The Strategic Relevance of Defence in a Multipolar World
A World Rearming: The Macro Security Environment
In 1992, American political scientist Francis Fukuyama famously declared “the end of history” —
arguing that liberal democracy had triumphed and that the United States, as its guarantor, would
preside over a peaceful, rules-based world order. For a generation, this thesis shaped Western defence
policy. Nations disarmed. Budgets shrank. The assumption that major interstate conflict was obsolete
became the default position in most Western capitals.
That assumption is now in ruins. Thirty-four years later, the world is not converging toward liberal
peace — it is fragmenting into a multipolar order defined by competing spheres of influence, eroding
international institutions, and the return of hard military power as the decisive currency of statecraft.
In 1904, the British geographer Halford Mackinder warned that control of the Eurasian “Heartland”
would determine the balance of global power. Today the geography of competition has expanded far
beyond the original concept. Strategic rivalry now stretches across the Indo-Pacific, the Middle East,
Africa, and the wider Global South, where great powers compete for influence over trade routes,
resources, technology, and security partnerships. The geopolitical contest Mackinder foresaw never
disappeared – it has simply returned in a broader and more complex form.
The Structural Shift: Key Inflection Points
• 2014 — Russia annexes Crimea, the first forcible redrawing of a European border since 1945.
NATO responds with the Defence Investment Pledge, though European spending remains near
historic lows.
• 2017–18 — The US formally designates China a “revisionist power.” The 2018 National Defense
Strategy declares great-power competition — not terrorism — as America’s primary security
concern.
• 2022 — Russia launches a full-scale invasion of Ukraine. Europe’s strategic complacency is
exposed: depleted stockpiles, hollowed industrial bases, force structures built for peacekeeping
not warfare.
• 2025 — The US 2025 National Security Strategy formally rejects “global domination” in favour of
“regional balances of power.” Secretary Rubio describes unipolarity as a “transient anomaly.”
America Embraces Hard Power
Niccolò Machiavelli observed five centuries ago that a prince who cannot make himself feared will
inevitably be exploited by those who can. In a multipolar order where international institutions have
lost their authority, that observation has never been more operationally relevant. The Trump
administration has demonstrated a readiness to deploy military force that marks a decisive break from
post-Cold War norms: coordinated US-Israeli strikes on Iranian nuclear facilities in June 2025, and in
January 2026, the capture of Venezuelan President Nicolás Maduro by US special forces — the most
far-reaching US military operation in the Western Hemisphere since Panama in 1989. The Council on
Foreign Relations documented that in 2025 alone, the Trump administration conducted more military
operations than the Bush, Obama, and Biden administrations combined.¹
This is not an aberration. It is the logical expression of a world in which, as Carl von Clausewitz
observed in On War (1832), war is “the continuation of politics by other means” — not an aberration
from statecraft but its most direct instrument. In a multipolar world where the credibility of deterrence
must be continuously demonstrated, the demand for that instrument is not a question of preference.
It is structural.
The Investment Case: Why Defence Now
The geopolitical case is clear. The investment case requires one further step: translating a security
thesis into a financial one. Three structural arguments define it.
3.1 Sovereign Demand at Historic Scale
The US defence budget crossed $1 trillion for the first time in FY2026. In April 2026, the Trump
administration proposed $1.5 trillion for FY2027 — a 44% year-on-year increase, the largest since
World War II.³ The EU’s SAFE instrument commits €150 billion in defence industrial loans, part of a
broader ReArm Europe plan targeting €800 billion. India allocated a record $90 billion to defence in
FY2026-27, with 75% ringfenced for domestic procurement.
3.2 Defensive Characteristics as an Asset Class
Government defence contracts offer financial characteristics that are rare across asset classes:
• Revenue visibility: Multi-year sovereign contracts (5–15 years) with customers who cannot go
bankrupt and rarely switch suppliers mid-programme.
• Recession resistance: Demand is driven by geopolitical necessity, not consumer sentiment or
economic cycles.
• Durable moats: Security clearances, qualification requirements, and embedded programme
relationships create switching costs that protect incumbents.
• Structural growth: The drivers of increased spending — great-power competition, technology
modernisation, industrial base rebuilding — are multi-decade in nature.
3.3 The Technology Inflection: A New Industrial Landscape
The most important dimension of the current cycle is that it is not simply a quantitative expansion of
procurement — it is a qualitative transformation of what warfare requires, creating entry points for a
new generation of manufacturers.
The defining dynamic is cost asymmetry. A Patriot PAC-3 interceptor costs $4 million. The Shahed
drone it shoots down costs $35,000. In the opening days of the Iran war, Gulf forces expended over
800 Patriot missiles in three days — exceeding Ukraine’s total four-year supply.⁴ The defender relying
solely on legacy systems is on an unsustainable cost trajectory.
Drones have fundamentally redefined the modern battlefield. In Ukraine, drones now account for 70–
80% of all military casualties — surpassing artillery. Global drone attack incidents increased by
4,000% between 2020 and 2024. Ukraine produced over 4 million FPV drones in 2025, with monthly
deliveries reaching 200,000. This is not a tactical novelty — it is a structural transformation of how
wars are fought.⁵
Ukraine’s low-cost interceptor drones — priced at $2,500–5,000 per unit — now account for over 70%
of Shahed downings over Kyiv. For the first time in a generation, military advantage is not exclusively
correlated with industrial scale. A smaller manufacturer with the right technical capability can be
genuinely competitive — at a price point governments urgently need.