Dual-use economy: Why the invisible power of dual-use technology will determine Europe's future

Dual Use: The Overlooked Economic Component of Civil-Military Integration

We use them every day and take them for granted: the GPS in our car, the internet on our smartphones, the microchips in our computers. But few people realize that many of these revolutionary technologies have their military origins or possess a hidden, second nature. This phenomenon, in which technology can be used for both peaceful civilian and military purposes, is called "dual use."

But the world has changed: Today, it's no longer just defense research that's driving the civilian market. Rather, it's commercial innovations in fields like artificial intelligence, drone technology, and biotechnology that are shaping tomorrow's military potential. A standard camera drone can be used for reconnaissance in war zones, and an AI algorithm for image recognition can also be used for autonomous target acquisition.

This merging creates enormous tension. On the one hand, these technologies are a crucial driver of economic growth and social progress. On the other, they pose a growing challenge to global security and export controls. Where is the line between a useful industrial good and a potential weapon? How can states and companies exploit the opportunities offered by innovation without taking incalculable risks? This text delves deep into the complex world of dual use, illuminating not only the security risks but, above all, the often overlooked economic component – ​​a dynamic that determines the technological sovereignty and future viability of entire nations.

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The double-edged sword of progress

In today's globalized world, technological progress and economic prosperity are inextricably linked. Innovations in information technology, biotechnology, and materials science drive growth, improve the quality of life, and create new markets. Yet many of these groundbreaking developments possess an inherent ambivalence, a dual nature that is summarized in the term "dual use." This concept describes goods, software, and technologies that can be used for both civilian and military purposes. It is a phenomenon as old as technological development itself, but has reached a new dimension of complexity and urgency in modern times.

This report analyzes the multifaceted issue of dual-use not only as a challenge for export controls and international security policy, but also particularly highlights its often overlooked yet crucial economic component. The central thesis is that a profound understanding of dual-use dynamics—the interweaving of civilian markets and military requirements, of commercial innovation and strategic security—is essential for the sustainability of companies and the sovereignty of states in the 21st century.

The traditional notion that military research led to civilian applications as a side effect has been reversed in many high-tech areas. Today, it is often commercially driven innovations from the civilian sector that define tomorrow's military potential. This reversal of technology transfer presents governments and companies with fundamentally new challenges.

It is no longer primarily about preventing the leakage of a few state military secrets, but rather about controlling the spread of widely commercially available cutting-edge technologies that have inherent military application potential. This shift is changing the nature of control, the balance between economic freedom and national security, and the strategic landscape for all actors.

From powerful microchips to commercial drones to artificial intelligence algorithms – the line between civilian use and military threat has become fluid and requires a differentiated and strategic approach.

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The Foundation of Dual Use: Definitions and the Fundamental Dilemma

Comprehensive definition: goods, software and technology in the tension field

To grasp the complexity of the issue, a precise definition is essential. According to the central European legal basis, Regulation (EU) 2021/821, dual-use goods are "goods, including computer software and technology, that can be used for both civilian and military purposes." This definition is deliberately broad and highlights three key aspects.

First, it is not only about physical goods such as machinery or chemicals, but also explicitly about intangible goods such as software and technology, i.e. the specific technical knowledge required for the development, manufacture or use of a product.

Secondly, the term also includes goods that can contribute to the design, development, production or use of nuclear, chemical or biological weapons and their delivery systems – the so-called weapons of mass destruction.

Third, the actual or intended end use is initially irrelevant for classifying a good as a dual-use good; the only decisive factor is its potential for military or proliferation-relevant use. Therefore, a good does not become a dual-use good through a critical use, but rather due to its inherent technical properties.

The historic dual-use dilemma: From fertilizer to weapon

The dual-use dilemma is not an invention of the digital age. One of the most striking historical examples is the discovery of the Haber-Bosch process for synthesizing ammonia at the beginning of the 20th century. This scientific feat enabled the mass production of artificial fertilizers and thus revolutionized agriculture by securing food supplies for billions of people.

At the same time, however, ammonia was also the crucial raw material for the production of explosives and chemical weapons, which were used on a devastating scale in World War I. This classic example illustrates the core problem: one and the same technology can be both Segen and a curse. This ambivalence is inherent in the technology and cannot be resolved by simple bans without simultaneously sacrificing its civilian benefits.

