As the future of war emerges in Ukraine, the Middle East and elsewhere around the world, nimble, smaller actors are forcing slow-moving defense bureaucracies like the United States to adapt.

That thread ran through the entirety of POLITICO’s annual Defense Summit held today, where lawmakers, policy wonks and industry emissaries tackled everything from legislative wrangling over spending to the composition of America’s arsenal.

Particularly relevant to the future of war was one afternoon panel on R&D spending, where a trio of analysts shed some light on the debates in Washington over exactly how the Pentagon can keep up with the blistering pace of technology on the battlefield.

“These lessons are right there in our face, and they go against some really cherished concepts in the Department of Defense that people don’t want to let go of,” said Paul Scharre, an analyst at the Center for New American Security.

One lesson is just how disruptive “small and cheap” can be. POLITICO’s Veronika Melkozerova reported last month on the extent to which the military use of commercial drones has completely upended warfare across the globe, and Matt Berg has reported here in DFD on just how dangerous drones might be when equipped with artificial intelligence.

Drones — nimble, inexpensive and sometimes deadly — are the watchword in defense R&D right now, as governments scramble to regain their technological advantage over $400 flying robots assembled largely in factories in China.

“The threshold for entry into the world of autonomy has been lowered significantly,” Samuel Bendett, a CNAS advisor, told me today. “Cheap drones being ubiquitous and available across the entire front means that any movement of personnel or weapons systems is going to be observed, tracked and potentially struck.”

Governments need a variety of context-specific defenses to respond to drone armadas, said Bendett, from the sci-fi-sounding — think laser systems meant to track and obliterate small drones — to quite literally your grandfather’s solution, using World War II-style large-caliber machine guns to take them down, as has been successful in Ukraine. The panelists at today’s defense summit advised the DoD to partner with smaller companies and start-ups to more nimbly get a mix of solutions in place, but that might be easier said than done.

“The U.S. should go into this with a full understanding of what risks they’re taking on, whether they’re operational or just due to changes in the commercial market,” said Stephanie Young, a panelist and program director at the RAND Corporation. “Maybe the market [for any given new technology] is immature… there needs to be an understanding that this is not risk free.”

Of course, investments needs to be proportionate to the threat — and one challenge is that it’s hard to tell what your opponent’s capacity really is. Bendett, who specializes in Russian affairs, told me when we spoke via phone today that country’s boasts of implementing AI and machine learning across its military haven’t been backed up yet by much evidence.

“There are a lot of announcements, but the true state [of the Russian military] is hard to estimate,” he said.

On the battlefields of Ukraine and Israel/Gaza right now, however, we’re getting a flood of information — and it suggests things are changing fast, in part because combatants can quickly borrow each other’s tactics.

“Hamas may have studied some of the tactics and concepts using quadcopters in combat, either through official training with Russians or they could have just been reading Telegram channels and translating Russian manuals and videos from Russian into Arabic,” Bendett told me. “The knowledge about using these weapons and tactics is spreading very, very fast, and the question is, how quickly can state militaries adapt?”

When it comes to the U.S. military, the participants at today’s summit acknowledged a seemingly endless number of barriers to that kind of adaptation, from the operational and market risks RAND’s Stephanie Young mentioned to the mere fact that the House of Representatives can hardly pass a continuing resolution to fund the government.

CNAS’ Scharre gave positive mention to the DoD’s “Replicator” initiative, which will partner with the defense industry to churn out “multiple thousands” of drones per year to counter China’s military. But despite that movement, he still worries that the lumbering giant that is America’s defense industry and bureaucracy can do it fast enough to keep up with the ever-changing future on the battlefield.

“The real challenge is going to be can they scale fast,” Scharre said. “And that’s been a big struggle for the Department.”

A major tech industry critic is warning Europe that it will be left behind on regulation barring major action.

POLITICO’s Pieter Haeck reported for Pro subscribers today on his conversation at a Lisbon policy conference with Signal’s Meredith Whittaker, who says that the European Union will have to do something decisive to counter American companies’ de facto ability to dictate the rules on their platforms.

“These companies will always have that advantage… because they own the infrastructure, because they have the data processing and collection affordances,” Whittaker said. “And because they have such a massive head start in terms of having the market to deploy these.”

Whittaker told Pieter she’s skeptical that Europeans even understand the extent of their powerlessness to shape the business landscape, no matter how many rules they pass. She expressed skepticism even that the EU’s sweeping Digital Markets Act aimed at curbing potential tech monopoly could have a meaningful impact.

A human rights nonprofit is warning that central bank digital currencies could double as a tool for promoting authoritarianism.

POLITICO’s Morning Money reported today on a new tracker from the Human Rights Foundation that will keep tabs on governments experimenting with CBDCs, citing concerns about “authoritarian regimes like China and Nigeria… leading the charge” on their deployment.

“It gives governments and central banks the opportunity to have direct access to citizens,” Nick Anthony, an HRF fellow and Cato Institute policy analyst, told Morning Money. “Whereas right now, in many cases, we have this sort of air gap of protection, this last bastion of that private sector layer.”

CBDC backers argue that the technology can make payments systems safer, more transparent, and more inclusive, but the HRF and other groups want to make sure the public is aware of their potential abuses: “All too often people usually find out about these types of developments years after the fact,” Anthony said. “We’re hoping the public can get more involved in the conversation before we are looking at it in the rear-view mirror.”

• Exxon Mobil is expanding into the world of materials for electric vehicle batteries.
• New supercomputers are aiming to crack two quintillion operations per second.
• DeepMind is using AI to improve weather forecasts.
• …And some scientists want to use it to revolutionize sustainable farming.
• Pre-2016 Bitcoin wallets might be seriously vulnerable to hackers.

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Mohar Chatterjee ([email protected]); Steve Heuser ([email protected]); Nate Robson ([email protected]) and Daniella Cheslow ([email protected]).

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Correction: This newsletter has been updated to reflect the correct spelling of Meredith Whittaker’s name.