T
he 80-year-old global order established after the Second World War is unravelling. The security architecture of the Atlantic system, the economic and political framework of the Bretton Woods institutions, the liberal assumption that free trade would reduce conflicts by increasing interdependence, and global supply chains reliant on cheap energy and low-cost production no longer meet the needs of the new era. The world is transitioning, increasingly and more forcefully, to a new global competitive order that we define as ‘Second Mercantilism’.
In this new order, trade is no longer merely trade. A semiconductor factory, a container port, a data centre, a rare-earth elements mine, an LNG terminal, a satellite network, a submarine cable, a shipyard or an ammunition factory have all simultaneously become elements of economic, technological, geopolitical and military power. States are no longer competing solely for market share; they are vying for control over production capacity, critical technology, energy security, logistics routes, strategic minerals, data flows and supply chains.
Consequently, the old distinction between the global economy and the global security system has vanished. The economy is being securitised, security is being industrialised, technology is becoming geopolitical, and trade is increasingly and explicitly transforming into a tool of the struggle for national power. It is precisely in the midst of this major shift that NATO’s future lies.
In the 20th century, there was an ideological, military and nuclear balance between two major blocs. Today, however, competition is far more fragmented, far more technological and far more economic in nature. Russia represents an immediate and direct military challenge; China, long-term industrial, technological and systemic competition; regional powers, missile systems, unmanned systems and proxy wars; whilst non-state actors represent asymmetric threats.
Cyberspace, space, undersea infrastructure, energy networks, critical minerals, artificial intelligence and supply chains are becoming new arenas of competition. In such a world, it is impossible for NATO to continue on its current path based on the classic military alliance logic of 1949.
The commitment by NATO members to raise their defense and security-related expenditure to 5 per cent of their GDP represents one of the most significant economic and political transformations in the Alliance’s history. However, it would be a grave mistake to interpret this decision merely as ‘spending more money’. For money, on its own, does not create deterrence.
You can increase your budget, but if you cannot produce sufficient ammunition, you cannot fight. You may possess the most advanced platforms, but if your critical components are reliant on a single external supplier, you cannot establish a sustainable defense capability. You can develop excellent air defense systems, but if your stockpile of interceptor missiles is depleted within a few weeks of intense fighting, your strategic resilience remains merely theoretical. You may possess very expensive fighter aircraft, but if their maintenance, engine, electronics, software and ammunition supply chains are fragile, you cannot manage the economics of a protracted war.
The Russia-Ukraine War, the crises in the Red Sea, the conflicts in the Middle East and the revolution brought about by unmanned systems on the battlefield have all demonstrated the same truth to us: the decisive factor in modern warfare is not merely technological superiority; it is the ability to scale up technology, produce ammunition continuously, rapidly replace losses and adapt industrial capacity to the pace of the war.
For this reason, NATO’s 5 per cent target must be a production doctrine, not merely an accounting decision. In this new era, NATO’s fundamental question should not be ‘How much are the Allies spending?’, but rather ‘How much can the Alliance produce, how quickly can it replenish its stocks, how long can it sustain operations, and how rapidly can it ramp up production in the event of war?’ It is precisely at this point that NATO must transition from a traditional alliance to a comprehensive defense economy.
The concept of a total defense economy does not mean transforming the entire economy into a military economy. The issue is to restructure the boundaries between defense and the economy in line with the demands of the new era.
NATO can no longer consider military planning and industrial planning in isolation from one another. Defence ministries, economic and industrial ministries, energy policies and critical infrastructure investments cannot operate in separate spheres. This is because, in modern warfare, the distance between the front line and the production line has been eliminated.
For this reason, the Alliance’s new economic model must be built on five fundamental pillars:
Firstly, long-term and predictable joint demand must be established. If defense companies are to be asked to increase their capacity, they must be given a 10–15-year order outlook, not just a three-year one. Factories grow not on the basis of political statements, but on guarantees of sustainable demand.
Secondly, joint procurement mechanisms must be strengthened. The dozens of different standards for the same munitions, disjointed national tenders for the same requirement, duplicate investments amongst allies, and political protectionism that hinders economies of scale must be reduced.