This realization led to early international efforts, particularly in chemistry and nuclear physics, to control the proliferation of dangerous technologies without prohibiting peaceful use. Treaties such as the Chemical Weapons Convention (CWC) and the Nuclear Non-Proliferation Treaty (NPT) are direct political responses to this fundamental dual-use dilemma.

Differentiation from pure armaments and the grey areas of control

For a functioning control system, it is crucial to distinguish dual-use goods from purely military goods. Military goods are products specifically designed, developed, or modified for military purposes. These include weapons, ammunition, and specific military equipment.

These are generally subject to stricter and separate control regimes enshrined in national laws, such as in Part I Section A of the Export List in Germany.

The real challenge of export control, however, lies in the vast gray area in between. Many state-of-the-art industrial goods are not military per se, but possess technical properties that make them attractive or even necessary for military applications. A classic example is high-precision machine tools. A modern, computer-controlled five-axis milling machine can be used for the series production of highly complex components in the civilian automotive or aerospace industry, but with the same capabilities, it can also produce components for rocket engines, tank systems, or centrifuges for uranium enrichment.

The decision as to whether such a machine qualifies as a controlled dual-use good therefore does not depend on its name or primary application, but on specific technical parameters such as positioning accuracy or the number of simultaneously controllable axes. These technical thresholds, which are specified in the lists of goods of the control regimes, define the boundary between an uncontrolled industrial good and a dual-use good requiring a license. Even seemingly innocuous products such as machines for producing lipstick tubes can be considered dual-use goods if they could potentially be diverted to the manufacture of cartridge cases. These examples demonstrate that effective export control requires in-depth technical understanding and a precise analysis of product parameters, going far beyond a superficial consideration of the intended use.

The global control regime: international politics and legal framework

Historical Development: From the Cold War (COCOM) to the Wassenaar Arrangement

Managing trade in sensitive goods is not a purely national task, but requires intensive international cooperation. Over the decades, a complex, multi-layered system of multilateral agreements and legal frameworks has evolved, aimed at preventing the proliferation of weapons of mass destruction and conventional military equipment without unduly hindering legitimate trade.

The origins of modern multilateral export controls lie in the Cold War. After World War II, the Western Allies established the Coordinating Committee for Multilateral Export Controls (COCOM). This body had the clear goal of preventing the export of strategically relevant Western technologies to the Eastern Bloc countries in order to slow their military buildup.

COCOM was an instrument of the East-West conflict, based on the principle of denial, and lost its raison d'être with the end of the Cold War. It was dissolved in 1994.

It was replaced in 1996 by the Wassenaar Arrangement (WA), which pursues a fundamentally different philosophy. Rather than targeting a specific group of states, the WA aims to promote transparency and greater accountability in the transfer of conventional weapons and dual-use goods and technologies.

The 42 participating states today, including most industrialized nations, undertake to maintain effective national export control systems and to inform each other about the export of certain listed goods to non-member states.

A key element is the exchange of information on rejected authorisation applications (“denials”) in order to prevent an exporter from authorising a delivery in another member state that has already been prohibited elsewhere for safety reasons.

The WA is not a treaty under international law, but is based on the political commitment of its members. It serves as a central forum for the development and regular updating of control lists for conventional military equipment and dual-use goods, which are then incorporated by the member states into their national or supranational legal systems.

The pillars of international non-proliferation: MTCR, NSG and the Australia Group

The Wassenaar Arrangement focuses primarily on conventional armaments and strategically relevant dual-use goods. For the particularly critical areas of weapons of mass destruction, specialized, overlapping control regimes exist, often referred to as the "four regimes" of international export control:

Nuclear Suppliers Group (NSG)

The Nuclear Suppliers Group was established in 1975 in response to India's 1974 detonation of a nuclear device, which demonstrated that civilian nuclear technology could be misused for weapons development. The NSG controls the export of fissile material, nuclear reactors, and specific equipment, as well as nuclear-related dual-use items that are widely used in civilian industries but can also be critical to a nuclear weapons program.

Australia Group

This informal forum, established in 1985, aims to prevent the proliferation of chemical and biological weapons (CW/BW). Member states harmonize their national export controls for a list of specific chemical precursors, biological agents (such as viruses and bacteria), and related equipment for the production of CW/BW.

