Finland and Sweden, NATO's newest members, have quickly positioned themselves as valuable contributors to the alliance, showcasing their innovative approaches to defense. With Finland publishing a guidebook for companies on how to do business with NATO, both countries have opened new doors for economic growth within their borders. Notably, small and medium-sized Finnish companies stand to benefit greatly from this new dynamic, as opportunities within the defense sector expand.
Finland and Sweden are taking proactive steps to align their defense spending with NATO expectations. Currently, only 23 out of NATO's 32 member states meet the defense spending target of 2% of GDP. In contrast, Finland and Sweden have already surpassed this benchmark, with current expenditures of 2.4% and 2.2% of GDP, respectively. They aim to further increase this spending to between 2.6% and 3% over the next three years.
NATO's expansion into the Nordic region has also seen the establishment of new bases and joint defense forces in northern Finland. This move underscores the strategic importance of the area, integrating national infrastructure into a comprehensive "Total Defence" system. This integration highlights a significant shift in regional defense strategies.
Swedish defense company Saab has actively engaged with NATO since Sweden's accession, negotiating framework agreements with the NATO Support and Procurement Agency (NSPA). This collaboration exemplifies the potential benefits for private companies amid rising defense spending commitments by NATO member states.
"Europe's Trans-Atlantic relationship will always remain important," stated Micael Johansson, Chief Executive of Saab.
The complexities and interdependencies of NATO's defense systems pose challenges for European members, requiring careful consideration in aligning with collective defense strategies. Amid these developments, the announcement by the United States of a pause in military aid to Ukraine presents another layer of complexity. However, European leaders have reaffirmed their commitment to long-term strategic partnerships.
"Being part of NATO brings us on an equal footing with all the other allies. It enlarges the possibilities for Finnish companies in the defense sector and beyond," said Jukka Siukosaari, Finland's Ambassador to the UK.
The landscape of the European defense sector is transforming rapidly, with private enterprises poised to gain from increased defense budgets across the continent. Saab's Micael Johansson expressed enthusiasm about the competitive environment within the commercial defense industry.
"We're no longer a country that cannot be trusted," Johansson emphasized.
This sentiment echoes a broader shift in perception towards Finland and Sweden within the international community.
"The perspective of other countries and companies [towards them] has changed," noted Johan Sjöberg, security and defense policy advisor at the Confederation of Swedish Enterprise.
As NATO anticipates a surge in defense spending in the coming years, investments will focus on replenishing stockpiles of advanced weapons systems. This shift presents both challenges and opportunities for member states and defense firms alike.