Defense spending has ended – but on all the wrong things

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Rola Khaleda, FT editor, chooses her favorite stories in this weekly newsletter.

Defense is the new technology when it comes to hot sectors. Or is it in the opposite direction? This is a question that deserves to be asked with the high defense shares in recent weeks on everything from news Donald Trump “The Golden Dome” The missile defense shield, to the UK Security Charter and the new European Union, which gives the United Kingdom’s defense companies access to the Defense Fund of 150 billion euros in Europe, to a broad understanding that the US -Chinese strategic competition here to survive and Europe will spend more on its defense.

The issue is whether all this new spending will pay its fruits, or whether the disruption of technology changes not only the nature of the war but the defense actions themselves.

Military budgets in the United States have always been huge (defense is the largest element in the federal budget) and its size increases during the Trump era. The president requested a record number of 1TN to defend the Big Beutif budget bill, which has just passed the House of Representatives with one vote and will now go to the Senate.

Also, Chinese military spending is increasing: the country is the second largest impulsion after the United States and has the largest navy in the world. Defense investment in Europe is scheduled to increase very sharply, as it distinguishes its security in the wake of Russia’s war in Ukraine and with the growth of the meaning that the United States has become an unreliable ally.

But a lot of this new investment will go to old elements, such as F-35 fighters, ships and submarines. Trump missile defense plans directly from Reagan Star Wars era Playbook. Some analysts began to ask if – even taking into account the growing global conflict – this is the money that is well spent at a time when technology has turned the nature of war.

After all, drones and cheap missiles can take Russian tank lines that are transferred to Ukraine. They were also used by the Houthi rebels in the Red Sea to destroy multiple ships and force the United States to spend nearly a billion dollars on military operations.

In some respects, Ukraine was a test of this shift in the war. As Eric Prince, founder of the private Blackwateer military company that now heads the private partner of private stocks, who noticed in a speech in February about the future of the war, the Russian conflict Okreen “made a widespread war” in a way that we have not seen “since Genghis Khan stacked horses.”

Today, innovations such as 3D printed explosives can come out on drones that are guided by software from Russian tanks for a few thousand dollars, while infiltrators discovered how to disrupt navigation systems for spear missiles of $ 150,000 within weeks. The prince, a previous seal of the navy, a previous position, says, most likely the next major military innovations will not come from the Pentagon, or even the Defense Research and Development Agency, but from “smart people” in “their deposits”. As he put it, “trillion dollars from the installed capacity” has become outdated.

This “technology -based and decentralized shrinkage came in a big way of war for the first time,” according to market analyst Luke Garamin, who also recently covered the topic. It is similar to the problem of the defense industry with the “curse of job occupant” similar to the NETFLIX fragmentation of the wonderful video, in which the old defense companies will be superior to innovation on the ground. Lewis gave the research award called “Microsoft-Author of Warfare”, a trend that can “undermine the relative advantage of military forces in the world.”

Just like companies like IBM and Microsoft Decratised PC (it used to work on a large company to reach the central tires), so ground innovation changes the nature of the war today. This could have profound effects on the current defense contractors from Raytheon to Bae Systems to Geospace and others who saw their shares prices rise in the last market gatherings. Their products may end until the military equivalent of a major computer compared to the increasingly used laptops in the battlefield.

Of course, these companies have their own innovation efforts. There are also many advanced startups from Silicon Valley to Israel that aim to benefit from the high -tech non -central war. But the changing nature of the war is not just a question on the market – it has economic and geopolitical effects as well. GROMEN said: “Western investors work based on a preliminary principle of American military domination as family support for American foreign policy, economic policy and the US dollar system itself.” What if this assumption is incorrect?

For beginners, it is possible that you see a decrease in dependence on American manufacturers – which is already happening, as shown by Europe’s reference plans, which depend on European Union companies. It also raises the issue of whether the United States is able to enhance military spending at a time when debt and deficit levels are raised. Finally, war addiction gives both individuals and individual states more self -rule of defense. Success in this new world may be measured less on the size of the budget and more on technology intelligence.

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