Missile Technology Control Regime (MTCR)

The Missile Technology Control Regime, established by the G7 countries in 1987, is intended to curb the proliferation of unmanned delivery systems for weapons of mass destruction. This includes not only ballistic missiles, but also cruise missiles and unmanned aerial vehicles (drones) capable of delivering a specific payload over a defined range. The MTCR control lists include both complete systems and key components such as rocket engines, navigation systems, and specialized materials.

Together, these four regimes form the foundation of the global non-proliferation system. Their lists of goods, developed in expert panels and regularly updated, form the basis for the control lists of the European Union and other member states.

Export control in the European Union: The Dual-Use Regulation 2021/821

For the Member States of the European Union, Regulation (EU) 2021/821 is the central and directly applicable legal basis for the control of dual-use goods. It replaces the previous regulation of 2009 and represents a comprehensive modernization of the EU export control system, responding to new technological developments, changing security risks, and the growing importance of human rights.

The regulation creates a uniform Union regime that covers the entire life cycle of an export transaction and regulates the control of exports (to countries outside the EU), brokering of transactions, technical assistance, transit and transfer (within the EU).

The principle of the EU internal market stipulates that trade in dual-use goods between Member States is generally free. However, an important exception is the particularly sensitive goods listed in Annex IV of the Regulation (e.g., from the areas of stealth technology or strategic control), whose transfer within the EU continues to require a permit.

A core element of the regulation is a differentiated system of authorisation types, which aims to reduce the administrative burden for non-critical exports while ensuring strict control for sensitive deliveries:

Union General Authorisations (EUGEAs)

These permit the export of certain goods to certain non-critical destination countries (e.g. USA, Japan, Switzerland) under specified conditions without the need to submit an individual application.

National General Authorizations (NGEAs)

Member States may issue their own general authorisations to further facilitate exports, provided they are compatible with the EUGEAs.

Individual permits

The classic form of authorization for a specific transaction between an exporter and an end user in a third country.

Global permits (collective permits)

Allow an exporter to make multiple exports of several goods to different end users in different countries and are valid for up to two years.

Approvals for major projects

An innovation in Regulation 2021/821 that takes into account the needs of industry in large, long-term projects (e.g. the construction of a power plant).

National implementation in Germany: The role of BAFA, AWG and export list

Although the EU regulation provides the framework, the actual licensing practice takes place at the national level. In Germany, the Federal Office of Economics and Export Control (BAFA) is the responsible licensing authority. It reviews companies' applications and decides on the granting or rejection of export licenses based on European and national legislation.

The legal basis in Germany is the Foreign Trade and Payments Act (AWG) and the more detailed Foreign Trade and Payments Ordinance (AWV). The EU Dual-Use Regulation, as European law, is directly applicable and takes precedence over national law. However, German legislation supplements the EU rules.

The most important instrument for this is the Export List, an annex to the Foreign Trade and Payments Regulation (AWV). While Part I, Section A of the Export List contains nationally controlled military equipment, Part I, Section B lists additional dual-use goods that Germany considers worthy of control for national security or foreign policy reasons, but which are not included in the EU-wide list in Annex I of the Regulation. Therefore, a German company must always consult both Annex I of the EU Regulation and the German Export List when reviewing its export plans.

The increasing intertwining of the global economy with geopolitical interests is leading to a noticeable fragmentation of the international control landscape. While multilateral regimes such as the Wassenaar Arrangement provide a common denominator for the technical classification of goods, the actual application of controls is increasingly shaped by the strategic interests of the major economic blocs. With its 2021 Regulation and the 2024 White Paper on Export Controls, the European Union has set a clear course that, in addition to traditional non-proliferation, also focuses on the protection of human rights and strengthening its own economic security. This is reflected in new, specific controls for digital surveillance technologies that could potentially be misused for internal repression.

At the same time, the United States traditionally pursues a very assertive export control policy, strongly influenced by foreign policy objectives. The US system, based on the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), is characterized by its far-reaching extraterritorial application. Thus, German companies can also be subject to US (re)export control regulations if their products contain US technology or components above a certain de minimis threshold.

The extensive US sanctions lists, such as the Entity List, target specific foreign companies and organizations that are deemed to pose a risk to US national security.

At the same time, other global actors such as China are building their own comprehensive export control systems to protect their national security and economic interests.

For internationally active companies, this development represents a significant increase in complexity. A largely harmonized global system is being replaced by a multipolar regulatory environment in which they must navigate not just one, but several, partially overlapping and occasionally conflicting legal systems. Compliance thus transforms from a purely technical classification task into a demanding strategic challenge requiring continuous analysis of geopolitical developments and legal frameworks.

