The four new governing parties PVV, VVD, NSC and BBB have concluded an outline agreement, which will be developed into a coalition agreement by the newly appointed ministers in the coming months. The Politics and Defence Technology working group has some suggestions for this
The Royal Institute of Engineers' (KIVI) Politics and Defence Engineering working group has the following recommendations for the cabinet formation. These have been drawn up on the basis of publicly available documents and defence technology knowledge and experience. The comments and questions concern technological or related aspects only.
As a follow-up to the formation letter 2023 that the working group sent to the informateur after the elections on 18 December 2023, the working group has adjusted the recommendations and, where possible, made them concrete for elaboration by the newly appointed minister Brekelmans and State Secretary Tuinman. These recommendations fit within the outline agreement agreed by the PVV, VVD, NSC and BBB.
Security and stability of our country and the world is essential for a healthy and sustainable economy. However, the world around us is becoming increasingly unsafe. As a result, threats to our prosperity are building and risks are increasing. The geopolitical situation and associated developments in the power politics of Russia, China and Iran necessitate a more assertive defence and foreign policy. Also in terms of technology and equipment.
It is good to know that the Netherlands will meet the NATO norm of 2% GDP from 2024 and that the new government wants to keep it that way. Also that the Netherlands is committed to the defence industry at home and in the European Union in the coming cabinet period.
It should be borne in mind that effective deployment of Defence requires long preparation in terms of technology, equipment, personnel and training. Within Defence, the knowledge infrastructure and the Defence Industry. Proper consultation in a "golden triangle", square or otherwise, suits this better than strictly regulated and compartmentalised procurement procedures.
Our working group's key recommendations for the next cabinet period are:
>A. Invest in resources to strengthen the armed forces for deployment at the higher end of the violence spectrum. Focus on large weapon systems, unmanned systems, as well as cyber and protection infrastructure. Increase the investment ratio structurally to at least 30%.
B. Stimulate energy transition for Defence with technologies, which are specific and indispensable for Defence.
C. Strengthen the defence industry through guarantees and long-term contracts, which will allow pension funds and other large investors, among others, to invest. Make arrangements for major projects and infrastructure.
D. In the European context, strive for a cluster structure for product and system development and scalable licence production throughout the Union. Also in the Netherlands.
E. Strengthen the knowledge infrastructure within defence, knowledge institutes and industry in order not to lose touch with the big countries. Increase the R&D rate from 2% to 3%.
The paragraphs below elaborate and explain the various aspects. It is good to see in recent developments that several of our earlier suggestions are already being implemented. Those have not been repeated here.
Equipment policy
1. Increase the investment ratio to at least 30% of the Defence budget over the next 10 years.
Spending 21% of the Defence budget on the development, purchase and construction of new equipment was considered necessary in the past to keep Defence equipment in order. Years of neglect and decline in the investment ratio to barely over 10% have also greatly delayed replacements and acquisition of new advanced equipment. It is therefore important that the investment ratio increases significantly to get and keep the armed forces up to date.
Also in light of increasing automation and the pursuit of a labour-extensive armed forces, we foresee that a structural level of 30% will be necessary in the future.
Specifically: set the investment ratio at 30% or higher on a structural basis over the next 10 years.
2. Retain vital military-technical knowledge and strengthen it for an effective Dutch role in EU and NATO.
A high level of scientific knowledge of technology is of great importance to guide product development, select systems and deploy them in the most effective way. Such knowledge is needed at Defence, knowledge institutes and the companies that develop and build equipment for Defence. For a small country with a relatively limited Defence budget, a relatively high investment in knowledge is all the more important to be able to keep up with the big countries.
Due to the increasing pace of technological development, we recommend increasing the budget for scientific research to 3% of the Defence budget, above the EDA standard of 2%.
Following the example of the private sector, specific research projects, assignments for PhD students and graduates of TUs, should be considered for targeted sponsorship as so-called 3rd flow projects. Defence professors" at TUs and professors at universities of applied sciences can also make a good contribution to developing knowledge, creating support and attracting highly trained personnel.
It is also important that the expertise grows along with the armed forces, so that the usefulness and results can be assessed and deployed. Broad cooperation in knowledge networks in which industry is also represented can support good deployment of the knowledge. Such as, for example, in "Netherlands Radarland".
Specifically: Increase the budget for scientific research to 3% of the Defence budget in order to be in line with other EU and NATO countries. Let the expertise within Defence grow along with this and guarantee good application in knowledge networks, in which industry is also represented.
