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FT editor Raula Khalaf selected his favorite stories in this weekly newsletter.
Defense is the new technology in the hot sector. Or round the other way? This is a question as to ask that defense stocks have rallied with everything from the news in recent weeks Donald Trump’s “gold dome” Missile Defense Shield, New UK-EU Protection Agreement, which will allow UK defense agencies to access Europe’s € 150 billion defense funds, to understand that the US-China strategic competition is here to stay here and Europe will spend more on its own defense.
The problem is whether all these new expenses will pay, or technology disruption is not just the nature of war, but the defense business itself is changing.
Military budget in the United States has long been larger (the single largest item of the Defense Federal Budget) and the larger under Trump. The President requested the record $ 1TN for the Defense of “Big Beautiful” budget bill, which has just passed the House with a vote and will now go to the Senate.
Chinese military spending is also increasing: The country is the second largest expense after the United States and the largest navy in the world. In terms of Ukraine’s war in Russia and the knowledge that the United States has become an incredible alliance, it is also increasing Europe’s defense investment as it reconsides its own protection.
However, most of this new investment is going to inheritance items, such as F -35 Fighter Jets, ships and submarines. Trump’s missile defense plans are directly out Reagan-era Star Wars PlayBook has begun to ask some analysts – even considering the global conflict – it is spent at a time when technology war is changing.
Cheap drones and missiles are above all, now the lines of Russian tanks can move in Ukraine. These are used to destroy multiple ships in the Red Sea to destroy multiple ships and to force the United States to spend nearly $ 1 billion in military operations.
In some ways, Ukraine has become a test field for this change in war. Eric Prince, the founder of the private military organization Blackwater, who is now the head of the Private Equity Farm Frontier Resource Group, mentioned in the February speech on the future of war, that Russia-Ukraine conflict “has been widely accelerated war” so that we did not see that “Genhis khan stirred horses”.
Today, innovations like 3D-printed canister explosives in the drones operated by software can extract Russian tanks in exchange for several thousand dollars, while hackers understood how the American-Angel $ 150,000 Javelin missile could jam the navigation systems in a few weeks. Prince says, add the growing energy of artificial intelligence and you have a former Navy Seal, a situation where the next major military innovation does not come from the Pentagon, even the Defense Research and Development Agency does not come from Darpa, but “from their garage” “smart people” in their garage. As he kept, “Trillion dollar installed power” is becoming obsolete.
According to the market analyst Luke Gromen, this “technology-powered default and decentralization has come to a major way of war for the first time”, who recently covered the issue. He compares the problem of the defense industry with a “curse curse” similar to the destruction of the blockbuster video in Netflix, where the old-line defense agencies will be dismissed by ground-up innovation. Louis Gival Research has called it “war microsoft-India”, it is a tendency that “can undermine the comparative advantage of the world’s military superpowers”.
Companies such as IBM and Microsoft Democratized PC (such as you had to work for a large company to get access to the mainframe) are changing the nature of war today. It has a possible profit impact for the defense contractors from Raythion to BAE systems from BAE systems and others who have seen their share prices rise in the recent market rally. Their products can become the military equivalent of a mainframe computer compared to the growing laptop on the battlefield.
Of course, these companies have their own innovative efforts. From Silicon Valley to Israel there are many cutting ends start-ups, which aims to capitalize on high-tech, decentral war. However, the changing nature of war is not just a market question – it also has macroeconomic and geological impact. Gromed says: “Western investors are operating on the basis of the first policy of US military domination as an indescribable result for the USD system and the USD system for the USD system.” If this guess is wrong?
For the starters, you will probably see the decrease in dependence on US manufacturers – something that is already happening, such as proved by Europe’s rebuilding plan, which depends on EU companies. This question also arises as to whether the America can increase military expenditure at the time of the Debt Viocese and deficiencies raising the alarm. Finally, the democratization of war gives more defense autonomy to both individuals and individual countries. Success in this new world is low in the form of budget and can be more measured in technology intelligence.