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The hub for security and defense offers well-founded advice and current information in order to effectively support companies and organizations in strengthening their role in European security and defense policy. In close connection to the SME Connect working group, he promotes small and medium -sized companies (SMEs) in particular that want to further expand their innovative strength and competitiveness in the field of defense. As a central point of contact, the hub creates a decisive bridge between SME and European defense strategy.

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The anatomy of control: goods classification and corporate due diligence

Systematics of goods lists: The logic of categories and genres

The effective implementation of export controls depends largely on two factors: a clear and systematic classification of controlled goods and the implementation of robust internal processes within exporting companies. Without precise identification of one's own products and a careful review of business partners and end uses, the legal regulations are ineffective.

The heart of goods-related export controls is Annex I of the EU Dual-Use Regulation. This comprehensive technical document lists all goods, software, and technologies whose export from the EU requires authorization. To make this complex list manageable, it follows a strict and logical system that is largely harmonized internationally.

Each listed item is identified by a five-digit alphanumeric code, the so-called Export Control Classification Number (ECCN), such as 3A001 for certain integrated circuits.

The structure of this number follows a clear scheme that allows for quick assignment to technological areas and control regimes:

The first digit (0-9) indicates one of ten categories, each covering a broad technological field.

The second letter (AE) indicates one of five genera that describe the type of property.

The last three digits form the identifier, which provides information about the origin of the check and serves as a unique identification. An identifier in the range 900-999 indicates purely national checks that go beyond international agreements.

This systematic structure is the crucial tool for companies to classify their products and identify potential approval requirements.

System of the EU dual-use goods list

System of the EU Dual-Use Goods List – Image: Xpert.Digital

The EU Dual-Use Goods List is a comprehensive classification system that structures various technical categories and types of goods. The categories are identified by the first digit and include key areas such as nuclear materials, facilities, and equipment (Category 0) and special materials (Category 1). The categories, represented by the second letter, further differentiate the goods, for example, into systems, equipment, and components (Category A) or materials (Category C).

The categories range from basic technical areas such as materials processing (Category 2) and electronics (Categories 3-4) to specific application areas such as telecommunications and information security (Category 5), sensors and lasers (Category 6), and aerospace, space, and propulsion (Category 9). This systematic structure enables precise classification and control of potentially dual-use goods in international trade.

The path to compliance: Internal compliance programs (ICP) as a strategic necessity

The legal obligation to comply with export control regulations lies solely with the exporting company. Given the complexity of the regulations and the serious consequences of violations – ranging from hefty fines to imprisonment for the responsible managers – the establishment of an internal compliance program (ICP) is essential for affected companies. An ICP is a systematic, internal company process that ensures compliance with all foreign trade law requirements.

An effective ICP typically includes several core elements:

responsibility

A clear assignment of responsibility for export control to one or more people within the company, often in the form of a management-level export officer.

Risk analysis

A systematic assessment of the company's specific risks based on its products, target countries, and customer base.

Goods classification

A careful review of the entire product portfolio to determine which goods, software, or technologies are covered by the commodity lists. This often requires technical expertise from the relevant departments.

Audit of business transactions

Each individual export transaction must be reviewed before execution. This includes verifying the end user, the recipient, the country of destination, and the declared end use.

Screening of business partners

A key component is the screening of all parties involved in a transaction (customers, suppliers, freight forwarders) against national and international sanctions lists. These include lists such as the Denied Persons List or the US Entity List, which list individuals and organizations with whom business is prohibited or severely restricted.

Documentation and storage

All audit steps and decisions must be fully documented and retained for a legally prescribed period (five years in the EU).

training

Regular training of relevant employees to maintain risk awareness and knowledge of regulations.

A functioning ICP is not only a tool for risk mitigation, but increasingly also a prerequisite for the use of procedural simplifications. For example, the new EU General Authorization (EU007), which facilitates the intra-group transfer of technology and software, explicitly requires an effective ICP at the exporter.

Beyond the lists: The “catch-all” clauses and the examination of end-use and end-user

Export controls are not limited to the products explicitly listed in the goods lists. So-called "catch-all" clauses play a crucial role. These clauses establish a licensing requirement for non-listed goods if the exporter is aware, or is informed by the authorities, that the goods are intended for a critical end use.

