Unmanned Ground System, and the Latvian led consortium’s project, VireTS, was a Virtual Reality Trauma Simulator for distributed multi-national team training for military medical personnel. All three nations also signed up to establish the NATO Innovation Fund. Naturally, each nation does things to a different scope and at a different pace bringing diverse results but one can see a very vibrant ambition in each one to strengthen the defence innovation ecosystem.
A Recipe for Success?
For smaller nations, even though it is tough from the manpower/expertise availability perspective, well-balanced regional defence industrial cooperation and investments in multinational initiatives can help to support them to succeed in their innovation capacity development. It can only be done if an initial set of support instruments is available from the government side. Visionaries from both industry and government who are not afraid to fail are extremely important. Equally a close and strong dialogue with the private sector and universities is vital.
Identifying a niche area is a good way to start to get known in the wider Euro-Atlantic defence innovation eco-system. Areas such as cyber, unmanned platforms, 5G or virtual/augmented reality applications have gained recent attention. For example, an Estonian-led consortium won a grant from the EDIDP for an unmanned ground system and a Latvian-led SME consortium received their EDIDP grant and an outstanding rating in the SME competition for their virtual reality application. It would be sensible to continue to invest in these fields and develop niche capacities.
Another important ingredient is collaboration with other governmental agencies responsible for innovation and investment. In smaller states, defence innovation and the defence industry cannot be the defence ministry’s solo ambition and interest. All in all, the three Baltic nations are good examples to follow, as defence ministry efforts and ambitions are already delivering well recognisable results.