Thirdly, redundancy must be established in critical production chains. In the new NATO economy, no strategic product should be dependent on a single factory, a single country or a single company. Alternative production centers must be established for engines, explosives, guidance systems, semiconductors, optical and radar components, batteries, critical minerals and software infrastructure.
Fourthly, a transition to a joint stockpiling system must be made. Ammunition, fuel, critical spare parts, air defense interceptors and strategic raw materials must be planned not solely on the basis of national stockpiling logic, but in terms of the Alliance’s overall resilience.
Fifthly, production-conversion capacity must be established in the event of war. Plans must be drawn up today to identify which elements of civilian industry – from automotive to electronics, from chemicals to metallurgy, and from software to logistics – can support defense production in the event of a crisis.
The view that this new architecture must evolve towards a ‘NATO Defence Economic Area’ has gained significant traction. This area should encompass common standards, long-term orders, mutual investments, cross-border production clusters, coordination on critical raw materials, the integration of SMEs into the system, joint testing and certification processes, and the reduction of political barriers to defense trade within the Alliance.
This is because, in the era of Second Mercantilism, the defense industry is not merely a sector in which companies operate. It is one of the main pillars of national power, technological sovereignty and alliance resilience.
However, NATO faces more than just Russia, China or other global challenges. One of the most significant issues the Alliance must overcome is strategic fragmentation within its own ranks.
NATO must shake off the image of a ‘row among boatmen’ – a situation where allies sometimes view one another as rivals, where bilateral political disputes hold collective security hostage, where defense industry restrictions are directed at alliance members, and where short-term domestic political calculations take precedence over long-term strategic objectives.
To put it more plainly, NATO cannot prepare for a new Cold War whilst engaged in an internal ‘brawl’. Weakening an ally’s defense capabilities on political grounds undermines the alliance’s overall deterrence. Disrupting an ally’s supply chain reduces the capacity NATO will require in a crisis. Imposing restrictions on parts, engines, ammunition or technology for an ally’s strategic platforms, whilst subsequently expecting that same ally to contribute more to the Alliance’s defense, is unsustainable.
Moreover, as the world moves towards far greater systemic competition, NATO’s squandering of its energy on internal disputes creates strategic space for its real rivals.
The Alliance cannot resolve every political issue between its members. Such an expectation is unrealistic. However, it must not allow bilateral disputes to paralyze its collective defence capabilities. Defence industry cooperation must be spared from becoming the first casualty of short-term political tensions. In this regard, the example of Türkiye is highly instructive.
NATO’s 5 per cent decision is not merely a security decision for Türkiye; it represents a new economic climate that could give rise to one of the greatest opportunities for external defense procurement in the history of the Republic.
Certain NATO countries must come to terms with the fact that the political obstacles and embargoes they have imposed on Türkiye’s defense industry in the recent past are entirely at odds with the 5 per cent target—which is essential for the Alliance’s global ambitions—and that they require Türkiye’s sustainable, robust production capacity.
This is because the 5 per cent target cannot be achieved merely by increasing the budget on paper. The true meaning of this target is: more ammunition, more air defense systems, more unmanned platforms, greater electronic warfare capabilities, stronger naval assets, more resilient logistics networks, larger stockpiles and faster production lines. And all of these require industrial capacity.
Türkiye, however, is not entering this new era as a country attempting to build its defencs industry from scratch. Thanks to the extensive ecosystem it has established over the past 20 years, Türkiye has developed production capabilities across a very broad spectrum – ranging from UAV and UCAV systems to smart munitions, from land platforms to military vessels, from electronic warfare to radar, and from missile technologies to communications systems.
Moreover, Türkiye’s most significant advantage lies not merely in its ability to develop technology. The key advantage is its capacity to produce systems that are cost-effective, scalable, adaptable to the needs of different geographies, and, crucially, extensively field-tested. This is precisely the characteristic sought by the new war economy.
This is because, in the coming period, it will not be the country with the most expensive platform that gains the advantage, but rather those that can compensate for losses most rapidly, replicate their systems most cost-effectively, produce ammunition without interruption, and continuously update their technology using data from the battlefield. Türkiye’s defense industry is rising precisely at this turning point for NATO.