The EU Dual-Use Regulation defines several such critical uses in Article 4. A permit requirement for non-listed goods arises if they are related to:

The development, production or use of chemical, biological or nuclear weapons (weapons of mass destruction).

A military end-use in a country subject to an EU, OSCE or UN arms embargo.

Use as components for military equipment previously exported from an EU Member State without the required authorisation.

These regulations shift some of the responsibility directly onto the company. As part of its due diligence, it must examine whether there are any indications of such critical use. Suspicious factors ("red flags") can include, for example, an implausible intended use, a customer with no industry experience, or conspicuous secrecy on the part of the end user.

The human factor: human rights as a new criterion for export controls

The modernized EU Dual-Use Regulation of 2021 has expanded the scope of export controls by an important dimension: the protection of human rights. Article 5 of the regulation introduces a new, specific catch-all provision for non-listed digital surveillance goods.

These goods are defined as products specially designed to enable the covert surveillance of natural persons by extracting or analyzing data from information and telecommunications systems.

An export licence for such goods is required if the exporter is informed by the competent authority (such as the Federal Office for Economic Affairs and Export Control) that the goods are or may be intended, in whole or in part, for use in connection with internal repression or the commission of serious violations of human rights or international humanitarian law.

What's more, if the exporter himself becomes aware of such an intended end-use as a result of his own due diligence, he is obliged to inform the authority, which will then decide whether a permit is required.

This regulation presents significant challenges for companies. They must not only evaluate the technical specifications of their products and the commercial viability of a transaction, but also assess the human rights situation in the destination country and the potential role of their products in this context.

The Regulation attempts to alleviate this burden by clarifying that goods for purely commercial applications such as invoicing, marketing or network security are generally not subject to this control.

Nevertheless, this human rights-based approach broadens the focus of export controls from pure non-proliferation to a values-based foreign trade policy, which significantly increases compliance requirements for companies in the technology sector.

The economic dimension: Between strategic advantage and competitive disadvantage

Dual use as an innovation driver: technology transfer and civil spillover effects

The debate about dual use is often dominated by security policy considerations. In doing so, the profound economic significance of this phenomenon is easily overlooked. The dual use of technologies is not only a risk that must be controlled, but also a key driver of innovation and a decisive factor for the competitiveness and strategic autonomy of entire economies. At the same time, the control mechanisms represent a significant burden for companies, potentially impairing their position in global competition.

The close integration of civilian and military research and development (R&D) is a powerful source of technological progress. Historically, many groundbreaking civilian technologies emerged as spillovers from military and defense research. The Global Positioning System (GPS) and the internet are the most prominent examples. The enormous government investments in these military projects created technological foundations that were later commercialized and revolutionized entire civilian industries.

Today, this dynamic has reversed in many areas. Especially in key digital technologies such as artificial intelligence, quantum computing, and advanced semiconductors, cutting-edge research is primarily conducted in the civilian, commercially driven sector. Defense ministries are increasingly dependent on adapting these civilian innovations for military purposes.

Regardless of the direction of technology transfer, significant synergies arise from dual applicability. R&D investments can pay off twice by both strengthening national security and improving commercial competitiveness. Business associations such as the Federation of German Industries (BDI) and political actors such as the European Commission therefore emphasize the need to specifically strengthen synergies between civil and defense-related research. The goal is to maximize spillover effects in both directions and create an integrated innovation base.

Economic benefits: Strengthening technological sovereignty and industrial base

At the macroeconomic level, the ability to develop and produce critical dual-use technologies domestically has become a central element of strategic autonomy. The COVID-19 pandemic and the geopolitical upheavals of recent years have highlighted the risks of one-sided dependencies in global supply chains, especially for high-tech goods such as semiconductors.

Dual-use technologies are often key enabling technologies that have far-reaching impacts on the entire economy. A strong domestic industry in areas such as microelectronics, cybersecurity, aerospace, or biotechnology is crucial not only for a country's defense capability, but also for its overall economic resilience and innovative capacity.

Political initiatives such as the EU Commission's White Paper on promoting R&D with dual-use potential therefore aim to strengthen Europe's technological and industrial base and reduce dependence on non-European suppliers in strategically important areas.

The targeted promotion of dual-use research thus becomes an instrument of modern industrial and security policy, aimed at increasing competitiveness while ensuring economic security.

