Global Competition and Risks to the Norwegian Defense Industrial base

“This strategy paves the way for a type of cooperation that will ensure the viability of Norway’s defense industry and enable the Armed Forces to capitalize on that industry’s expertise and innovation. In other words – Cooperation for Security”

- Frank Bakke-Jensen, Minister of Defense 2018-2022.[1]

Norway’s Defense Industrial Strategy aims to bolster operational readiness and supply security by uniting the Defense Sector, the Defense Research Establishment (FFI), and the Defense Industry. Considerable efforts are made to strengthen this base through this collaboration. Nevertheless, Norway remains dependent on international cooperation, trade, and allied support to supply and innovate within its defense forces. The Kongsberg Group (KG), one of the primary defense industries, thus is critical in empowering the Norwegian Defense Industrial Base (N-DIB) and facilitating defense industrial cooperation with allied nations. Still, reliance on large defense contractors and foreign partners highlights vulnerabilities in Norway's defense industrial strategy, underscoring the need for enhanced focus on a more holistic approach, including smaller innovative tech firms and education.

Russia's Defense Industrial Base (R-DIB) has long relied on international partnerships to maintain its production and innovation capabilities. However, since the full-scale invasion of Ukraine, Russia´s defense industry has faced significant problems in its international cooperation, and according to its primary defense industry, Rostec, it is forced to put export contracts on hold, placing an economic strain on its ability to keep up production.[2] But, deeper ties with China and North Korea fuel the R-DIB and military campaign and still pose a significant threat to Norway. Strengthening N-DIB remains essential considering this regional security dynamic.

To build greater resilience, N-DIB must diversify beyond major primers to include innovative domestic firms and leverage industrial synergies. Despite Russia´s weakening industry because of its war with Ukraine, an enhanced focus on a holistic approach, including smaller innovative tech firms and education, is essential. 

Norwegian Defense Industrial Base characteristics and capabilities

According to the Norwegian Defense Pledge, Norwegian National Security objectives include, - hindering armed conflict and threats to national and allied security, - defending Norway and its allies against threats and attacks in an allied effort, - promoting Norwegian security interests, and highlighting peace, stability, and international order.[3] The illustration shows the Norwegian Defense Concept. The top triangle is the Norwegian Defense Forces; the bottom left triangle is the Total Defense System; and the bottom right triangle is Alliance and Partners, leading to defense ability, illustrated by the middle triangle.[4]

The Defense Industrial Triangle is a defined strategy highlighting the dependencies between the Defense sector, FFI, and the Defense Industry. This must be seen in conjunction with the defense concept, aiming to secure necessary national defense innovation and development of capabilities, which has proven effective for a small country like Norway, which is highly dependent on other nations and allies to meet demands within the defense sector. However small in an international context, the largest defense company, the KG, plays a vital part in this triangle as a significant actor within the defense industry. According to KG´s homepage, their portfolio comprises various areas, including Defense and Aerospace, Maritime, Digital, and Discovery.[5] These are contributors and affect national innovation and the defense industrial base, as its portfolio stretches within a range of capabilities[6], strengthening the defense forces and its allies.

As a small country, openness and transparency between industry and government provide opportunities for more effective processes. On the contrary, it will also have a smaller workforce, relying on international competence, especially within science, technology, engineering, and mathematics (STEM), which will provide a risk in a crisis or war, as this competence might return to its origin. From this perspective, a more significant effort to include smaller tech companies could increase national resilience within innovation and areas necessary for a broader part of the defense forces. An example of extended cooperation and innovation is described in an article by Stephan Pettersen, “Norwegian Special Forces leading the way in Arctic Wars,”[7] and is between the Norwegian Special Forces (NORSOF), the United States Special Operation Command (USSOCOM), and FFI called the Arctic Warrior Experiment.[8] The KG might provide a wide range of high-end capabilities, but as Elisabeth Gosselin-Malo highlights in her article, “Norway Special Operators Field Pitches on Fresh, Arctic-Capable Gear,” operating in extreme arctic conditions requires special equipment,[9] and cooperation with firms specializing in developing niche solutions is critical to achieve this. Additionally, defense industries could benefit from more people educated within STEM. According to the article by Mads Arnesen, “Norway, the lowest ranking country among the Nordic countries in technological education,” Norway is on the lower end of the scale in educating personnel within this category,[10] which argues for a more proactive approach from the government to ensure these competences are produced, in cooperation with the defense industries and industries in general. However, KG´s innovation capabilities and deliveries within defense capabilities, as a defense industry primer, play a significant role in the national as well as the international market, with product sales and cooperation with, among others, the US, Australia, Japan, Nederland, Lithuania, and Hungary. In addition, missile production plants are being established in the US and Australia, increasing production and supply chain resilience.    