For this reason, the 5 per cent target will not merely turn Türkiye into a NATO member that spends more on defense. More importantly, it will position Türkiye as one of the key potential suppliers to meet the massive external demand created by the increased spending of other NATO countries. This could generate a genuine multiplier effect for Turkish defense exports.
Europe needs to replenish its ammunition stocks, expand its air defense capabilities, increase its unmanned systems, modernize its land forces, and invest more in electronic warfare, radar, missiles, maritime security and the protection of critical infrastructure.
Türkiye possesses production capacity in a significant portion of all these areas. Consequently, the fundamental question for the coming period is not whether Türkiye is important to NATO. That debate has already been settled. The real question is to what extent NATO’s new defense economy can be sustainable without Türkiye’s production capacity.
It is no longer sufficient to explain Türkiye’s role within NATO solely through the concept of the ‘southern flank’. This is a geographical term from the Cold War era. In the new era, Türkiye is a strategic pivot rather than merely a flank.
Situated between the Black Sea and the Mediterranean, the Balkans and the Caucasus, Europe and the Middle East, the Caspian Basin and the Eastern Mediterranean, and the Euro-Atlantic system and the Turkic world, Türkiye is the central country linking different security geographies. A flank is on the periphery; a hinge, however, connects the different parts of the system.
Türkiye’s importance, therefore, does not stem solely from the Straits, its military bases or its large army. Türkiye is simultaneously a centre for production, logistics, energy, transport, technology and diplomacy.
When it comes to Black Sea security, Türkiye is there. When it comes to the Caucasus, Türkiye is there. When it comes to the Balkans, Türkiye is there. When it comes to the Middle East, Türkiye is there. When it comes to the Eastern Mediterranean, Türkiye is there. When it comes to security and defense relations extending to Africa, Türkiye is there once again. As the geography of the New Cold War expands, Türkiye’s strategic value is not diminishing; it is multiplying.
When Türkiye’s defense industry capacity is factored in, its position within NATO takes on a new dimension. Türkiye is no longer merely an ally that provides troops, bases or geographical access. Türkiye is a power capable of developing, producing and exporting the systems the alliance requires, and of adapting them to different operational conditions.
For this reason, the 5 per cent target for NATO countries will not merely signify market growth for Türkiye. With the right strategy, Türkiye could become one of the hubs for joint production centers, technology consortia, long-term supply agreements and cross-border defense industry investments.
The aim here should not simply be to ‘sell more Turkish defense products’. The aim is to establish Türkiye as one of the founding production centers of NATO’s new defense economy.
In the era of the New Cold War, deterrence cannot be measured solely by the number of missiles. True deterrence lies in being able to convey this message to your adversary: you may weaken me with an initial strike, but you cannot exhaust my production capacity; I will replenish my stocks, make up for my losses, re-establish my supply chains, produce alongside my allies, and sustain the war for longer than you can.
This is the essence of a total defense economy. In a world where the 80-year-old order is unravelling and the era of Second Mercantilism is on the rise, NATO must change not only its military plans but also its economic and political mindset. A NATO that wastes time on internal political squabbles, imposes defense industry barriers on its own members, produces the same systems in a fragmented manner, and leaves critical supply chains dependent on non-allied actors cannot manage the new global competition.
To focus on real rivals, the strategic disarray within the Alliance must first come to an end. Türkiye’s role in this new era is far greater than it has ever been. Türkiye’s geography is indispensable. Its armed forces are indispensable. Its defense industry capacity is becoming increasingly indispensable.
Its scale of production, cost-effectiveness, technological dynamism and operational experience across diverse geographies make Türkiye one of the natural hubs of NATO’s new defense economy. Consequently, NATO’s 5 per cent decision is not merely a period of higher defense spending for Türkiye. This decision represents a new economic context that could give rise to one of the greatest opportunities for external defense demand in the history of the Republic.
Türkiye must view this opportunity not merely as an increase in exports, but also through the prism of joint production, technology partnerships, cross-border investment, long-term supply agreements and strategic industrial depth. Certain NATO countries must now face up to a reality: the political obstacles and embargoes they imposed on Türkiye’s defense industry in the recent past are entirely at odds with the 5 per cent target, which is essential for the Alliance’s global ambitions. The production volume, munitions capacity, unmanned systems, naval platforms, electronic warfare solutions and sustainable supply chains required by this new era cannot be established whilst excluding Türkiye.
