Capstone attended the Oslo Energy Forum last week, a prelude conference to US and European leaders gathering in Munich. Several CEOs of global energy companies, along with Norway’s top leadership, were in attendance. Our key takeaway: Europe has absorbed the message of increased defense spending, creating opportunities for investors and defense companies.
Undersea Infrastructure Protection: NATO Priority
Several Norwegian speakers highlighted a key trend underappreciated in the US: the need to protect critical subsea infrastructure from Russian and Chinese attack. Since World War II, undersea cables served as strategic military communications infrastructure and intelligence targets. Today, they serve as the commercial veins for AI, data transmission, and global financial transactions—carrying more than 95% of intercontinental internet traffic and government communications and enabling trillion-dollar daily commerce.
These cables also serve as the pipelines for offshore windfarms. Last month, Britain, Belgium, Denmark, France, Germany, Iceland, Ireland, Luxembourg, the Netherlands, and Norway signed the Hamburg Declaration, a commitment to build the world’s largest clean energy reservoir in the North Sea that could produce electricity “sufficient to power 143 million homes via high-voltage undersea cables.”
According to the Carnegie Endowment for International Peace, “More subsea data cables connect to Europe than to any other continent around the world.” These cables are not only threatened physically by Russian and Chinese potential attacks but also vulnerable to cyberhacks and espionage.
A recent Norway-UK undersea infrastructure protection agreement, coupled with NATO’s presence at the Hamburg Declaration last month, signals the beginning of a broader Northern European effort to secure critical subsea cables and pipelines. This creates opportunities for:
- Maritime surveillance systems (sonar, acoustic sensors, autonomous underwater vehicles)
- Naval patrol vessels and subsea monitoring platforms
- Command and control systems for critical infrastructure protection
- Satellite-based maritime domain awareness
Companies with dual-use underwater technology serving both commercial and defense markets (e.g., offshore energy monitoring, fisheries, naval applications) are well positioned to capture this spending. Nordic defense budgets are expanding specifically for this mission set.
NATO 5% Commitment – Hidden Infrastructure Opportunity
The widely reported NATO 5% of GDP defense commitment obscures a critical detail: it comprises 3.5% for traditional defense spending and 1.5% for defense-related infrastructure. The infrastructure component remains undefined, creating ambiguity about whether member states can count pre-existing plans or must allocate new funding. This 1.5% infrastructure allocation could encompass:
- Military base power infrastructure and grid resilience
- Dual-use energy systems supporting defense installations
- Transportation and logistics networks with military utility
- Communications infrastructure and data centers for defense applications
Energy and infrastructure companies with defense-adjacent capabilities should position for this spending. The definitional flexibility means countries will seek creative approaches to meeting the 1.5% threshold, potentially including civilian infrastructure with national security justification.
US Political Dynamics at Munich Security Conference
The Munich Security Conference revealed significant US political positioning ahead of the 2028 elections. Democratic presidential contenders Governor Gretchen Whitmer and Governor Gavin Newsom were in attendance, ostensibly to discuss foreign policy credentials, while Representative Alexandria Ocasio-Cortez had a coming-out party of sorts on foreign policy. China was a key message for all three. Secretary of State Marco Rubio distinguished his tone from Vice President Vance’s confrontational 2025 approach, but the substance remained consistent: burden-sharing expectations and transactional alliance relationships.
European defense companies should prepare for continued US pressure on allied procurement regardless of 2028 election outcomes. Buy American requirements and domestic content mandates will persist across both parties.
Bottom line: European defense infrastructure spending will create opportunities beyond traditional weapons systems. Companies positioned at the intersection of energy, maritime technology, and defense will benefit disproportionately from the NATO 5% commitment.
Read more from Capstone’s National Security Team:
Regulatory Changes to Foster US Drone Supply Chains
How Trump’s National Security Strategy, NDAA Expand Private Investment Opportunities
The Coming US Boost to Defense and Europe’s Response
