【Cooperation between European and Indo-Pacific Powers in the US alliance system project：Policy Paper Vol. 10】
Unifying NATO-IP4 Defense Supply Chains and Beyond

Publication of Policy Papers for the SPF Project “Cooperation Between European and Indo-Pacific Powers in the U.S. Alliance System”

　IINA (International Information Network Analysis) hosts a series of policy papers featuring analyses and insights from U.S., Japanese, South Korean, Australian and European experts, which discuss constructive cooperation among U.S. allies in Europe and the Indo-Pacific. The series aims to provide readers with valuable perspectives on the future of NATO-IP4 (Indo-Pacific 4) cooperation for regional and global security.

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The aftermath of Russia’s full-scale invasion of Ukraine in 2022 exposed massive shortfalls in NATO-nation supply chains, especially for air defenses and secure digital battlefield communications as well as long-range missiles, munitions, and artillery. The war also revealed massive delays in defense productions, ammunition standardization issues, industrial base constraints, and the like. As a result, NATO countries have resolved “to increase their own capabilities for deterrence and defense, and to replenish the stockpiles that have been depleted by their support to Ukraine.”[1]

Given the need for urgent transformation of defense-related supply chains, especially in critical and emerging technologies, the 2024 Washington NATO summit resulted in major pledges from NATO members to “strengthen . . . the defense industry across the Alliance,” through enhanced and systemic approaches to defense industrial development, greater “large-scale multinational procurement of defence capabilities,” and enhanced cooperation with NATO partners. They also agreed to work on “reinforcing NATO standards in the production of defense materiel” to ensure interoperability and interchangeability.[2]

The major defense industrial base and supply chain challenges in the Euro-Atlantic pale in comparison to the allied and partner defense industrial base and supply chain challenges in the Indo-Pacific. The potential of simultaneous Taiwan and North Korea contingencies—even during today’s Ukraine war—pose significant challenges to the IP4 nations, the informal grouping of nonmember NATO partners including Australia, Japan, New Zealand, and South Korea. These challenges will not be easy to overcome, even in the aftermath of significant defense spending increases, most notably Japan’s decision to double defense spending by 2027. A Taiwan contingency alone would pose unprecedented disruptions to global supply chains, including oft-noted semiconductor and critical mineral shortages. Some estimates indicate a $10 trillion loss in gross domestic product globally in the event of a Taiwan conflict.

The NATO 2022 Strategic Concept explicitly mentioned the Indo-Pacific for the first time, stating that “developments in that region can directly affect Euro-Atlantic security.”[3] The Indo-Pacific is a critical hub as more than 80 percent of international trade relies on maritime transport.[4] It is also the key global maritime region: 60 percent of global trade flows through the region, which is home to nine of the world’s 10 largest seaports.[5] The significant global dependence on Indo-Pacific supply chains notwithstanding, the Indo-Pacific faces major challenges to supply chains that extend beyond potential military conflicts in the South China Sea, around Taiwan, and from the North Korean nuclear program. These include natural disasters such as typhoons and tsunamis; growing illicit ship-to-ship transfers by the North Koreans;[6] massive cyber threats from the PRC, North Korea, and Russia; Iranian, Chinese, and Russian trilateral naval exercises in the Gulf of Oman;[7] and frequent Russian and Chinese air incursions over Japan. Given potential disruptions in NATO’s defense supply chains, as well as other challenges to global shipping and defense supply chains in the Indo-Pacific (and beyond, notably from Iran and its proxies), there is a need to strengthen NATO-IP4 defense-related supply chain cooperation as a first step toward promoting greater interoperability between NATO and the IP4 nations.

NATO and the IP4 need to enhance the implementation of ITPPs, which NATO formerly called the “one partner, one plan” program, for nonmember states, especially the Defense and Related Security Capacity Building Initiative. This NATO initiative provides strategic advice and practical assistance to partner nations upon their request. It is tailored to each partner’s needs, promoting defense reform, institution-building, capability development, and local force training to strengthen resilient defense institutions.[8]

The best means for NATO to enhance its defense industrial cooperation with partners such as the IP4 might be to think through scenarios that could adversely affect defense supply chains, As noted above, a key focus should be simultaneous crises in multiple theaters that could tax NATO capabilities to the fullest. NATO planners should do the same for scenarios involving the IP4 nations and other NATO-friendly nations. These situations could include protracted, simultaneous conflicts with Russia, China, and North Korea; conflicts arising in the South China Sea between China and Southeast Asian nations; or continued wars involving Israel and the Gulf Arab states. Joint scenario planning between NATO and the IP4 nations could identify and highlight supply chain vulnerabilities to help mitigate them.

A thorough analysis of such scenarios will help highlight shortcomings in national, alliance, and partner-nation defense supply chains. NATO and the IP4 nations could then build on recent NATO efforts to improve defense supply chain security. In addition to overcoming defense supply chain security challenges, developing NATO-IP4 baseline supply chain standards for materials like critical minerals and microchips would enhance NATO-IP4 cooperation. Baseline standards would also greatly enhance operations like ally-shoring, co-production capabilities, joint procurement initiatives, and supply-chain redundancy. The development of such standards can allow nations to center them in their defense planning efforts and to further diversify supply sources. Planners should pay special attention to materials and technologies critical to the next-generation defense ecosystem, which are increasingly drawing the attention of both the public and private sectors.

Improving defense supply chain security and setting baseline supply chain standards between NATO and the IP4 nations would be major first steps. Over time, NATO and IP4 need to overcome other major technological, diplomatic, political, and industrial security obstacles to increasing cooperation that are preventing greater alignment of our defense industrial bases. Overcoming these obstacles will be crucial over time to eventually allow co-development and co-production. It will also be crucial to modular construction with battlefield proximity, which will be necessary to empower the lethality NATO-IP4 needs for deterrence in the most complex security scenarios. Given the threats to geopolitical instability in the Indo-Pacific concurrent with significant security challenges in the Euro-Atlantic and Middle East, deepening cooperation between NATO and the IP4 nations is urgent.

(2025/04/04)