NATO Spending Commitments and a Brief Look at NATO's Future

Last week, President Trump went to Brussels to attend a summit for the North Atlantic Treaty Organization (NATO). Allies within NATO are feeling unease, at least in part because President Trump continued to accuse allies of free-riding and not "paying their fair share towards NATO." During his summit, he accused NATO allies of being delinquent in paying towards NATO, which is false. While Trump lambasted allies for not paying the 2 percent commitment, it would behoove him to realize that when the countries agreed that they would expend 2 percent of their GDP towards military spending by 2024, which was a non-binding agreement until the Crimean escalation in 2014. The interesting thing is even if a) everyone put in 2 percent (thereby increasing military outlays by $114 billion) and b) the United States, for some reason, matched it with the corresponding $114 billion decrease in military spending, it would have reduced the U.S. military budget by 16 percent. The United States would still have had 3 percent of its GDP be spent on military spending, which is higher than other NATO countries.

This gets to the question of the day: In spite of the fact that European allies have been increasing their military spending, is the United States spending so much more for NATO than its partners? If you look at overall military expenditure, then the United States is responsible for 70 percent among NATO members. As NATO itself admits, this imbalance in indirect spending has existed throughout NATO's history, so it's not like it's anything new. Yes, spending over $600 billion on military expenditures is costly for the United States government. However, this figure does not refer to NATO expenses or expenses the United States spends on European defense. The International Institute for Strategic Studies (IISS) puts U.S. military spending towards Europe in context. The United States contributes just $685 million to NATO common funding (or 22 percent). Including equipment procurement, U.S. funding for NATO capability puts the figure at $6.8 billion for 2018. If we look at total U.S. spending on European defense, it goes up to $30 billion, which is less than NATO European defense spending of $230.8 billion (see below). When looking at direct spending on European defense, the United States plays a small role than Trump purports.

Even so, I would still contend that the United States plays a vital role for NATO. Without the United States, NATO would be a hollow shell of its former self. At the same time, I do wonder if NATO can hold itself together. As the American Enterprise Institute points out, security alliances such as NATO normally don't last this long; NATO's longevity is an anomaly. Security alliances and security priorities can and do shift. In spite of my wishes, the United States continues to play the role of global policeman. With multiple areas to focus on, the United States cannot focus on Europe like it once did. What if the United States decided to put more money into the Middle East or dealing with China because Trump ended up escalating from a trade war to using military force against China? If Trump goes after China, Europe would have to reconsider its current ties with China. Plus, if Trump is serious about shifting national security priorities, he might be increasing pressure to help make sure that the United States can both maintain NATO and pursue other national security priorities.

Given that the composition of NATO has shifted since its founding in 1947, as has the prioritization of national security for allied countries, I think there needs to be reform if NATO wants to last. Trump is making it clear that NATO is not going to be doing "business as usual." There is one other thing to consider. Even if Trump exaggerates the U.S.' commitment to NATO, one could make the case for greater military spending in Europe. The Euro Zone is having a harder time holding it together. Various European countries are dealing with greater extremes amongst political parties. Russia is slowly but surely reasserting its assertiveness on the European continent. Greater instability in Europe bolsters the argument for NATO, especially since history has shown us what an unstable Europe leads to, especially when Europe is the United States' largest trade and military partner.

How will NATO's future end up? If I knew, I would be a very rich man. Alas, clairvoyance is beyond me. What I do know is that there is enough going on that the status quo and prevalence of NATO is not going to be what it once was.