How Nato prepares for the 5% challenge in partnership with start-ups

Analyst at the Istituto Affari Internazionali in Rome, Alessandro Marrone is cautious: 'The DIANA project has to reckon with the fragmentation among NATO member states, an organisation that moreover does not make technological industrial policy. It is therefore difficult for the programme to turn out to be a paradigm shift (...) Of course it is an opportunity for small companies that can access the various test centres, including the National Underwater Dimension Centre in La Spezia'.

The rigmarole to fully enjoy DIANA involves a series of stages. According to the military organisation, currently 10 companies have just completed the second stage. In all, 74 companies are part of the class of 2025. Two Italian companies have so far been selected: Orbital Recharge in Space (ORIS), a company specialising in energy transmission via laser technology; and Fluid Wire Robotics, an enterprise born from a rib of the Scuola Superiore Sant'Anna in Pisa and active in robotics.

Domenico Sfasciamuro, one of the founders of ORIS, a company set up in 2024 and which has already received 100,000 euro in subsidies from the DIANA programme, explains from Turin: 'Our company is dedicated to space. For us, participating in the Nato initiative was useful to understand a world, the military world, in which information is difficult to find. Our goal is to understand whether our work can be used beyond the space sphere and in the military field as well'.

Asked how much money has been invested so far, a NATO spokeswoman replied: 'We do not disclose this amount. We can say that we are on track with investments and have made more than 10 direct investments'. Beyond the more technological aspects, for Nato it is also a matter of helping smaller companies to participate in tenders. Tom McSorley, an advisor to the DIANA programme, recently pointed out that lawyers are just as important as engineers at this juncture.

Let us leave aside for a moment the moral and political aspects of rearmament, which divide NATO member states so much. Historically, increased defence spending intersects with industrial issues, even before economic ones. It is well known that military research has given birth to the Internet, and other inventions that are now part of our daily lives (satellite navigation, the microwave oven, adhesive tape, nylon and other artificial fabrics, the tea bag, concentrated juices).

According to the SIPRI institute in Stockholm, military spending has increased to USD 2,718 billion in 2024, an increase of 9.4 per cent in real terms compared to 2023. In an article published in February by the Kiel Economic Institute, Ethan Ilzetzki, professor at the London School of Economics, reminded us that a phase of rearmament also has economic consequences. He looked back to the German choices of the 1930s, which enabled the country to overcome the Great Depression.

In Europe, an increase in military spending from 2 to 3.5 per cent of GDP would contribute 0.9 to 1.5 per cent to GDP growth. "GDP growth," the author warns, however, "will be lower, possibly negative, if the increases are financed by tax increases rather than by borrowing. Once again the example of Germany comes to mind: the Merz government has made rearmament the driver of economic recovery, announcing billions in investments, including in infrastructure.