Business challenges: compliance costs, legal uncertainty and global competitiveness

However, the control regimes represent a significant burden for exporting companies. Compliance with these complex regulations incurs significant business costs. These include direct costs for specialized personnel in export control departments, expensive software solutions for goods classification and sanctions list screening, and external legal advice.

Added to this are indirect costs resulting from delays in the approval process. Long wait times for an export license can lead to contractual penalties or even the loss of orders, as customers cannot be guaranteed delivery dates.

Another key problem for business is legal uncertainty. In particular, the vaguely worded catch-all clauses and the new human rights-related criteria place considerable responsibility on companies. In their day-to-day business, they must make complex foreign and security policy assessments, which may be punishable, for which they often lack the necessary information and expertise.

This uncertainty can lead companies to refrain from legal transactions out of caution (“over-compliance”) or to submit a flood of precautionary approval requests to the authorities, which overloads their capacities and further extends processing times for everyone.

These burdens can lead to a significant competitive disadvantage in the global market. If companies in the EU are subject to stricter, more complex, and more unpredictable controls than their competitors from other parts of the world, they risk losing market share. Effective export controls only work in a global market if the most important competitors are subject to similar, or ideally, the same, rules. The increasing geopolitical fragmentation of control regimes complicates the creation of such a "level playing field" and exacerbates competitive pressure for European high-tech exporters.

The future of research: Targeted promotion of dual-use potential in Europe

In response to these challenges and to strengthen their own position in the global technology race, efforts are underway at the European and national levels to promote research and development with dual-use potential more strategically. In its 2024 White Paper, the European Commission has put forward various options for discussion to create a more integrated and targeted framework for dual-use innovation.

Expert commissions such as the German Expert Commission for Research and Innovation (EFI) are calling for the dissolution of the strict separation between civilian and military research funding that still exists in many countries.

Such an opening could unleash significant synergies and open up economic opportunities that Germany and Europe would otherwise miss.

The debate revolves around how research funding can be made more agile and flexible in order to fully exploit the potential of technologies that can serve both civilian and security-related purposes, without neglecting civilian basic research.

This strategic realignment aims to pool Europe's innovative strength while harnessing it to strengthen economic and national security.

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The global economy is currently experiencing a fundamental change, a broken epoch that shakes the cornerstones of global logistics. The era of hyper-globalization, which was characterized by the unshakable striving for maximum efficiency and the “just-in-time” principle, gives way to a new reality. This is characterized by profound structural breaks, geopolitical shifts and progressive economic political fragmentation. The planning of international markets and supply chains, which was once assumed as a matter of course, dissolves and is replaced by a phase of growing uncertainty.

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Dual Use in Practice: Concrete Application Areas and Case Studies

Revolution from the military: GPS and the Internet as prime examples of technology transfer

The abstract concepts and legal framework of dual use are best understood through concrete examples from technological practice. These case studies demonstrate how deeply embedded dual use is in our modern world—from basic infrastructures we use every day to the cutting-edge technologies that will shape our future.

Two of the most transformative technologies of the late 20th century have their roots directly in US military research and development. They are classic examples of successful technology transfer from the military to the civilian sector.

The Global Positioning System (GPS) was developed in the 1970s by the U.S. Department of Defense as the NAVSTAR GPS program to enable precise, worldwide, and weather-independent navigation for military units (ships, aircraft, soldiers).

After its full operation in 1993, the signal was gradually released for civilian use. Initially, scientists and surveyors primarily used the new technology.

The real breakthrough, however, came around the year 2000, when the US government turned off artificial signal degradation for civilian users (Selective Availability). This, combined with the progressive miniaturization of receivers, led to an explosion in civilian applications. Today, GPS is the backbone of countless services and industries, from navigation in cars and smartphones to precision agriculture and fleet management in logistics to the synchronization of financial markets and telecommunications networks. The economic benefits are immense; one study estimated the economic benefit generated by GPS for the US alone at $1.4 trillion by 2019.

The situation is similar with the Internet. Its predecessor, the ARPANET, was developed in the late 1960s on behalf of the Advanced Research Projects Agency (ARPA) of the U.S. Department of Defense.

The primary goal was to create a decentralized and robust computer network that would remain functional even if individual nodes failed—for example, due to a military strike. Initially, the network connected only a few universities and research institutions working on defense projects.

In the decades that followed, it developed into an important tool for the academic community. The decisive turning point came in the early 1990s with the development of the World Wide Web and the gradual opening and commercialization of the network.

