Jul 11, 2018 | 09:30 GMT

6 mins read

The NATO Summit Spotlights Its Defense Spending Standard

U.S. President Donald Trump and NATO Secretary-General Jens Stoltenberg speak May 25, 2017, at NATO headquarters in Brussels.
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  • The United States will pressure its NATO allies during the military bloc's July 11-12 summit in Brussels to spend more on their own defense.
  • Although it is NATO's most powerful member state, the United States still derives great benefits from the alliance.
  • The commitment from each NATO member to spend at least 2 percent of gross domestic product on defense does not adequately account for the different security priorities of the alliance's disparate states.

Fed up with what it perceives as an unequal burden sharing, the United States is preparing to put considerable pressure on its NATO allies during a summit in Brussels on July 11 and 12. U.S. President Donald Trump already has foreshadowed this pressure, which could include threats to withdraw U.S. forces from Europe or to cancel major NATO exercises, by sending strongly worded letters to the leaders of several NATO allies, including Germany, Belgium, Norway and Canada. While the United States has a case to make that the alliance's member states are not living up to their commitment to spend at least 2 percent of their gross domestic product on their own defense, NATO remains a critical component of the United States' global dominance.

The Big Picture

NATO remains a pivotal component in today's geopolitical landscape. As the United States gears up for a great power competition with Russia and China, the status and health of the alliance will figure prominently in the rivalry's outcome, particularly in Europe.

The United States Benefits From NATO

There's no denying that NATO as a whole greatly benefits from the inclusion of the United States as a member. Not only is the country by far the most powerful military power in the alliance, but it also provides much of the foundational strength — especially in logistics and intelligence — through which NATO would fight potential external threats. These advantages require large defense budgets and have not been cheap for the United States to accrue. In the same vein, the U.S. complaint that many of its fellow NATO member states have benefited from a "free ride" is not without merit.

Even considering the lopsided defense investments in the alliance, however, the United States derives enormous benefits from its central position in NATO, and it relies on the alliance architecture it has set up since the end of World War II to maintain its position as the dominant world power. It is no coincidence that the last time the United States faced a relatively even match — the Soviet Union during the Cold War — many of the current NATO member states were aligned on the opposing side under the Warsaw Pact. Now that the United States is once more in competition with Russia, and this time with a rising China, too, the value of the alliance system remains undiminished. In fact, whether it is the Philippines in Asia or Turkey in Europe, China and Russia are trying to draw traditional U.S. allies away from Washington.

A chart showing NATO defense spending as a percentage of GDP

The United States benefits from its NATO allies in pursuit of other security objectives as well. With its arguably anemic defense spending, Germany has borne the brunt of Trump's ire over the perceived free-rider status of many NATO states. Nevertheless, Germany's key geographic position in Europe ensures that it is pivotal to U.S. security interests. To project power in Europe, particularly against a Russian-related contingency in Eastern Europe, the United States will have little choice but to depend on Germany's position in the center of the Continent and its transportation infrastructure to transfer forces and materiel eastward. The United States has also relied heavily over the past two decades on the bases and related infrastructure it has built up in Germany since the Cold War to prosecute its counterterrorism operations in the Middle East, Africa and beyond.

A Diverse Alliance

Given that NATO member states, even as allies, don't always share the same purpose, goals or security priorities, the United States' blanket approach to the 2 percent commitment is unlikely to work. (The requirement applies specifically to each NATO country's domestic military spending. All member states also pay direct contributions to finance NATO's requirements.) Faced with a potentially existential threat from Russia, NATO members on the alliance's eastern flank, such as Poland and the Baltic states, will be far more inclined to boost their defense spending. They will also be much more careful to not anger the United States, since they view its presence and strength as the best deterrents against potential Russian aggression.

By contrast, member states that are geographically removed from Russia generally have other security priorities in mind. Italy, for instance, is increasingly focused on the power vacuum in Libya and on the migrant flow over the Mediterranean. France is embroiled in various security missions in Africa and the Middle East and wants to bolster its overall power projection capabilities. The United Kingdom, meanwhile, is struggling to calibrate its defense posture under tight fiscal constraints. And in Germany, the public remains divided on the very idea of a powerful German military. Given their diverse priorities, it would be unreasonable for the United States to expect a single broad approach toward NATO to find much success.

A Flawed Measure

Furthermore, the U.S. focus on the 2 percent commitment is hard to justify. The measurement provides a simple method for evaluating whether a NATO member state is shouldering its share of the burden. At the same time, though, the standard is far from perfect.

A chart showing defense spending breakdowns by country in NATO

The 2 percent standard originated more from an overall measure of defense spending by European NATO countries in the early 2000s than it did from a careful examination of what a NATO member's best level of defense spending would be relative to its economy. What's more, the rule emphasizes input, with little focus on output. Greece, for instance, meets its 2 percent commitment, but largely because it spends more than 75 percent of its defense budget on personnel and pension costs. In fact, more than 15 NATO allies spend well over half of their defense budgets on personnel and pension costs, investments that translate poorly into advanced capabilities. The 2 percent measure also depends too heavily on the state of a member country's economy at any one time. Variations from temporary recessions or spikes in growth could throw off the measurement, and chasing after economic fluctuations is hardly conducive to the bloc's ideal of stable and consistent defense budgets.

Other output factors to consider include participation in active NATO missions, modernization of forces, logistical support and availability of rapid reaction forces that can be deployed in an emergency. While the 2 percent standard retains value as a simple and direct measurement of burden sharing, a more encompassing and nuanced picture is necessary to better ascertain a member state's commitment to NATO.

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