	Introduction

The year 2014 was pivotal for the North Atlantic Treaty Organization (NATO, or the alliance). Among them is the challenge of protecting NATO's military technological superiority over its potential adversaries, and staying ahead of political and technological change. NATO faces both conventional and hybrid challenges, but threats could expand to include new challenges related to the diffusion of technology, the accelerating pace of technological change, or NATO's military and societal dependence on commercial technologies. Operating domains have already expanded to include cyberspace, land, sea, and air, and could soon include space. Policymakers from across the alliance, concerned that NATO's technological edge is eroding across domains, have urged NATO to address the risks and opportunities associated with technological change. In the future, NATO might have to rely as much on its agility and capacity for innovation as it has previously relied on its military technological advantage. This report provides analysis for Congress on how NATO is responding to the technology landscape, and includes sections on
the evolving threat environment and how NATO is affected by global trends in defense spending and advancing technology; U.S. defense strategy and its increasing focus on strategic competition for technological superiority and innovation; NATO's response, including institutional strategies as well as national responses from Europe's top-three defense spenders (the UK, France, and Germany); and the opportunities and the challenges that NATO faces in fostering a NATO capacity for innovation in light of technological change. Congress may consider what role it can play in supporting NATO's adaptation to the changing technology environment. It has modernized its military and increased investments in unmanned systems and other emerging technologies. In the United States, it grew by 45%. International competition for technology and innovation is also increasing. Responsibility for NATO's transformation or adaptation rests largely with NATO's military command, Allied Command Transformation (ACT) in Norfolk, VA, which is working with other NATO stakeholders to build a shared vision for the future, to identify potential capability needs for future operations, and to use that information to establish and align S&T investment priorities for the allies. U.S. defense innovation strategies raise questions for the United States and its allies about their expectations of one another in terms of technology and innovation, and about their willingness to collaborate on technology development. Namely, it confronts a major state rival with sophisticated military capabilities as well as an expanding group of nonstate challengers with potential access to disruptive technologies. Many European states are now taking steps to increase their defense budgets and, at the same time, balance commitments to national sovereignty in defense with efforts to increase practical cooperation with European partners. When it comes to defense innovation, investments in R&D, and reforms to improve access to commercial innovation, European nations are in the early stages of formulating predominantly national strategies. German analysts point to a deep-seated concern in the German public consciousness about defense research and its potential to undermine peace. Generally speaking, NATO's innovation challenges relate to 
securing resources for innovation and engaging commercial industry; balancing short-term priorities with preparations for the future; preserving interoperability and transatlantic burden-sharing; harmonizing defense planning processes, including with the EU; and using allies' diversity to foster more effective innovation. The risk is that the gap could deepen if the United States continues to pursue a technology-driven strategy and Europeans do not, or if the United States moves faster than its NATO allies on fielding new technologies. Discussions about technology and future warfare are beginning to take place in some national governments and in NATO institutions. Global commercial investments in R&D are growing, and commercial innovation is increasingly important for defense and security.
The North Atlantic Treaty Organization (NATO) has a renewed focus on defense and deterrence in Europe. In the past, NATO relied at least in part on its military technological superiority over potential adversaries for defense and deterrence in Europe, but some policymakers are increasingly concerned that NATO's technological superiority is eroding.
Russia, China, and others are modernizing their militaries, investing in new and emerging technologies, and exploring their applications for defense. In addition, NATO faces rising operating costs, and both conventional and hybrid challenges in operating domains that have expanded to include cyberspace as well as land, sea, and air. NATO must also contend with a growing group of nonstate challengers empowered by the pace of technological change and the global diffusion of technology. Increasingly dependent on ubiquitous technology, NATO is adapting to a world in which commercial investments in research and development (R&D) outpace those of governments, innovation cycles are shortening, and there is more international competition for technology and innovation.
Since 2014, the United States has promoted defense innovation as a strategy to integrate new technologies into military capabilities and strengthen U.S. technological superiority over its potential adversaries. Today, many European allies acknowledge the importance of technology and innovation in defense, and they are beginning to respond to the changing environment by committing more resources to defense, and a few have national defense innovation strategies of their own. The United Kingdom, France, and Germany—NATO's largest European defense spenders—are investing more in R&D and reforming their defense ministries to take more risk, procure technology faster, develop innovative concepts, and strengthen their links with commercial industry. Generally speaking, however, European governments are still in the early stages of developing what are predominantly national strategies.
NATO seeks to harmonize the allies' national strategies and defense investments, promote collaboration, and build a shared vision for the future. Its member states have sophisticated militaries, institutional frameworks for collaboration, and dynamic economies that attract talent, and support innovation. Innovation challenges persist, however, such as those related to NATO's limited budgets and its bureaucratic processes, which make it difficult for NATO to attract the attention of commercial industry and global technology companies. NATO is also working to balance its member states' concerns over national sovereignty with the need for more multinational cooperation, both from a cost and from an interoperability point of view. NATO also seeks to enhance interoperability among allied militaries and balance short-term priorities with preparations for future warfare. In the future, NATO might have to rely as much on its agility and on its capacity for innovation as it has relied on its military technological advantage in the past.
Congress may consider what role the United States can play to support NATO's adaptation, and what channels Congress could pursue to exert influence over NATO's direction. There are both risks and opportunities associated with sharing technology or developing it jointly with NATO allies, and there are questions about what the United States and its allies expect from one another in terms of technology and innovation. Technology has the potential to enhance NATO's effectiveness, but it also has the potential to undermine interoperability or political cohesion if the United States develops a technology-driven strategy and its NATO allies either do not keep pace, or do not adapt to strategic, political, and technological change.