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Increasing defence budgets at the expense of other critical sectors may have long-term repercussions, compromising the very security it is meant to enhance. NATO countries need a more intelligent, balanced security strategy—and some have already begun to implement one.
The NATO summit in The Hague has earned the label “historic” even before its official opening on Tuesday, 24 June. At the top of the Allies’ agenda was a major new defence investment plan, which proposed raising the benchmark for defence spending to 5% of GDP. Despite the plan’s far-reaching implications, it has faced little opposition, with Spain being the only nation to opt out.
Increasing defence spending seems reasonable given the current geopolitical climate. As Russia’s full-scale invasion of Ukraine drags on, Israel and Iran trade missile strikes, and China adopts an increasingly belligerent posture toward Taiwan, the Latin adage si vis pacem, para bellum—“if you want peace, prepare for war”—feels more relevant than ever.
However, relying solely on the Cold War formula of outspending your opponent cannot be the only way forward. Nor is a narrow definition of security that focuses exclusively on military threats while overlooking other risks, such as climate change and resource scarcity.
Truth is, the funding and materials required to realise the 5% defence spending cannot be conjured out of thin air—they must be taken from somewhere. The renewable energy infrastructure and the defence sector rely on the same resources and will have to compete for them. With the EU and the U.S. scaling down environmental regulation and diverting resources away from climate initiatives, it’s clear the energy transition may lose out in this competition.
Defence forces consume substantial quantities of materials such as high-grade steel, aluminium, and complex alloys for tanks, ships, and aircraft, as well as titanium, neodymium, and samarium for drones and other high-tech components. Supporting infrastructure is equally resource-intensive: gallium and germanium, for instance, are essential for semiconductors used in satellite communications and for the solar cells that power them. In the Netherlands alone, increasing defence spending to 5% of GDP would represent a roughly 250% jump from the current level of around 2%. This would translate into an estimated addition of 34 ships, 105 aircraft, and 130 helicopters—all requiring tonnes of valuable metals.
The renewable energy sector depends on many of the same materials. Rare Earth Elements (REEs) are used in magnets for motors and sensors; lithium and cobalt are key components in advanced battery technologies; aluminium is critical for lightweight structural applications; and gallium and germanium underpin cutting-edge semiconductor systems.
As demand rises across both sectors, the strain on already volatile raw material markets will only intensify. What’s more, many of these bulk and high-tech materials are highly energy-intensive to produce and, if not sourced and processed responsibly, can have significant environmental and social consequences for local communities. Besides responsible sourcing and processing, we should be considerate of how and where to use our scarce resources. Pursuing both NATO’s growing military ambitions and the energy transition may prove mission impossible.
For its money and might, NATO cannot simply command the global supply of resources like metals, land or workforce. It may engage in a brutal competition for these limited assets and it may even win, crippling other sectors in the process. But there is a better way forward—one of cooperation rather than competition.
Building strategic autonomy and depriving potential opponents of their leverage is a crucial defence strategy, which also combats resource scarcity. For example, the EU Critical Raw Materials Act sets clear goals to reduce dependence on China, including ramping up domestic production through mining, processing, and recycling. Boosting renewable capacity would also allow NATO countries to shake off their dependence on major fossil fuel producers like Russia, Iran and Venezuela—an approach that became especially relevant after Russia invaded Ukraine.
Applying circular economy principles, such as repurposing materials or designing equipment with multiple functions in mind, offers another way forward. This approach was adopted in Finland’s defence strategy, which is grounded in the concept of comprehensive security. Rather than focusing solely on military assets, it emphasises whole-of-society resilience, involving cooperation between authorities, businesses, public institutions, and citizens to protect vital societal functions and enhance preparedness for a wide range of threats.
Ultimately, defence is not only about possessing superior weapons—it is about rendering potential adversaries irrelevant. Achieving this requires an integrated strategy aiming to reduce resource dependency while fostering economic and societal resilience. The circular economy offers a path to achieve this by lowering demand for raw materials, expanding domestic supply through recycling, promoting sustainable supply chains and enabling shared use of infrastructure and equipment.
The military and energy sectors don’t have to compete for resources. Instead, they can strengthen each other, building the foundation for a true security able to withstand all challenges of the 21st century.
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