“Two percent is a joke. Four percent is what we should be spending. We [the US] are being played for fools”
President Donald J. Trump, Brussels NATO Summit, 12 July 2018
When is a pledge not a pledge?
The NATO Brussels summit was all about burden-sharing. Or, at least, it was about US President Donald Trump demonstrating to his electoral base that he could strong-arm the European allies into spending more on defense. On the face of it, Trump succeeded in firming up the Defense Investment Pledge to which the allies had agreed in 2014 to spend 2% of GDP on defense by 2024 of which 20% per annum must be on new equipment. However, what was the central contention at the summit raises another question: why is it so hard for Europeans to meet what is by historical standards a relatively low level of investment in their own defense well-being? Only by analyzing the choices faced by each NATO nation does one begin to get a picture.
With the United States providing 75% of allied forces, 68% of the cost and 22% of the NATO budget the Americans seem to have a point – Trump or no Trump. Some Europeans have argued that only those American forces directly assigned to NATO command structures should be considered in an assessment of relative burdens. Washington counters, and rightly, that in an emergency NATO would rely on far more US forces than simply those currently stationed in Europe. Prior to the summit, NATO Secretary General Jens Stoltenberg tried to accentuate the positive by suggesting that as many as eight nations would achieve 20% by the end of 2018, three more than at present. Indeed, President Emmanuel Macron announced on Bastille Day that France would increase defense spending to meet the goal. Stoltenberg also said that sixteen of the twenty-nine allies would achieve 2% by 2024 and that in 2018 nineteen of the twenty-nine would be spending 20% of their respective defense budgets on new equipment each year.
So, what’s the problem?
There are several shared factors that make it hard for Europeans to hike the existing levels of defense expenditure which for NATO Europe averages out at around 1.47%. Too much existing public debt is the primary constraint. The US-generated sub-prime and Euro-generated sovereign debt crises of the late-2000s allied to the subsequent austerity policies of many European nations reflect a focus on maintaining internal social and political stability rather than dealing with external threats. Those NATO members that are also members of the Eurozone are constrained in their public expenditure by the need to maintain the convergence criteria of government budget deficits that must not exceed 3% of GDP over any three years and public debt that must not exceed 60% of GDP at the end of any given financial year.
However, there are also a range of specific factors that constrain defense expenditure in each NATO nation. Even amongst those that do currently meet the 2% benchmark, there are tensions. Greece (2.27%) exceeds 2% only because of its traditional hostility towards Turkey, another NATO member, and because the Greek armed forces have a lot of political influence and act as a major employer in a debt-ridden society. Estonia (2.14%) and Latvia (2%) both share a common border with a predatory Russia. Lithuania (1.96%) will move to 2% in 2018 for the same reason.
The United Kingdom (2.12%) likes to trumpet its commitment to 2%. However, since 2009 when the cost of the nuclear deterrent became part of the core defense equipment budget London has struggled to afford both a credible strategic nuclear deterrent and a credible deployable conventional strike force. France (1.81%) suffers from the same dilemma as the increasing cost of quality forces comes at the expense of both quantity and capacity. Poland (1.98%), Romania (1.93%) and Bulgaria (1.56%) are all trying to increase defense expenditure because of the threat they see posed by Russia in their respective regions, with the Black Sea fast becoming as much of a contested region as the Baltic Sea.
In the wake of the 2016 coup attempt, the Erdogan government in Turkey (1.68%) has been seeking to limit the political influence of the army whilst at the same time coping with an internal insurgency and the threat posed to the country’s stability by the war in Syria. At the other end of Europe, Norway (1.68%), Secretary-General Stoltenberg’s home country, is facing increased Russian intimidation around its North Cape region and the militarization of the Arctic. Oslo is finally recognizing that pre-positioned US forces or not Norway will need to do more for its own defense and regional stability.
