To stay military top dog: NATO innovative warfare funding

(Photo: business centre where NIF helds office) We are witnessing a new global arms race, with different political powers ramping up their military budgets. In the last ten years, the military expenditures of NATO EU countries have increased by almost 50 %, from €145 billion in 2014 to €215 billion in 2023. This new arms race is not only revolving around traditional weapon systems, but also around so called “emerging disruptive technologies”: advanced technologies, such as artificial intelligence and data and computing, that can be used for new forms of warfare. The war in Ukraine, with the widespread use of cyber, drones and other autonomous weapon systems, has put a spotlight on how these new advanced technologies, originally build for the commercial sector, are changing the nature of war. In a bid to be ahead in the development of these kind of technologies, the NATO last year launched the NATO Innovation Fund (NIF) with office in Amsterdam.

Capital for advanced killing technologies

The NATO Innovation Fund is a multibilllion-euro initiative designed to invest in emerging technologies with dual-use military and civilian applications. Although the fund bears the name of the NATO, the alliance is not involved financially or organisationally in the fund. Instead, the fund operates as as standalone venture capital fund that receives its capital from twenty four different NATO countries. The main goal of the fund is to support the development of new advanced technologies, such as artificial intelligence (AI), data and computing, energy, new materials and biotechnology, that can be used for military purposes. The fund aims to do this through investing in start-ups that develop these kind of technologies and by investing in other investment funds have the same focus.

The NIF is complementary to another NATO initiative: the Defence Innovation Accelarator for the North Atlantic (DIANA). This program also seeks to support start-ups based in NATO-countries to develop new emerging disruptive technologies. Contrary to the NIF, this program is run directly by NATO employees. DIANA organises so called “competitive industry challenges”, where start-ups are asked to develop dual-use technologies to tackle a certain military or security issue. The start-ups that are selected for the challenge gain access to DIANA’s ‘accelerator sites’ and ‘test centres’ where they can develop their new technologies.

The accelerator sites and test centers of DIANA are based in existing university or commercial research labs in NATO countries. In the Netherlands, the Brainport Eindhoven area functions as an accelerator site. This means that DIANA participants gain access to the facilities and expertise of the TU Eindhoven university and different companies that are part of the Brainport Eindhoven area.Furthermore, DIANA participants also can make use of the Safety & Security Campus/Robotics & AI Systems (RAS) campus for security innovation at the military base Oirschot, and the Fieldlab SmartBase of the Dutch Military in Ede, that both function as a DIANA test centers.

Next to this access to specialised test sites, participating start-ups receive non-dillutive grants to develop their product and are mentored by network of scientist, engineers and military experts affiliated to DIANA. Lastly, DIANA helps participating start-ups to find investors and to market their products to NATO member-states.

Tech-war rhetoric

The NIF is presented as the step after DIANA: companies that have developed a product through DIANA can then use the NIF for funding to start up their company. NATO-officials argue that this is necessary because Western private venture capital funds are afraid to invest in dual-use technology with military purposes. In their view, companies that develop these kind of technologies often fail to attract long-term funding in the West and as a result get taken over by investors from non-NATO countries. The NIF was launched to fill this supposed gap: the fund is structured “to make investments that would mature in about 15 years, as opposed to the 7-10 year timeline commercial VC funds tend to operate on”. The tech-war rhetoric of the official communication of the NIF clearly positions the project within the global arms race to have the most advanced military technology. Interestingly, there is also talk of setting up a similar fund for non-NATO allies in Asia to be ahead of China in the development of emerging disruptive technologies.

Militarising civil technology

The NIF not only intensifies the global arms race in advanced technology, it is also contributes to the militarisation of society. Both DIANA and the NIF only focus on dual-use technology, in other words, “civilian” technology that can be used for military applications. This means that start-ups that develop advanced technology that could be used for valuable civilian applications, such as healthcare of renewable energy, are seduced to adapt their products to military needs. Next to funneling technological innovation towards military goals, both NATO projects also push the acquisition of new military technology by NATO member states. Just as DIANA, part of the work of the NIF consists of training and supporting funded start-ups to bid for and win military contracts. This is especially worrying in the case of the NIF: the venture capital structure of the fund dictates a need for investment returns. This means that the only clients for the funded start-ups, governments, are under pressure to produce contracts to sustain the business of these companies. Thus, the fund runs a risk of supercharging militarism.

Lack of ethical guidelines

This is all especially worrying because neither DIANA nor the NIF provide any ethical guidelines regarding what kind of companies to support and invest in. New emerging disruptive technologies have the potential to stimulate the development of ever-more advanced and more lethal weapon systems – an effect that begs for limitation and control. At present, there are hardly any legal frameworks or guidelines to control new and advanced technologies of warfare, like automated weapon systems. On a EU-level for example, the only regulation that explicitly tackles the issue of automated weapons is that of the European Defense Fund (EDF), stipulating that weapons systems developed through the fund should still possess “meaningful human control” This while the use of AI in warfare is already a reality: journalists revealed that the Israeli Defense Forces (IDF) used the AI based program ‘Lavender’ to identify targets for the widespread bombings during first months of the Gaza war. The system identified over 37,000 Palestinians as suspected militants — and their homes — for possible air strikes. Although a human decision was still required to authorise the bombings, army officials recounted how they would often “devote only about 20 seconds” to each target before authorizing a bombing”. The IDF thus basically handed over the decision to kill over to a machine – even though they knew the system had a 10% error rate. Lavender not only shows that what “meaningful human control” accounts to easily gets blurred when AI is used during wartime, but also how automated weapon systems can lower the threshold for attack. Officials using Lavender explain about the process of picking targets that “the machine did it coldly. And that made it easier.” Now that humans become further detached from the use of force, states apply lethal force in situations where they wouldn’t have before. The development of ever more destructive, technologised, complex and expensive war products by both DIANA and the NIF are exactly what we do not need if we want to protect peace and a human society.

Djuna Farjon, April 2025