According to her, events in the Middle East threaten energy security and food supply, and to manage risks, Western countries' funding models must be changed.
"I have been talking for a long time about the fact that an economic war is taking place in the world. (...) We tend to speak rather frivolously about trade wars, currency wars. But in reality, if you look at what has been happening in the Middle East in recent months, and what has been going on with tariffs, blockades, export controls, asset seizures for about 10 years – all the signs of an economic war are obvious," said R. Harding at the NATO Parliamentary Assembly spring session in Vilnius on Saturday.
"What happened in the Middle East made us realize that a threat has emerged (...) to our energy security, food supply, and many other things. The world is truly balancing on the edge of an abyss right now," she added.
According to the speaker, NATO states must fundamentally review their funding sources, because "the peacetime financial system can no longer ensure security amid growing pressure."
I have been talking for a long time about the fact that an economic war is taking place in the world.
"We cannot freely use our macroeconomic systems to borrow more due to the budget constraints we all feel. We cannot use tax systems as before for a very simple reason – our societies are under great pressure due to food and energy prices. (...) We must very clearly rethink our funding systems," said R. Harding.
According to her, Western countries can no longer think only about traditional economic growth – states' preparedness for crises must become the most important political and economic task.
To allocate more attention to national defense, according to R. Harding, state budget funds alone will not be enough – it is necessary to attract private investments and increase production volumes.
"We have a serious strategic problem – supply chains that cannot expand quickly enough, and this situation exists in all (NATO – BNS) allies," emphasized the Director General of the Economic Security Centre.
She stressed that the scale of defense industry development will directly depend on banks and other financial institutions lending to the entire production chain. To achieve this, according to the expert, states must ensure stable, long-term public procurement contracts and guarantee systems that give the financial sector confidence to actively finance military resilience.
As BNS reported, at last year's NATO summit in The Hague, Alliance members committed to allocating at least 5% of gross domestic product (GDP) to defense and security by 2035, dividing these expenditures into two parts: 3.5% of economic size for direct defense needs, and 1.5% for related projects, such as military mobility.
Despite this, some Alliance members are in no hurry to increase defense spending and maintain the 2% GDP threshold.
Meanwhile, Lithuania's defense budget amounts to about 4.8 billion euros, or 5.38% of GDP.
NATO began to increase defense spending more rapidly due to the growing threat from Russia, after Kremlin forces invaded Ukraine in 2022.
