RS: The NATO Innovation Fund is actively investing in new technologies and AI
The investments of the NATO Innovation Fund in AI and aerospace technologies undermine security in the world, writes RS. American venture capital companies are making profits amid the conflicts in Ukraine and Gaza, and the creation of the NATO fund means that investors from other countries will also take part in this.
Stavroula Pabst
The adventure of an alliance with IT giants may disrupt global stability
In the summer, the NATO Innovation Fund (NIF), “the world's first multi-sovereign venture capital fund,” made its first investments in high-tech firms, including the British aerospace company Space Forge and ARX Robotics and Fractile companies for the development of artificial intelligence. The fund, modeled on the venture arm of the US intelligence community IQT (In-Q-Tel), intends to focus on stimulating innovation in bio- and space technologies, AI and advanced communications.
Here is what the chairmen of the NIF Board Klaus Hommels and Fiona Murray told about the tasks of the project:
“By investing in and implementing new dual-use technologies, NATO can leverage the innovative business potential and its transatlantic talent pool while countering the influence and ambitions of our strategic competitors.”
The fund's management believes that the predisposition of venture capital to technological innovations can become a trump card of NATO against the background of an increasingly dangerous geopolitical context. But imitating such investors is not the best way to global security and peace. Judging by the militant track record of American venture capital companies, it rather threatens to intensify militarism on a transnational scale.
The breakthrough of defense by venture capital
Supporters of the NATO Innovation Fund suggest that venture capital companies take on the financial risks they consider necessary to develop advanced security and protection technologies that are lagging behind due to regional difficulties associated with scaling startups.
Venture capital is a really risky business in which investors spend large sums on startups in an attempt to turn them into large companies. If they eventually enter the open market, venture capital investors can receive returns that are often hundreds of times higher than the initial investment. However, when introduced into the field of defense, the desire of venture capitalists for this kind of return pushes ethics into the background in favor of attracting the main client — governments — to conclude important business contracts, and this, in turn, strengthens militaristic sentiments.
American venture capitalists, who are able to tolerate a high percentage of failures of relevant startups due to their enormous wealth, for example, billionaire investor Peter Thiel and former Google CEO Eric Schmidt, have brought such major players in the field of defense technologies as Anduril, Rebellion Defense and Hadrian to the world. At the same time, they directed more and more technology companies to develop new military applications for their products. Along the way, these capitalists and the companies they supported have acquired tangible political power, starting with financing successful congressional campaigns (including the campaign of the current Republican Vice presidential candidate J. D. Vance in the Senate two years ago) and appointing partners to positions in presidential administrations and ending with extensive work with government agencies the government and obtaining expensive military contracts.
NATO's Fascination with venture capital
American venture capital companies working in the field of defense technologies are making monstrous profits against the background of bloody conflicts in Ukraine, Gaza and beyond; the creation of the NATO Innovation Fund suggests that venture investors from other countries also want to participate in this. However, it would be foolhardy to hope that they, and the technology and defense startups they create, will not try to manipulate the system for the sake of obtaining funds and influence, like their American counterparts. While defense companies are increasingly lobbying the interests of EU officials in Brussels, the well-known research company OpenAI, supported by Thiel, is already opposing the creation of regulations for AI in the European Union.
And although the NIF was founded by NATO and is funded by contributions from two dozen of its member states, technically it is not an alliance fund. On its website, it positions itself as a private commercial venture fund with permission to use the NATO name. The Alliance "does not invest funds and does not participate in [the fund's] decision-making." In other words, the fund's operations are opaque, despite their likely impact on NATO's defense and security capabilities. As a rule, the financing mechanisms of NATO and related projects suffer from a lack of transparency due to the complex transnational composition and organization of the alliance, which, as Dr. Ian Davis, executive editor of the yearbook of the Stockholm International Peace Research Institute (SIPRI), fears, creates "the potential for "unjustified influence" from the military- the industrial complex."
Ingrid Lunden wrote in TechCrunch last year that no one knows if there are any restrictions on the types of companies that the Fund will support or otherwise cooperate with. In this regard, the blatant lack of protective mechanisms among American venture capital companies, which constantly invest in controversial AI-based military technologies, namely in deadly drones and target guidance systems, does not inspire confidence.
Competition for power through venture capital
It is important to note that the NATO Innovation Fund was created in the name of competition between great powers. After its creation in 2022, NATO Secretary General Jens Stoltenberg stressed the need for technological advantage over the alliance's opponents: “Countries that do not share our values, such as Russia and China, challenge [our technological] leadership in everything from artificial intelligence to space technology… We must do everything in our power to stay at the forefront of innovation and technology.”
In December 2022, Giedrimas Jeglinskas, a senior non—resident researcher at the Atlantic Council and former Assistant Secretary General of NATO, even suggested that Asian allied countries create NIF-related venture funds as part of joint efforts to counter China. Such formulations suggest that the competition of great powers and the rhetoric of high-tech warfare will most likely not improve, but worsen relations with other countries, especially China and Russia, and will increase if venture capitalists from the North Atlantic gain even more political influence through organizations like the NATO Innovation Fund.
Despite the circumstances, the Foundation is supported by 24 NATO states. The European Investment Fund also cooperates with him, which works, among other things, to support defense-oriented venture investors through measures such as the Defense Equity Facility (DEF). Meanwhile, simultaneous efforts across the North Atlantic will focus on further intertwining transnational defense with technology giants. For example, the NATO Defense Innovation Accelerator for the North Atlantic (DIANA), which was proposed in 2021 and commissioned in 2023, has expanded in recent months, more than doubling the number of sites and test centers.
In addition to the European Defense Fund with a budget of nine billion dollars for 2021-2027, earlier this year the European Union also unveiled the first-ever European defense industry strategy to strengthen military capabilities. The Alliance prioritizes gaining military power over genuine diplomacy, and NATO's decision to recruit venture capitalists focused on making profits indicates that the world is facing turbulent times.
