NATO’s leading military official has delivered a stark rebuke to Western financial institutions, labelling their reluctance to invest in defence as “stupid” amid escalating global security concerns.
Admiral Rob Bauer, chair of NATO’s military committee, emphasised that financial organisations are missing substantial opportunities by maintaining outdated policies against defence investments. Speaking candidly, he questioned the business acumen of rating agencies, banks, and pension funds, pointing to the massive governmental defence spending projected over the next two decades.
The timing of Bauer’s criticism is particularly poignant as European nations rush to bolster their military procurement and production capabilities to support Ukraine. This urgency is heightened by the imminent inauguration of Donald Trump, who has consistently pressed Europe to reduce its military dependence on the United States.
Despite recent surges in share prices for major European defence companies like Rheinmetall and Kongsberg Gruppen, numerous European banks remain hesitant to finance arms manufacturers, particularly affecting smaller suppliers crucial to the defence supply chain. This reluctance persists even as venture capital investments in defence startups across NATO countries have quadrupled since 2019.
The Dutch naval officer challenged the ethical arguments often used to justify avoiding defence investments, stating that defence investment for deterrence purposes represents “the best sustainability measure.” He particularly criticised the consideration of geographical proximity to Russia as a negative factor in sovereign ratings for Eastern European NATO members.
NATO has responded to these challenges by establishing its own fund for defence startups, whilst the European Investment Bank faces mounting pressure to revisit its restrictions on weapons funding. Bauer’s message is clear: the financial sector must adapt to new geopolitical realities and recognise that defence spending is not merely a cost, but a crucial investment in future security.
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