A “triangle” like this is crucial to encouraging and keeping a defense industrial base and the ability to mobilize in Norway. Nonetheless, its weakness lies in relatively few people educated within STEM, compared to other countries, and the few large defense primers leading the market and getting the shareholders, restricting smaller startup tech companies from developing, thus increasing dependencies on foreign supply chains, defense cooperation, and importing workforce. The Arctic Warrior Experiment perhaps serves as a multiplier in this triangle, increasing opportunities for additional defense industry and defense forces. The Norwegian Government has thus acknowledged the need for more integrated cooperation between the defense industry and other industries and recently published a “Roadmap to Increased Defense Industry Production,”[11] highlighting the necessity to increase innovation, mapping supply chain vulnerabilities, and establish a counsel for defense production readiness.[12] However, it could also have incorporated a goal to increase the need for additional educated labor with STEM competence and be more specific in its aim to incorporate innovation. Considering the increasing competition and threat with Russia, this roadmap is crucial in improving resilience and readiness in support of national defense objectives.    

Russian Defense Industrial Base characteristics and capabilities

Russia plays a significant role in affecting Norwegian and European security. According to the article “Back in Stock” by Snegovaya, et al.[13], Russia´s defense industry developed and was strengthened in the period between the annexation of Crimea in 2014 and the full-scale invasion of Ukraine in 2022. However, it has, like many other countries, been dependent on the import of supplies within several capabilities, including from European countries. In his article, “Russia Has the Resources for a Long War in Ukraine,” Sergey Vakulenko claims that a lot of the defense spending relies on funding from Russia´s foreign oil and gas sales.[14] In the aftermath of their invasion of Ukraine, international economic sanctions were aimed at reducing the Russian ability to keep up arms production and a resilient economy.

Still, their capability is significant, and armed forces are well supplied. However, some of these supplies comprise refurbished old systems from the Cold War.[15] But as Snegovaya also highlights, “it is expected that Rostec is ramping up its production of T-80 and T-90 tanks, Terminator 2 tank support combat vehicles and multiple rocket launchers,[16] additionally their industry still comprises a variety of capabilities[17] fueling the war, amid problems with keeping up supplies. This shows that Russia is still able to keep up its defense industrial production. Still, according to the international think tank Chatham House, in the article “Russia´s Military Industrial-Complex and Military Innovation,” Russia´s “key problem areas include microchip production, military artificial intelligence, robotization of the armed forces, and other advanced technologies.”[18]. This highlights why they have extended their cooperation and ties to China and North Korea, enabling them to sustain their industry.

Even as international sanctions continue, they can bypass these through third-country cooperation and alternative defense industry cooperation. According to Chatham House, an example is the extended use of UAVs and how they convert shopping centers into drone manufacturing and assembling through volunteer effort, fundraising, and support from wealthy Russian citizens.[19] This shows an ability to adapt and overcome obstacles and communicate and utilize the population in general to support the war industry. On the contrary, according to Rostec 2023 Financial Data, “the visible fall of Rostec’s profitability despite the massive increase in government arms procurements means that the corporation will not be able to maintain long-term operational sustainability.”[20] Russia’s defense industrial base still depends on international supplies and cooperation. China, North Korea, and other significant actors supplying their defense industry are major actors. But, as the financial data from Rostec applies, “there is no sign of an “arms manufacturing miracle” in Russia, despite Russian officials’ regular attempts to argue with people worldwide that its manufacturing sector is unrivaled in terms of labor force and productivity.[21] As Vakulenko states, their population is on a growing deficit.[22] This combines a decreasing fertility rate over time, the ongoing war with war losses, and people fleeing the country, making it difficult to feed the war machinery, whether it’s the defense industry or the battlefield.    

