In an increasingly interconnected world, the relationship between defence, security, and trade has profound implications for industries globally.
A recent CityUK webinar, featuring UDSS Co-Chair General Sir Richard Barrons KCB, CBE, and Omar Ali, Global Financial Services Leaders & EMEIA Financial Services Regional Managing Partner and Chair of TheCityUK Long-Term Competitiveness Group, provided a deep dive into how technological links and IoT shape our current economic landscape and future outlook.
The evolving landscape of defence and security
Leading the webinar, General Barrons contextualised the discussion with recent geopolitical events, notably the 75th NATO Summit. Highlighting NATO's pivotal role as the most successful military alliance in history, he emphasised the enduring importance of its strategic decisions:
“[NATO has] acquired a sense of permanence despite the fact that what it has to do keeps changing… This was clearly reflected in the summit - but if you look below the surface, there are some very significant tensions and pressures on the alliance.”
The NATO summit underscored two main objectives: continued support for Ukraine and the revitalisation of the alliance to face emerging global challenges - “this much more difficult world,” as General Barrons termed it.
"We are moving into a world where people will be more assertive about how they protect their interests if dialogue is broken down. That's a very uncomfortable conversation to have in the UK in 2024 on the back of 30 years of post-Cold War era and the sense of a prosperous and largely pain-free life - but the world has moved on from that," he continued.
Ukraine: a symptom of larger tensions
The conflict in Ukraine is emblematic of the broader tensions within NATO and its member states. "There currently is no doubt that the alliance will see [the Ukraine] war through well into next year, and really doesn't expect to falter, but it is aiming for much less US help," said General Barrons.
The war has highlighted the economic strain on Ukraine and the financial commitments required from NATO allies. The summit's decision to allocate $40 billion to Ukraine is significant, but falls short of the $100 billion requested, reflecting internal political challenges, especially within the US.
“It is clear to most - but not all - NATO members that a good outcome in Ukraine is important to the security of the alliance, both in terms of the physical security of the alliance area but also the place of the alliance in global affairs", General Barrons commented.
Watch the full discussion here for more in-depth insights:
How the Growing Links Between defence Security and Trade Impact Our Industry
Shifting focus and financial strains
A key point raised during the webinar was the US's shifting focus from European to Asian security concerns, primarily due to the rising influence of China. This pivot necessitates that European nations shoulder more of the financial burden for their own defence.
General Barrons expanded: "The review is going to have to focus on how you make technology choices, how you do acquisition in a way that delivers value for money - and what sort of financial and administrative bureaucracy is needed to make the defence system lean, efficient, and agile.”
He pointed out that the desired defence spending for adequate capability should be around 3.5-4% of GDP - however, many NATO members, including the UK, are currently at about 1.4-1.5%.
Industry's role in national security
Critically, the webinar underscored the notion that national security is no longer the sole responsibility of the military.
"It is beyond the capacity, or frankly the competence, of government to do some of that well enough, so we need to find investment pathways and manufacturing opportunities that solve defence but also prosperity and growth problems,” explained General Barrons.
The increasing prevalence of the digital age means that innovations in defence now originate in the civilian sector. AI, robotics, and bioscience are civilian-driven and then adapted for military use, which inverts the traditional flow of technological advancements from the military domain to civilian usage. Drones are a prime example of this preexisting chain.
Putting this in the context of finance and commerce, General Barrons went on: "Most City enterprises understand there isn't a government body that protects their data and networks, that trains and holds their people to account for cyber - they have to do that themselves or make themselves a target."
Broader economic and trade implications
Evolving supply chain tensions and emerging hot-cold and trade wars, alongside political volatility and economic uncertainty, point to a future where financial and professional services companies would continue to operate in a state of perpetual flux.
The growing ties between defence, security, and trade mean that geopolitical instability affects global supply chains and economic stability. Industries must recognise their role in national security, as they are both targets and players in this broader strategic landscape.
The financial services sector, represented by Omar Ali, also plays a crucial role in navigating these uncertainties, emphasising the need for robust strategies to manage risks associated with geopolitical and economic volatilities.
As General Barrons put it, “War is much more about what the military does; there's the military work, the sub-threshold confrontation that goes on every day in cyberspace, and the assault on what we think through social media. It's quite difficult to put a boundary to it."
Preparing for an uncertain future
The discussion concluded with a sobering reminder of the existential risks posed by geopolitical tensions, climate change, and digital transformation. Industries and governments must collaborate to fully and intelligently address these challenges.
"The number of cyber attacks impacting the financial services sector continues to rise,” said General Barrons, “and some of the numbers I have seen on that recently are frightening."
The more uncertain, challenging landscape the world now presents is new territory for many companies, as circumstances have been comparatively comfortable for the past generation or so. Surging digital advancements present both opportunities and vulnerabilities - so a strategic approach is required to harness their benefits while mitigating risks.
"Boards need to think differently about the strategic horizon,” opined General Barrons. “And then, frankly, unlike some governments in the run-up to the war in Ukraine, once you've got your head around that, you actually have to make some decisions to assure the prospects and continuity of your enterprise.”
The growing links between defence, security, and trade demand a holistic understanding and integrated approach from industries, governments, and financial sectors.
By recognising how these dynamics interconnect, we can properly prepare for and navigate the evolving complexities of our modern world. Find out how Universal Defence and Security Solutions works with organisations to better understand and navigate the defence industry.
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