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©Reuters. FILE PHOTO: Banners with the NATO logo are placed at the entrance to the new NATO headquarters during the move to the new building, in Brussels, Belgium, April 19, 2018. REUTERS/Yves Herman/File Photo
By Gwladys Fouche and Sabine Siebold
OSLO (Reuters) -A senior NATO military official warned on Saturday that a dramatic increase in ammunition prices means allies’ higher defense spending will not automatically translate into greater security and called for more private investment in defense companies.
“The prices for equipment and ammunition are skyrocketing. Right now we are paying more and more for exactly the same thing,” Dutch Admiral Rob Bauer, chairman of NATO’s Military Committee, said on Saturday after a meeting of the alliance’s defense chiefs in Oslo.
“This means that we cannot ensure that higher defense spending actually leads to greater security.”
NATO has pushed for an increase in defense production to meet demand for weapons and equipment that has soared since Russia’s invasion of Ukraine, as allies not only rush supplies to Kiev but also stockpile their own.
One of the biggest concerns was the shortage of 155mm artillery shells, with Kiev firing up to 10,000 of these shells per day.
In February, NATO Secretary General Jens Stoltenberg warned that Kiev was burning the shells much faster than the West could produce them.
Bauer urged more private investment in the defense sector to boost production capacity, and urged pension funds and banks to stop labeling defense investments as unethical.
“Long-term stability must prevail over short-term gains. As we have seen in Ukraine, war is an event that concerns the entire society,” he said, adding that such investments are also in the strategic interest of the private sector goods.
“Forty percent of the (Ukrainian) economy evaporated in the first days of the war, a large part of which was private money, that money has disappeared,” he noted.
Bauer also urged company leaders to accelerate the expansion of production capacity.
However, according to Bauer, there was no connection between a shortage of ammunition and the difficult course of the counter-offensive in Ukraine.
“The reason why it takes time is because it is extremely dangerous, because there is a huge amount of mines in a very deep minefield – more than ten kilometers – with five to six mines per square meter,” he said, noting that Ukraine was still advancing. 200 or 300 meters per day.
In 2024, NATO will hold its largest collective defense exercises since the Cold War, with more than 40,000 troops from across the alliance taking part in the Steadfast Defender exercise in Germany, Poland and the three Baltic states.