Today, the Internet is the basic infrastructure of the global information society and has fundamentally changed the world economy by enabling electronic commerce, new services, and a drastic reduction in transaction costs.

Modern arenas: drones, artificial intelligence and the merging of civil and military domains

While GPS and the Internet are examples of technology transfer that spanned decades, the merging of civilian and military applications in modern technologies often occurs almost simultaneously.

Unmanned aerial vehicles (UAVs), colloquially known as drones, impressively illustrate this trend. Originally developed for military reconnaissance and attack, a huge commercial drone market has developed in recent years. This market is growing rapidly in Germany and worldwide, driven by affordable prices and a wide range of applications.

Drones are now routinely used in agriculture to monitor fields, in the construction industry to inspect buildings, in logistics for parcel delivery, and by emergency services to assess the situation in the event of fires or accidents.

At the same time, these very commercially available and technologically advanced drones are being adapted directly for military purposes. Small, maneuverable quadcopters from the civilian market are being used for platoon-level reconnaissance or as carriers for small explosive devices, fundamentally changing the face of warfare. The transfer of technology from the civilian to the military sector is significantly accelerating the armed forces' innovation cycle.

Artificial intelligence (AI) represents perhaps the most complex and far-reaching field of dual use. AI algorithms developed in the civilian sector, for example, to examine MRI images for anomalies in medicine, analyze customer behavior, or optimize complex logistics chains, are based on the same fundamental technologies that are also highly relevant for military purposes.

Military applications of AI include autonomous real-time target detection, control of weapons systems, analysis of massive amounts of data for intelligence gathering, and defense against cyberattacks.

The ethical “dual-use dilemma” is particularly pronounced here: research into more powerful AI, which can bring enormous benefits to humanity, inevitably carries the risk of being misused for the development of autonomous weapons systems or totalitarian surveillance systems.

Invisible Frontiers: Biotechnology, Quantum Computing and the Strategic Importance of Space

At the forefront of scientific research, new fields of technology are emerging whose dual-use potential is already foreseeable and which will play a central strategic role in the future.

Biotechnology, particularly advances in genome editing (such as CRISPR) and synthetic biology, promises revolutionary breakthroughs in medicine and agriculture. At the same time, these technologies carry the risk of being misused for the development of novel biological weapons.

Scientific research aimed at understanding the transmissibility or pathogenicity of viruses to better combat pandemics can also potentially generate knowledge that could be used to create more dangerous pathogens. For this reason, special oversight mechanisms such as the National Science Advisory Board for Biosecurity (NSABB) have been created in the United States and other countries to identify and evaluate such "dual-use research of concern" (DURC).

Quantum computing has the potential to solve computational problems beyond the reach of today's supercomputers. This opens up immense opportunities for civilian research, for example in the development of new drugs or materials. At the same time, it poses a fundamental threat to today's IT security, as a powerful quantum computer would be capable of breaking most common encryption algorithms that protect our digital communications and financial transactions.

In addition, quantum sensing promises the development of extremely precise measuring instruments that could be used both in civil geology and for military submarine or stealth aircraft tracking.

Space is also becoming an increasingly important dual-use domain. The era of "New Space," characterized by private companies offering low-cost satellite launches and massive satellite constellations, is blurring the boundaries between civilian and military space use. Earth observation satellites, which provide high-resolution images for agriculture or disaster relief, can also be used for military reconnaissance. Communications satellites, which bring broadband internet to remote regions, are also crucial for controlling drones and networking troops in theater.

Infrastructure as a strategic asset: ports, airports and civil-military logistics chains

The concept of dual use is not limited to individual products or technologies, but also encompasses critical infrastructure and services. The logistics chains and transport routes that form the backbone of the global economy are also essential for military mobility and a state's ability to deploy armed forces.

Large civilian seaports are therefore often designated as "strategic ports." They must be able to make their facilities and capacities available at short notice for the loading of large military equipment and troops, enabling rapid deployment to crisis areas.

Likewise, there are numerous airports around the world that are used for both civil and military purposes, which creates operational synergies but also requires close coordination.

In addition, civilian expertise is being specifically utilized for military purposes. An outstanding example in Germany is the Bundeswehr's cooperation with Lufthansa Technik. The company leverages its world-leading expertise in the maintenance, repair, and overhaul (MRO) of civil aircraft to provide technical support for complex military aircraft fleets, such as the German government fleet or the new P-8A Poseidon maritime patrol aircraft.

