While the NATO Summit in Wales is preoccupied with Ukraine and Iraq, the Atlantic community also faces a fundamental internal challenge. The failure of the alliance to integrate its defence industries has weakened the ability and willingness of its members to heft the burden of collective security. Over the long term, this threatens the alliance's capabilities by depriving it of the scale of a united NATO market. Worse, members' attempts to recover the costs of inefficient local production through arms exports contribute to the proliferation of military technology and exacerbate the threats the alliance faces. 

The development of advanced weapons necessitates increasingly complex and expensive research and development. Facing rising costs, states purchase fewer weapons, leading to a reduction in scale, thus further exacerbating the cost spiral. These rising costs inevitably come into collision with other government priorities. While commentators blame defence budgetary pressures on profligate European welfare spending, declining political willingness to invest in military capability is as much a function of the decreasing bang for the public buck. Joint procurement and production would mitigate these pressures by spreading the burden of research development and reducing unnecessary duplication.

Joint ventures such as the Eurofighter Typhoon (pictured) merely illustrate the ad hoc nature of European defence integration. NATO partners, motivated by lingering desires for strategic autonomy and pressure from domestic arms producers fearful of losing their privileged positions, have proven loath to integrate their defence production.

The results have proven dire for NATO. Defence spending has fallen alongside rising costs, with the burden shifting to the largest states capable of sustaining economies of scale. What little joint development and procurement that does occur is frequently warped towards the local interests of national governments and defence industrial actors, rather than the shared strategic interests of the Atlantic Community.  

Military aerospace provides powerful illustration of these problems. Fragmentation among NATO partners wanting to maintain individual capabilities to produce combat aircraft has led perversely to the accelerating attrition of their collective design and production bases. Now, only the US is able to single-handedly meet the costs of developing a 'fifth-generation' aircraft, the Joint Strike Fighter (JSF). Other allied partners are being integrated into these efforts – but as sub-contractors, rather than as partners in shaping an aircraft that would meet the design requirements of the alliance.

As a result, the diverse design expertise of NATO states is withering away. Rather than a spectrum of aircraft types shaped by joint design strengths and optimised for alliance requirements, there is instead one aircraft, reflecting one design vision. Even if the JSF technically exceeds the low expectations of its critics, it will nonetheless represent a lost opportunity for NATO to achieve strategic and sustainable defence industrial rationalisation. It will also mark a sharp increase in risk, as the entire alliance becomes dependent on a single combat aircraft design into future decades.

And while haphazard defence integration degrades alliance capabilities, it also exacerbates external threats.

To compensate for higher costs, NATO states turn to exporting defence technology. While proliferation may help national defence industries in the short run, over longer time frames it also serves to bolster the capabilities of repressive regimes and rising powers. The starkest example is France's reluctantly aborted sale to Russia of two Mistral-class assault ships. Openly recognised as a sop for shipyards that are facing hard times amid Paris' defence retrenchment, these ships threatened a substantial technology transfer to Moscow. Russia's demand for such vessels, designed to project force in contested littoral environments, is directly tied to its revanchist ambitions, which recent events have demonstrated stretch to NATO's doorstep. The cancellation of the sale is good news for Europe. But the fact that the sale was cancelled only after the customer invaded another European country underscores the risks posed by an absence of defence industrial rationalisation. 

What should be done? It will require concerted effort, sustained political leadership and long-term commitments for national and transnational industries to adjust and rationalise.

These efforts must be iterative. NATO's early track record of establishing joint defence industrial policies (notably the standardisation of logistics and ammunition, which has shaped decades of military designs) suggests that a limited targeted approach can greatly alter the incentives towards convergence and integration. To this end, the alliance should focus on a particular high-stakes facet of the defence procurement – for example, a commitment to rolling joint surface combatant production – to create a model that can then scale up across industries.

Any effort will be doomed to failure unless leaders engage proactively with arms producers, rather than seeking to impose top-down solutions. While the alliance cannot afford to leave defence integration to ad hoc interactions of private sector incentives and national politics, a failure to recognise and channel political economic realities will doom rationalisation. 

Defence integration presents the alliance with both a threat and an opportunity. If handled correctly, it will substantially improve NATO's capabilities and hence its members' security. If it is ignored, it risks facilitating the growth of threats that the alliance will be ill equipped to confront.  

Photo by Flickr user Peter Gronemann.