“Freedom is more important than free trade,” NATO Secretary-General Jens Stoltenberg declared at the 2022 Europe-based World Economic Forum in Davos discussing China amongst other key issues. Just a few years earlier it would have seemed strange for a security-oriented NATO chief to weigh in on such economic issues.
Today, amid Russia’s aggression, the rise of China, and tensions in the Middle East, security and economics are inseparable. “What used to be seen as purely economic decisions have become security concerns”, says former NATO spokesperson Oana Lungescu, now a Distinguished Fellow at RUSI in London.
In 2019, for example, the US warned NATO members that purchasing 5G equipment from China’s Huawei was a threat to their collective security. At the time, Europeans argued it was good business, and removing Chinese 5G providers could have cost up to €55bn ($59bn.)
As a result, for the first time in more than 20 years, an economic issue made its way to the top of the NATO agenda. At the 2019 London Summit, China was mentioned by name for the first time in a declaration that pointed directly to the country’s economic policies.
Critical minerals, used to make chips for electronics and advanced machinery, are another pressing concern. Around 98% of the EU’s rare earth metals come from China and Stoltenberg warned last year of the need to secure access to these vital raw materials. NATO’s Parliamentary Assembly has also expressed concern about China’s central role in the semiconductor industry.
The security implications of economic dependency took center stage following Russia’s full-scale invasion of Ukraine in February 2022. Weeks earlier, NATO had warned Europe it must diversify its energy supply away from Russian gas (a reliance which, much like Chinese 5G, had developed for economic reasons.)
NATO’s involvement with energy infrastructure intensified after the start of the war. The Nord Stream 2 gas pipeline was sabotaged later that year, leading the alliance to double its maritime presence in the North Sea. The NATO Energy Security Centre has been providing recommendations on these issues since 2012.
Economic concerns were built into NATO’s founding document. Article 2, dubbed the “Canadian” article, because Ottawa insisted on it, dictates that states should seek to eliminate conflicts and encourage economic collaboration with other members.
Article 3, which most notably involves defense spending, also commits NATO allies to preparing their economies against outside threats. Two former NATO assistant secretary generals, who asked not to be named, said in interviews with these authors that these articles provide the organization with a clear economic mandate.
The alliance made full use of these powers during the Cold War when, with the understanding that economics and defense are inextricable, NATO became the leading force behind the Coordinating Committee (CoCom) on Soviet Union export controls. The committee was dissolved in 1994 and, presuming the West had won the battle for global dominance, NATO softened its position.
Given that sufficient military spending was already a hard sell, getting NATO countries to commit to civil or economic preparation in the post-Cold War period was near-impossible. Global economic dependencies rose, European countries failed to safeguard their supply chains, and critical infrastructure was installed by geopolitical adversaries.
Now, with Western governments pursuing active industrial policies while facing a hot war on the European continent and looming conflict in the Taiwan Strait, NATO has resumed its economic responsibilities.
If the alliance does once again become involved with export controls, however, it would be different from the Cold War. China is a significantly wealthier rival than the Soviet Union and an economic powerhouse. To counter this challenge, NATO must expand and improve its toolkit.
The alliance already has a clear means to coordinate economic resilience, and its primary assets lie in monitoring and mapping. The Joint Force Command tracks air and sea routes to ensure the safe flow of goods, for example, and keeps score on investments from strategic rivals that could threaten supply chains. This monitoring led NATO officials to raise the alarm over the Chinese majority ownership of several strategic ports in Europe.
The alliance is also unique as a forum for information sharing and coordination. Unlike other multilateral groups like the EU-US Trade and Technology Council (TTC), or the Mineral Security Partnership, member states regularly include sensitive intelligence briefings between governments.
There is a strong political will to coordinate with other member states and, increasingly, with Indo-Pacific countries and the private sector. According to former NATO officials, this coordination needs to be strengthened to ensure economic security.
Strong internal markets among NATO members will fast-track much-needed changes. In Europe, 23 alliance countries share the EU single market, and the private sectors of all allies are intrinsically linked through shared supply chains.
Critics suggest NATO is overextending itself by venturing into economic security and stepping on the European Commission’s toes since a great deal of its activity seems to overlap with the EU’s Economic Security Strategy.
With NATO’s current focus on military supply chains, and the EU’s on civilians, it is less of an issue, but as these lines blur it will be important not to duplicate efforts. The sheer volume and complexity of the challenges means two hands are better than one. “If an issue is of strategic importance, it is appropriate to discuss in different fora”, said one senior NATO official.
The alliance’s focus on economic security will not slow down any time soon. It has always been concerned with safeguarding its economies, and that is a harder task now than it was for much of the 20th century.
NATO’s future priorities look increasingly economics-driven and the July summit in Washington DC is an opportunity to strengthen cooperation.
Clara Riedenstein is an incoming graduate student at Oxford University’s Department of Politics and International Relations and a research assistant with the Digital Innovation Initiative team at the Center for European Policy Analysis (CEPA).
Eduardo Castellet Nogués is a Program Assistant for the Digital Innovation Initiative at the Center for European Policy Analysis (CEPA). His work focuses on the nexus between trade, technology, and the EU-US relationship.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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