This partnership enables the Bundeswehr to draw on cutting-edge civilian expertise and global logistics networks, increasing operational readiness and potentially reducing costs.

Such cooperations also exist in the area of ​​public services, for example between the civilian German Weather Service (DWD) and the Geoinformation Service of the German Armed Forces (GeoInfoDBw), which jointly train personnel and provide meteorological data for civilian and military purposes.

Suitable for:

• Dual-use heavy-load container terminals – For the EU internal market and Europe’s military defense security

Synergies in the service of society: Civil-military cooperation in disaster protection

One of the most positive and visible forms of dual-use is civil-military cooperation (CMC) in national disaster management. When civil authorities and aid organizations such as the fire service, the Federal Agency for Technical Relief (THW), or the Red Cross reach the limits of their capacities in major disaster situations such as floods, forest fires, or pandemics, they can request support from the Bundeswehr through administrative assistance.

The armed forces possess capabilities and resources that are often unavailable, or insufficient, in the civilian sector. These include heavy engineering equipment such as bridge-laying vehicles and armored recovery vehicles for the rapid restoration of infrastructure, air (helicopter) and ground transport capabilities, logistical expertise for supplying large numbers of people, and a large number of disciplined and readily available support personnel.

The Bundeswehr's deployment during the devastating flood disaster in the Ahr Valley in 2021, in which soldiers built temporary bridges, cleared debris, and supported logistics, is an impressive example of the effectiveness of this cooperation.

In order to ensure that this cooperation runs smoothly in an emergency, there is a fixed structure of liaison and contact persons at all administrative levels, from the state commands to the district liaison commands, who ensure close coordination between civilian and military authorities.

Suitable for:

• Without civilian industry, no logistics in the event of a disaster and civil-military cooperation (CMC)

The strategic realignment – ​​dual use as an integral part of economic and security policy

A comprehensive analysis of the dual-use phenomenon reveals a fundamental truth of the 21st century: the strict separation between civilian economy and military security can no longer be maintained in a world characterized by high technology. Dual-use goods are not a marginal phenomenon, but rather are at the heart of modern technological and economic development. A nation's ability to lead in these key technologies determines not only its economic competitiveness but also its strategic autonomy and security.

The report has highlighted the inherent tension that characterises the issue.

On the one hand, there is the need to control the proliferation of technologies that could be misused to produce weapons of mass destruction, destabilize regions, or violate human rights. The international control regimes and the detailed legal frameworks of the EU and its Member States are indispensable tools for addressing these risks. However, they represent a significant burden for export-oriented economies, characterized by high compliance costs, legal uncertainty, and potential competitive disadvantages.

On the other hand, the dual-use potential is a crucial driver of innovation and economic prosperity. Synergies between civilian and military research and development create spillover effects that benefit both sectors and strengthen a society's technological base. At a time when technological progress increasingly comes from the commercial sector, the ability to harness these civilian innovations for security purposes—and vice versa—is a decisive strategic advantage.

Addressing this tension requires a strategic realignment of policy. Purely reactive export controls based on prohibitions are insufficient. What is needed is a holistic approach that recognizes dual use as an integral component of economic, innovation, and security policy.

Such an approach must meet several criteria:

Agility

The control lists and mechanisms must be able to keep pace with the rapid pace of technological change in order not to be overtaken by new developments.

International harmonization

To minimize distortions of competition, controls must be harmonized as much as possible at the international level. Unilateral, national tightening can weaken one's own industry without significantly increasing global security.

Collaborative partnership

Effective oversight is only possible through dialogue with industry and academia. Companies and research institutions require a clear, understandable, and predictable legal framework. Their technical expertise must be incorporated early on in the list development process.

Ultimately, effectively managing the dual-use dilemma is one of the central challenges facing modern industrialized nations. It's about finding a wise balance: a balance between promoting openness and innovation, which secures prosperity, and applying targeted, effective controls to ensure security. Only a policy that considers both sides of this coin will be successful in the long term in an era of profound geopolitical and technological upheaval.

Markus Becker

I would be happy to serve as your personal advisor.

Head of Business Development

Chairman SME Connect Defense Working Group

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Konrad Wolfenstein

I would be happy to serve as your personal advisor.

contact me under Wolfenstein ∂ Xpert.digital

call me under +49 89 674 804 (Munich)

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