NATO’s overall defense economy cannot simply replicate the platform logic of the 20th century. The new battlefield is evolving into a hybrid structure where expensive, low-volume systems are used alongside cheap, mass-produced systems. For this reason, the Alliance’s new defense industry mobilization must focus on several key areas.
The first area is low-cost, mass-produced unmanned systems. UAVs, armed UAVs, kamikaze systems, loitering munitions, logistics drones, and unmanned land and sea vehicles are no longer merely auxiliary elements but essential components of warfare.
The second area is anti-drone and layered air defense. Using missiles costing millions of dollars to shoot down drones costing tens of thousands of dollars is not a sustainable economic model. NATO must integrate electronic warfare, directed energy, low-cost interceptors and AI-supported early warning systems within a single architecture.
The third area is munitions production. High-volume production capacity must be established, ranging from 155-millimeter artillery rounds to precision-guided munitions, and from cruise missiles to air defense interceptors. The new war has demonstrated just how quickly stocks can be depleted.
The fourth area is long-range precision strike capability. As the depth of the battlefield increases, command centers, logistical hubs, air bases and strategic infrastructure are being threatened from ever greater distances.
The fifth area is electronic warfare and spectrum superiority. In the wars of the future, forces that cannot control the electromagnetic spectrum, safeguard their communications or blind the enemy’s systems will be unable to make effective use of even their most advanced platforms.
The sixth domain is the protection of subsea infrastructure. Power cables, fibre-optic cables and critical subsea systems form the invisible nervous system of the global economy.
The seventh domain is space and satellite architecture. Instead of a few large and vulnerable systems, distributed, redundant and rapidly deployable satellite networks must be established.
The eighth area is AI-enabled C4ISR systems. Armies that interpret data rather than merely collect it, link sensors together, shorten decision-making times and bring different force elements together within a common operational picture will gain the upper hand.
Above all this, a single fundamental principle must prevail: in the new warfare, victory will not go to the one with the most expensive platform, but to the one that can renew its forces most rapidly, replicate them most cost-effectively, produce ammunition for the longest duration, and compensate for losses most swiftly.
In the era of the New Cold War, deterrence cannot be measured solely by the number of missiles. True deterrence lies in being able to convey this message to your adversary: you may weaken me with an initial strike, but you cannot exhaust my production capacity; I will replenish my stocks, make up for my losses, re-establish my supply chains, produce alongside my allies, and sustain the war for longer than you can.
This is the essence of a total defense economy. In a world where the 80-year-old order is unravelling and the era of Second Mercantilism is on the rise, NATO must change not only its military plans but also its economic and political mindset. A NATO that wastes time on internal political squabbles, imposes defense industry barriers on its own members, produces the same systems in a fragmented manner, and leaves critical supply chains dependent on non-allied actors cannot manage the new global competition.
To focus on real rivals, the strategic disarray within the Alliance must first come to an end. Türkiye’s role in this new era is far greater than it has ever been. Türkiye’s geography is indispensable. Its armed forces are indispensable. Its defense industry capacity is becoming increasingly indispensable.
Its scale of production, cost-effectiveness, technological dynamism and operational experience across diverse geographies make Türkiye one of the natural hubs of NATO’s new defense economy. Consequently, NATO’s 5 per cent decision is not merely a period of higher defense spending for Türkiye. This decision represents a new economic context that could give rise to one of the greatest opportunities for external defense demand in the history of the Republic.
Türkiye must view this opportunity not merely as an increase in exports, but also through the prism of joint production, technology partnerships, cross-border investment, long-term supply agreements and strategic industrial depth. Certain NATO countries must now face up to a reality: the political obstacles and embargoes they imposed on Türkiye’s defense industry in the recent past are entirely at odds with the 5 per cent target, which is essential for the Alliance’s global ambitions. The production volume, munitions capacity, unmanned systems, naval platforms, electronic warfare solutions and sustainable supply chains required by this new era cannot be established whilst excluding Türkiye.
(Originally published in Turkish by Kriter)
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