Evaluation of Norway´s defense industrial base

The span and variety of capacities make the KG a significant motor in the N-DIB and an important supplier and partner to other nations. Its portfolio spans from technological competence to high-end military capabilities and high-tech niche solutions. In comparison, Rostec´s portfolio comprises complete military systems. Nevertheless, KG´s niche solutions perform far beyond defense, generating greater resilience through various export markets and strengthening its overall capability to continue development. According to the Defense pledge, “The Norwegian Armed Forces serve as reference customers in export sales, but innovative Norwegian solutions have also been procured directly by allied forces. As a result, the Norwegian defense industry has succeeded in the international market, and sales have trended upward since the early 2000s. The Norwegian defense industry now derives more than 75 % of its revenues from international customers.”[23]  

While Russian industry is more likely driven by top-down demands and priorities led by the government, Norway´s openness and transparency, mutual trust, and respect will likely promote innovation driven by the industry based on a shared understanding of national security objectives. On the contrary, Russia has a long history and tradition of educating personnel in STEM fields. As for Norway, these resources are scarce due to low education rates, and, therefore, it relies on the national and foreign workforce, making it vulnerable to loss of competence. However, as the Russian conflict with Ukraine continues, as Vakulenko states, the emerging population deficiency is not likely to improve,[24] nor is its ability to sustain its STEM competence.

As one of the significant cooperative partners, the relationship with the US generally provides a trajectory in favor of Norway relative to Russia and is a key driver for the continued growth of Norway´s defense industrial base. The specific partnerships between the two countries´ Special Forces are one driving factor in enhancing extended innovation and promoting smaller tech firms to complement larger firms like the KG in enhancing the defense industrial base in general. Another key driver is defense industrial cooperation with other countries, especially Australia and Japan, as it increases resilience within supply chains and production. On the contrary, Russia´s cooperation with China and North Korea poses a threat to supply chains should the strategic competition increase in this region. Kelsey Davenport´s article, “North Korea and Russia Strengthening Military Ties,” underlines this threat with the recent mutual defense treaty between Russia and North Korea.[25]

Norway depends heavily on other countries’ defense industries and global supply chains as a small nation. These dependencies ultimately impact national security objectives, particularly in increased competition between the US and China or if the conflict between Russia and Ukraine escalates and potentially pressures China to choose sides.  Although the Norwegian defense model undertakes a whole-of-society approach, including other non-defense branches, to plan for and support in crisis and war, the N-DIB relies heavily on allied cooperation and support, including vulnerable supply chains. The increased global competition provides a strategic risk in the ability to support Norwegian and allied military forces. As the article “In the Dark” from War on the Rocks explains, The US supply chains also depend on Chinese and other nations' industries and global supply chains in many areas to keep its industrial base running.[26] In strategic competition with Russia and the need for continued support to Ukraine, in addition to building Norway´s own defense capabilities, the N-DIB will need continued focus on building resilience by strengthening and broadening production and innovation beyond the KG by stimulating education within STEM and incorporating other high-tech firms as partners to support and inspire more innovation and the development of competence.

Conclusion

The N-DIB must be seen in conjunction with the Norwegian Defense Concept. The KG plays a vital role as a defense industry primer in this, with its technological competence, high-end military capabilities, and high-tech solutions playing a significant role in the international market. Cooperation with the US and partners like Japan and Australia is particularly important, strengthening production and increasing supply chain resilience. In competition with Russia and strategic competition between the US and China, however, Norway must continue focusing on domestic innovation, education within STEM, and a broader inclusion of a variety of tech firms to leverage industrial synergies and increase overall defense resilience.

Photo: Kongsberg.com