3. Opt for development of the newest systems instead of outdated COTS/MOTS systems.
The policy of the past few years was mainly focused on the procurement of Commercial Off The Shelf (COTS) or Military Off The Shelf (MOTS) systems: out-developed, in production and proven. However, the technology level of 'proven' systems is usually 10-15 years behind the current state of the art.
In order to have advanced assets with the greatest chance of military success, it makes sense to place development orders ourselves much more often or to collaborate on the latest systems in a European context. Important examples from the past include radar systems, participation in the development of F-35 fighters and many naval ships developed and built in the Netherlands. This can involve large companies as well as startups and scale-ups. Good consultation suits this better than strictly regulated and compartmentalised tendering procedures.
Specifically: Place development contracts yourself more often and start them on time and in good consultation to fulfil the desire for a technically high-quality armed forces.
4. Continue building a labour-extensive armed force to reduce the need for personnel.
The current and future shortage of personnel makes it vital to continue building an innovative, technically high-quality and, above all, labour-extensive armed force. More automation, remote operation, artificial intelligence and autonomous systems can help. Technology development has progressed to the point where remotely controlled and autonomous systems are possible in many cases.
Specifically: Focus on weapon systems that require fewer personnel. Especially on unmanned systems.
5. Increase the focus on simulation.
The technological possibilities for training through simulation (of processes or with Extended Reality technology) continue to increase rapidly. With the introduction of artificial intelligence (AI), this will only increase further. It deserves attention to invest more in this to make exercising cheaper and more effective. These technologies also make it possible to improve operational processes and train for high-risk and dangerous situations. Furthermore, it can reduce the burden on natural areas by the army and above our country by the air force. International pooling of simulation systems increases capabilities, is more efficient and strengthens cohesion with partners. Good examples are the helicopter simulators in Den Helder, which are used by several countries.
Concrete: Strive for advanced international simulation facilities to make training and education more effective, efficient and cheaper....
6. Strengthen the armed forces with large weapon systems (such as aircraft, tanks, air defence and frigates).
Inter-state conflicts and other threats make it important to further strengthen the armed forces. Already, small-scale participation in the higher end of the violence spectrum is difficult near Israel and in the Red Sea. For the land force, combat tanks, for the air force additional fighter aircraft and for the navy additional frigates, submarines. For all armed forces units, unmanned systems are important. Sometimes in large numbers.
Nationally, completion of maritime capabilities for missile defence, national air defence against drones, protection of the North Sea (underwater) infrastructure is important.
Specifically: Strengthen the armed forces with weapon systems for the higher end of the violence spectrum to withstand emerging threats. Whether national, European or global. Put particular emphasis on unmanned systems.
7. Aim for a high level of protection for special national security risks.
Better protection of data traffic, critical infrastructure and cyber security are of great importance for national security and autonomy. The government should aim for a very good level of protection in all these areas. Artificial intelligence, advanced sensors, satellites and unmanned systems can be deployed for this purpose.
Specifically: Deploy artificial intelligence, advanced sensors, satellites and unmanned systems for protection of critical infrastructure, data traffic and cyber security.
8. Invest in energy transition, specifically important for Defence.
Energy transition is important for Defence in connection with the desired strategic (energy) independence and emissions of, among other things, CO2. Targeted research and development of sustainable technologies for specific Defence applications is necessary as not all civilian technologies are suitable for application in the armed forces. Given the long lifetime of new large weapon systems, a modular and flexible approach for existing and future energy carriers and associated systems is desirable.
It is essential for Defence to have large-scale availability of synthetic fuels for non-adaptable weapon systems such as (fighter) aircraft. Such fuels could be produced using nuclear energy, thus contributing to strategic (energy) independence. In February 2023, we published a position paper on this topic (link) with 13 recommendations.
Concrete: Underline the importance of strategic (energy) independence. Also for Defence. Allow indispensable sustainable energy carriers for Defence to develop themselves, if they are not available in the civilian market. For instance, by stimulating corporate initiatives as launching customers.
9. Monitor the replacement of the submarines strictly.
A decision on the replacement of the submarines was made in 2024. However, implementation has yet to start, with our working group consistently identifying major risks in terms of cost and time overruns. There are also risks of "inevitable" technical compromises compared to the agreed specifications, such as the integration of Tomahawk missiles and Mk48 torpedoes.
Specifically: Have the implementation of the project based on the DMP-D strictly monitored and do not accept compromises in time, money and product.
10. Preserve the Dutch submarine knowledge infrastructure.
Consequence of the decision on submarine replacement is that much of the military-technical knowledge accumulated over decades and required for deployment will no longer fit well. All knowledge and skills will have to be adapted to Naval Group systems and technologies. There is no provision for this in industrial participation. This concerns almost exclusively platform systems (not sensors, command & control and weapon systems).
