HELSINKI — Nordic governments are exploring the feasibility of permitting the Helsinki-based Nordic Investment Bank to provide competitively priced loans to defense companies in the private and state-ownership domains.

Founded by the five Nordic states in 1975, the Nordic Investment Bank was to function as a financial institution supporting the regional and international growth of nondefense industries. The Baltic states Estonia, Latvia and Lithuania joined the bank as full members in 2005.

“The NIB hasn’t in the past financed defense companies in the military-industry complex. However, the world has changed,” said André Küüsvek, the bank’s chief executive. “Such a development can have immense symbolic value. It’s a change in our business under consideration by our owner governments.”

The central discussion at the government level revolves around what type of capital investments within the defense sphere the bank might be sanctioned to finance.

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Any future pan-Nordic agreement to authorize the NIB to provide development loans to the defense industry would represent a significant annex to the bank’s operations. At present, the bank is primarily focused on funding projects within the portfolios of infrastructure and green transformation, such as wind and hydropower; hydrogen-fueled transportation; environmentally friendly buildings; airports; and road networks.

Most Nordic states, led by Sweden and Norway, want to strike a balance between those activities and the additional field of national and regional security, which involves drone systems and surveillance technologies.

The bank, which traditionally prioritizes high-impact projects, completed $1.1 billion in new lending during the first three months of 2024. In 2023, it paid out $3.7 billion in loans to Nordic companies. A significant and increasing proportion of the lending is extended for research and development.

The final decision as to whether the NIB is cleared to provide financing to the Nordic defense sector is “in the hands of the bank’s government owners,” Küüsvek said.

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Sweden is the largest owner in the NIB, as it holds 34.6% of the bank’s shares, followed by Norway with 21.5%, Denmark with 21.1%, Finland with 17.7%, Iceland with 0.9%, Lithuania with 2%, Latvia with 1.3% and Estonia with 0.9%.

Nordic government interest in using the bank to support the growth potential of defense companies has followed quickly on the heels of formerly nonaligned states Sweden and Finland joining NATO, a development that removed many obstacles to closer cross-Nordic defense collaboration. Nordic governments have made no secret of their desire to exercise what they consider a so-called NATO dividend to deepen cooperation in key areas, including joint weapons development and production.

One joint Nordic cooperation project that got underway in the first quarter of 2024 saw the Finnish Defence Forces transfer military equipment to stores in neighboring Norway. Finland’s military plans to commence a similar operation to move equipment to stores in Sweden in the fall.

Gerard O'Dwyer is the Scandinavian affairs correspondent for Defense News.

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