Then one moves into the smaller allies such as new member Montenegro (1.58%), Portugal (1.38%), Croatia (1.3%) and Albania (1.19%) which face issues of debt, are trying to prepare for EU membership and for whom Russia is neither a threat nor a problem. Indeed, in the case of Montenegro, Russian money is positively welcome, if not the influence that goes with it. The Netherlands (1.35%) and Denmark (1.21%) simply do not spend enough by choice. Relatively rich states the Dutch and the Danes are classic free-riders. They might both have small but impressive cadres of special forces, which afford real political utility in Washington but they are also “armed” with political classes and indeed publics all too willing to let others do the defending for them. The real losers are the respective “bonzai” Dutch and Danish armed forces with excellent but unsupported personnel.
Italy (1.15%) is the real conundrum. Rome should be the natural leader of the southern allies but too often Italy is a big country that behaves likes a small one. Italy lacks any real strategic culture to speak of, has an economy and a society that has suffered greatly from the strait-jacket imposed by the Eurozone, and now faces a major migration crisis. The new government in Rome also sees Russia as a potential partner and views the chronic instability in the Middle East and North Africa as its main security concern.
The small central European states such as the Czech Republic (1.11%), Hungary (1.08%) and Slovenia (0.93%) are far away from both of NATO’s front-lines to the east and south not to be immediately affected but close enough to be unsure of where to posit the center of gravity of their respective security efforts – internal order, countering Russia and/or managing mass migration flows. They are also profoundly influenced by German choices… or the lack of them.
Spain (0.93%) is broke whilst Belgium (0.93%) has a political class obsessed with lecturing other Europeans (most notably the British) about the need to do more for “Europe”, whilst showing an utter disregard or indeed unwillingness to match their lofty rhetoric with hard investment. Luxembourg (0.55%) and Iceland (0% but a good base)? Who cares?
And then there is Germany (1.24%). The growing gap between Berlin’s lofty rhetoric and its goal of being a leader in the Alliance and the chronic state of the Bundeswehris the burden-sharing dilemma in a nutshell. The problem is that Germany is also the European defense dilemma in a nutshell. If Germany spent 2% of GDP on defense, Berlin would be spending over $70 billion per annum, far more than either Britain or France. History is still eloquent in Europe and Berlin has to balance the stability of Europe with the defense of Europe. To some extent, the 2% goal has become hung up on German defense expenditure. The paradox being that if NATO is to achieve that goal, Germany might need to be excused from it, or at least allowed to invest some of its Euro-generated budget surplus on the hardening of infrastructures across Europe that could assist Alliance military mobility in an emergency. Quite simply, the future cohesion of the Alliance, particularly the European end of it, suggests a Germany that spends no more and quite possibly less than either Britain or France.
A 90 degree Alliance in a 360 degree world
The consequence of all of the above is that NATO Europe has the capability and capacity to be a 90 degree alliance facing a 360 degree world in which different threats and technologies are merging into threats demanding both allied quality and quantity. That costs. In other words, even if all NATO Europeans did meet the 2%/20% goal there is no one collective defense driver that would generate strategic unity of effort and purpose in and of itself. Some Europeans really are free-riders on America for whom social security is more important than actual security. For them, the only justification of 2% would be if it ensured the Americans would continue to defend them and basically pay for it. If 2% spent well achieves that they might just do it for it would be better than having to fork out 3% or more if the Americans really did “do their own thing”, as President Trump suggested at the summit.
The deeper malaise in European defense – be it NATO or the EU – is the lack of a shared strategic planning culture, a lack of shared strategic vision and a lack of strategic seriousness. Until Europeans begin to properly consider the European strategic environment as Europeans and not simply as an adjunct to the Americans then “defense” for many Europeans will continue to be seen as “discretionary” expenditure on by and large unreformed armed forces. Proof of that? Just look at how the 2% is calculated. NATO defense expenditure guidelines are still not about generating the defense outcomes needed to afford credible defense and deterrence. Rather, the inclusion of “administrative costs” such as pensions demonstrates yet again that even if many NATO Europeans met the 2% they would only be recognizing as much threat as they can afford and would be happy to leave “real” defense to the Americans. President Trump might be a jerk, but he is right about that.
 All the figures herein are taken from “Defense expenditure of NATO countries as a percentage of gross domestic product in 2018” https://www.statista.com/statistics/584088/defense-expenditures-of-nato-countries/