Concrete: Investigate how the knowledge of COMMIT/JIVC, TNO, the submarine service and other actors can be brought up to standard, so that the Netherlands can continue to offer the current direct partner countries and NATO the same top-level knowledge and cooperation .
Financial policy and budget planning
11. Enable pension funds and major investors to contribute to accelerating major projects and innovation.
In 2022 and 2023, the Defence Summit publicly stated several times that investments by pension funds are important to put and keep the armed forces in order. Several pension funds and asset managers want to contribute, provided they can continue to fulfil their primary mission of paying pensions. High returns are not the primary driver in this regard.
However, it is now unclear how and what pension funds and other large investors can do. The government will have to enable these investments in consultation with experts.
The Action Agenda "Scaling up production and security of supply" of 7 June 2024 indicates that the government will come up with a Parliamentary letter no later than the third quarter.
Specifically: Use the Belhaj (2019) and Valstar (2022) motions as a basis to enable large investments by pension funds and investors in large projects and infrastructure. Consult with experts.
Concretise the elements indicatedin the action agenda "Scaling up production and security of supply" as guarantees and/or long-term purchase agreements. Then appropriate investments will also be possible there.
12. Plan a stable flow of very large projects to reduce start-up and shutdown losses.
In recent decades, projects have been highly concentrated around a particular armed forces component. Projects for the other two major very capital-intensive operational commands were then much smaller or completely absent. Think of the Defence-wide replacement of operational wheeled vehicles (DVOW), the F-35 project and now a catch-up project for frigates and submarines.
In each case, this concentration requires a strong build-up of knowledge at Defence, the knowledge institutes and companies. Starting and stopping activities and scaling up and down knowledge leads to loss of time and quality and unnecessary costs. The current difficulties in recruiting sufficiently qualified personnel reinforces this process. A more even flow of projects would improve the stability of organisations involved and therefore produce better quality results.
Concrete: Realise a planning of major projects that leads to a stable deployment of capacities of Defence, the knowledge institutes and companies .
Defence industry
13. Encourage excellent Dutch OEMs and other companies within the framework of a European strategic autonomy.
Better European cooperation in the defence industry can make the development and production of Defence assets more effective and efficient. The European Union and the member states seem to be pushing to encourage large end-product supply companies (OEMs) through long-term contracts and off-take guarantees. (Price) competition is being shifted to suppliers of components and semi-finished products. It is therefore not a good idea to want to place Dutch industry mainly in that role of supplier.
Maintaining or forming OEMs is important to make a structurally visible and proportional contribution to the European defence industry. Damen Naval and Defenture are good examples, but an OEM that develops and produces drones does not yet exist in Europe.
Specifically: Maintain and stimulate OEMs of vital importance to the Netherlands and encourage innovative companies that can excel in Europe. On this basis, develop an adapted Defence Industry Strategy (DIS) .
European Union
14. Strive in the long term in Europe for a cluster structure for R&D and for strategically distributed licensed production
The European Defence Industry is hugely fragmented and member states have a focus on national companies. As a result, these are hardly viable in many member states and the systems supplied are often incompatible.
The European Defence Industry Strategy (EDIS) published in spring 2024 has not brought any real solution to these problems. Among other things, the announced VAT exemption for certain projects is very limited. Nor does the European Defence Industry Plan (EDIP) offer a solution. It remains focused on strengthening national resources and national industries.
A concept developed by us together with Eurodefense, "Clustering the EDTIB", proposes to strive in the longer term for a cluster structure for R&D and licence production by companies throughout the European Union.
Specifically: steer towards a European cluster structure for product and system development and scalable licence production throughout the Union, including in the Netherlands .
15. Create a level European playing field for defence equipment exports.
To ensure a level playing field for the Defence Industry, much better coordination of arms export policy in the EU is necessary. Dutch arms export policy should be seamlessly aligned with that of the other EU member states. Now there are large differences in the application of policies by member states. This results in unequal opportunities and barriers for companies based in EU member states.
The trilateral agreement, set up by France, Germany and Spain in 2023, deserves support. The UK, Italy and the Netherlands are already seeking affiliation with this agreement.
Specifically: Realise affiliation with the Trilateral Agreement and urge other EU member states and partners to also join it
_____________________________
The Hague, 2 July 2024
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Disclaimer: The facts and opinions given are based on open sources and on the knowledge and experience of working group members.
This is not an official position of KIVI. The association accepts no liability for anything put forward by the working group or its members.
Photo: Ministry of Defence
