Investing in Space: NATO holds out its hand to the commercial space sector

CNBC

a day ago

NATO's agreed to open its wallet wider, and space and defense players are likely lining up to benefit. The military coalition's brand-new commercial space strategy adds the cherry on top.
Now inked, at the vocal behest of U.S. President Donald Trump, is a pledge to more than double alliance members' defense expenditure from 2% to 5% of their gross domestic product by 2035. Some 3.5% of that funding should be funnelled toward "pure" defense, while the remaining 1.5% should be slated for security-linked infrastructure, such as cyber warfare capabilities and intelligence.
Notably, NATO recognized space as one of five "operational" domains alongside air, land, maritime and cyberspace back in 2019. Two years later, it concluded that offensives to, from or within space can be a threat to the alliance and trigger the infamous Article 5 prescribing an attack on one member as an attack on all. Going into the fine print, the military coalition is expected to publish its new Space Doctrine 2026.
Whether allies — especially a reluctant Spain — can or will actually meet a 5% target is in the air. Glancing over NATO's numbers, only Poland came anywhere close to allocating that slice of its GDP to defense purposes last year, at 4.12%, while Washington itself devoted only 3.38% of its economic output to that purpose. Across the board, there's ground to cover. In Europe, the writing's been some months on the wall, after the 27-member European Union bloc proposed to mobilize 800 billion euros ($936 billion) for defense spending back in March, while Germany relaxed its fiscal debt rules to facilitate more security-linked purchases. The U.K. started the year with a pledge to hike defense expenditures to 2.5% by April 2027, and Prime Minister Keir Starmer has since rushed to pledge a 5% goal will be hit by 2035.
Communication, navigation and surveillance are obvious uses for space capabilities in defense, and that's before you think about taking the war to the stars. Trump's ambitious Golden Dome defense shield — which his administration bills at $75 billion, but some watchers say will cost many times over — already has the likes of Boeing, Lockheed Martin and even European players vying for a piece of the budgetary action. Just recently, satellite imagery provider Planet Labs clinched a seven-figure contract to deliver monitoring and intelligence capabilities to NATO itself.
And that's the state of play among defense-geared space businesses before revisiting the controversial topic of whether Elon Musk's Starlink can be successfully dethroned from Ukraine, where it has been facilitating access to internet data and communication for residential and military purposes alike. Russian bombing has devastated local mobile networks over its three-year invasion, making third-party satellite communication services indispensable — but Musk's previously close relationship with a volatile Trump, whose support for Kyiv has been fluid, has raised concerns in Europe over Starlink's long-term reliability. It remains to be seen whether the president and tech billionaire's visceral public showdown will erase these worries among European leaders, who are largely in it to support Kyiv for the long haul.
Last we heard, Europe was still pursuing an alternative satellite champion to dislodge the overwhelming reliance on Starlink in Ukraine. France's Eutelsat, which is already supporting government and institutional comms in the embattled eastern European country, has been benefitting from that venture. Since merging with Britain's OneWeb in 2023, the French company commands over 650 OneWeb satellites in Low Earth Orbit (LEO), along with more than 30 geostationary satellites.
The company gained a nice vote of confidence last week, when it announced a 1.35-billion-euro capital raise led by the French government — which will become the company's largest shareholder with a 29.99% stake — and other investors, in a bid to boost its LEO capabilities. Shares rallied 31% as a result, building on gains logged after initial speculation that it could step into Starlink's shoes in Ukraine. That's a nice bump from the late-February lows hit in the days after a weaker-than-expected half-year profit report shaped by softer broadcast sales and firm costs.
And these kinds of private players are officially not just a fringe consideration for NATO. Just this week, the alliance released its first ever Commercial Space Strategy, stressing three goals – leveraging commercial solutions, ensuring continuous access during peace, crisis or conflict and bolstering coherent relationships with the commercial sector. The end game, ultimately, is to "help commercial partners to better understand NATO's needs, invest and meet necessary security measures, including for cybersecurity, and expand manufacturing capabilities" — many steps short of NATO procuring its own space arsenal, but still a potential boon for private companies dealing with individual member governments.