NATO’s top military commander, admiral Rob Bauer, has urged the European Investment Bank (EIB) to expand its support for the defence sector, pointing out that the EIB’s current restrictions limit Europe’s security capabilities at a critical time.
Bauer, who chairs the NATO Military Committee, called on European finance ministers to address the EIB’s constrained role in funding military projects and proposed that NATO finance ministers meet regularly to better coordinate defence funding efforts.
Bauer warned that Europe faces its “most dangerous” global environment in decades, with autocratic regimes seeking to destabilise the rules-based international order. His message to European leaders and businesses was clear: Europe must prepare for a wartime scenario.
“Peace is no longer a given,” he said, speaking on Tuesday at the Princess Beatrix lecture in Maastricht, the Netherlands.
“Businesses need to be ready for wartime conditions, adjusting production and distribution accordingly,” Bauer stated. He pointed to the strategic consequences of commercial dependencies, such as Europe’s reliance on Russian energy and Chinese-controlled infrastructure, as vulnerabilities that could be exploited.
“If we can make sure that all crucial services and goods can be delivered no matter what, then that is a key part of our deterrence.”
Business sector has role in deterrence
“Business leaders in Europe and America need to realise that the commercial decisions they make have strategic consequences for the security of their nation. Businesses need to be prepared for a wartime scenario and adjust their production and distribution lines accordingly,” Bauer said. “If we can make sure that all crucial services and goods can be delivered no matter what, then that is a key part of our deterrence.”
A major focus of Bauer’s speech was the EIB’s limited support for direct defence investments. Although the EIB last year broadened its definition of “dual-use” investments—those with both civilian and military applications—it still prohibits direct funding for weapons or military equipment. This policy, Bauer argued, puts NATO’s readiness at risk.
“It means that you can still not invest in a gun, or a fighter aircraft, or a tank.”
EIB still cannot finance guns and tanks
Even with the expanded dual-use definition, direct funding for defence products remains restricted, he said. “It means that you can still not invest in a gun, or a fighter aircraft, or a tank.”
The EIB is a major funding partner for European investment projects carried out by SMEs and multinationals. With 88 billion euro in EIB funding in 2023 it mobilised investments worth 320 billion euro, supporting 400,000 companies and 5.4 million jobs.
A recent example of EIB funding bolstering Europe’s defence is a 115 million euro loan to deepen the navigation channel at Denmark’s port of Esbjerg on the North Sea. This expansion will increase the port’s capacity to accommodate larger vessels, including those used in NATO operations, giving them better access to the Baltic Sea.
“I would love to see finance ministers within NATO meet a couple of times per year.”
Bigger role for finance ministers
Bauer emphasised that EU finance ministers, who oversee the EIB’s board of supervisors, hold the key to updating the EIB’s mandate. Bauer also proposed that NATO finance ministers start meeting regularly to align defence funding strategies and tackle emerging security issues. “I would love to see finance ministers within NATO meet a couple of times per year,” Bauer said in response to a question by Investment Officer.
While Bauer acknowledged concerns over Donald Trump’s return to the U.S. presidency, he underscored the importance of maintaining cooperation with the United States, regardless of political changes. “The U.S. remains too critical for Europe in terms of economics and military support for us to turn away, regardless of who occupies the White House,” he noted.
Bauer also highlighted that NATO’s effectiveness depends on the commitment of all member nations, not just the U.S. “I would suggest, when you wake up, look in the mirror and ask, ‘Have I done everything I promised?’ If not, don’t point fingers; address your own responsibilities first,” he advised.
Overcoming European defence fragmentation
Another significant obstacle Bauer identified was protectionism within Europe’s defence industry, which he argued hampers NATO’s ability to respond swiftly to crises, such as the ongoing war in Ukraine. Bauer cited examples of proprietary equipment and ammunition that are incompatible with other systems, creating inefficiencies similar to those in consumer goods markets.
“Protectionism is like ink cartridges in printers,” Bauer explained. “Manufacturers make their cartridges incompatible with other printers to corner the market, but this approach is counterproductive for defence.” This fragmentation, he argued, impedes NATO’s ability to supply Ukraine and other allies with essential ammunition and equipment efficiently.
To combat this, Bauer called for greater standardisation and joint procurement across Europe’s defence industry. “Protectionism does not protect us—it slows us down,” he warned, urging European leaders to prioritise interoperability and collaboration.