Defense Policy

The Digital Deterrence Dividend

Drone Op Ed Dpa_M
Drones are part of the new wave of defense technology.
  • Why it matters

    Why it matters

    Defense technology is changing rapidly and without significant investments and a change of policy, Germany risks being left behind.

  • Facts


    • The U.S. is working to integrate commercial technical innovation into its defense strategy and arsenal and launched a $14 billion fund in 2014 to invest in R&D.
    • The U.K. has created a defense innovation fund worth €800 million.
    • On Tuesday, Germany’s defense minister Ursula von der Leyen announced plans to raise the number of soldiers in the armed forces.
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Chancellor Angela Merkel and U.S. President Barack Obama recently opened the Hanover trade fair for industrial technology.

The exhibtion is well known for its promotion of the 4th Industrial Revolution, the advancement of manufacturing through automation and digitization.

Globally, Germany and the U.S. are considered the leading players in this field. However, unlike Germany, the United States has long discovered the value of such technology for its foreign and security policy.

Starting in 2014, the U.S. Defense Department began to lay the groundwork for what it calls the “Third Offset Strategy,” a $14 billion R&D investment initiative focused on innovative defense technologies. The strategy supports the broader goal of deterring opponents from readily using conventional military capabilities to enforce foreign policy objectives, a valid concern for many U.S. allies in Asia and Europe.

The strategy focuses not only on developing new technologies but on better leveraging commercial technologies to improve existing capabilities.

The U.S. decided commercial-sector innovation is essential to develop militarily useful artificial intelligence, directed energy weapons and autonomous aircraft and ships.

The United States has recognized that the Defense Department no longer has a monopoly on leading-edge technologies that are changing the world day by day.

Continuing to believe so would be a strategic liability that carries profound risks when nations such as China and Russia are pushing onward with next-generation military technologies. This leaves Germany and other NATO allies with a choice: Adopt a similar but bespoke approach, or risk being left behind the most significant shift in military technology since the advent of the airplane.

Reason enough for European allies to take notice, as the United Kingdom has. In its recent 2015 Strategic Defence & Security Review, Britain announced an £800 million “Defence Innovation Fund” that clearly resembles the U.S. approach. For Germany, there is hardly a reason to replicate the U.S. initiative one-to-one. However, specific defensive systems, network technologies, and most importantly, the policy design itself offer a forward-thinking view on the role innovation can play to preserve peace and defend against future threats.

German initiatives such as the 4th Industrial Revolution and the advanced manufacturing technologies it brings are setting new standards globally. These advances aren’t hidden in labs; they are visible everywhere. As an example, autonomous vehicles appear to be breaking new records every month on German roads while the country is slowly but steadily nurturing its startup scene.

However, these efforts focus on global business opportunities rather than the increasingly acute challenges faced by the Bundeswehr and NATO, such as deterring Russian military incursions in Eastern Europe or fending off cyber attacks on critical infrastructure.


Defense secretary visits defense innovation unit Credits DoD
Secretary of Defense Ashton Carter visiting the Defense Innovation Unit. Source: DoD photo by U.S. Army Sgt. 1st Class Clydell Kinchen


Managing this tension is not easy for America, either. The United States decided that commercial-sector innovation is essential to developing militarily useful artificial intelligence, directed energy weapons, and autonomous aircraft and ships that are at the core of the Third Offset Strategy technology portfolio.

This doesn’t mean that Germany should invest in these advanced offensive systems in the same way, but in the 21st century, Germany needs a clear plan for ensuring its forces have access to the most innovative technology they need to accomplish their missions, wherever they may be.

In fact, many less “superpower-esque” capabilities that could suit Germany’s forces play an equally important role in the U.S. initiative. Defensive capabilities such as missile-defense systems, electronic warfare, unmanned vehicles, or cyber-security, play a much more important role than the purely offensive innovations pursued by the United States.

Also, since the Bundeswehr’s mission primarily focuses on Europe, the Middle East and Africa, there is hardly a need to pursue the full breadth of technologies, some of which the United States plans to deploy to Asia Pacific.

Germany should rather ask itself which innovative technologies represent low-hanging fruit, which are useful to the Bundeswehr’s mission requirements, and ideally, which complement research pursued by its European allies.

Since Germany has a limited defense budget, currently expected to be €36.6 billion in 2017, it has yet another reason to chart its own course, rather than model the American efforts. Fortunately, Germany’s already leading role in commercial manufacturing, such as was presented at the Hanover trade fair, provides a potentially valuable innovation resource.

Deciding on what to invest in is the next step.


Military Spending text graphic-Germany China United States USA France United Kingdom Britain defense weapons arms 01


In 2015, the German Defense Ministry decided on “Key Technologies” as investment guidance for the nation’s defense firms. These could serve as a starting point to explore possible areas to use existing or in-development commercial technology as game-changing tools for deterrence and defense.

Possible avenues of cutting-edge research within the four “Key Technology” areas chosen by the German Defense Ministry include: electronic warfare spectrum dominance, undersea navigation aids, air & missile defense, advanced manufacturing, autonomous & robotic systems, as well as cyber and big data analytics.

Since no technology by itself will help deter potential opponents, the U.S. Defense Department encourages innovation on a broader scale and plans to implement acquisition policies that make it easier for new technologies to cross the considerably wide gap between the commercial and defense technology sectors.

Similarly, the German Defense Ministry could develop new connections between its traditional R&D and acquisition efforts, mainly focused on Europe’s largest defense firms, the Fraunhofer Society, and the German Aerospace Center. If the perception prevails that startups, universities, and commercial innovators cannot cooperate with the defense ministry, it will make it infinitely harder to benefit from their innovative potential.

In fact, the federal initiative to digitalize manufacturing, ‘Industry 4.0’, has managed to engage companies, small and large, to invest and cooperate in research clusters across the country. Such a policy approach creates clear pathways for innovative companies to invest capital in their German operations rather than to move to foreign markets.



German MoD's defined Key Technologies-02

The recent launch of a cyber-cluster at the Bundeswehr University in Munich is a promising step in this direction.

Part of the U.S. Third Offset Strategy includes the creation of multiple liaison offices in American tech-hubs, such as Silicon Valley or Cambridge, Massachusetts. Similar clusters can be found in Germany. For example in Darmstadt for software, Aachen for manufacturing, or Munich and Hamburg for aerospace.

It is up to the German Defense Ministry to reach out to these clusters and enable non-traditional suppliers of innovative technologies to compete with the established defense industrial base and provide more affordable, cutting-edge solutions to the Bundeswehr.

In Germany, nobody expects the Bundeswehr to be assigned the multitude of mission requirements the U.S. armed forces fulfill globally. Still, America’s Third Offset Strategy carries important and urgent lessons for German government and company officials alike.


The opinions and views expressed in this article are those of the author alone and are presented in his personal capacity. They do not necessarily reflect those of any organization. 

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