Taking the “come out swinging” approach to family reunions, President Donald Trump kicked off the NATO summit this week by accusing Germany of improper ties to Russia and berating European allies for insufficient defense spending. On Thursday, he reportedly suggested that if member states didn’t cough up 2 percent of GDP for defense spending by January, the United States would “go our own way.”
This is a theme for the American president—that Western Europe is shirking its military spending duties. How accurate is it, and how might the January deadline play out?
I called up Jari Eloranta, an economic historian at Appalachian State University who specializes in military spending trends. After NATO’s founding after World War II, the U.S. consistently outspent other member states at eye-poppingly high percentages of its GDP, according to Eloranta. That was partly due to the Cold War. The Soviet Union, meanwhile, was outspending the United States, but help from European allies put NATO defense spending above that of the Soviet Union’s competing alliance, the Warsaw Pact. In recent years, defense spending overall has been lower than in those heady earlier decades.
As Eloranta pointed out, NATO members committed in 2014 to spending 2 percent of their gross domestic product (GDP) on defense by 2024. So by insisting instead on January, Trump would be pulling the rug out from under that deal. But as he also pointed out, there are serious risks to sudden increases in defense spending and several problems with using GDP to determine how much spending is “enough.”
To what extent has the president pointed to a real problem?
It’s very artificial to point at the 2 percent target. The financial crisis and downturn after 2008 was much more severe in Europe—it has taken them much longer to recover from it. It’s kind of artificial to use GDP as the measuring stick for military spending at all. Because obviously if your GDP declines, typically budgetary spending doesn’t change that much for a while, so, for example, states like Greece look like they’re spending almost 3 percent of their GDP on defense when in fact it’s just an artifact of their GDP having plummeted massively.
Same thing for the U.S.: Right after 2008 U.S. military spending as a percentage of GDP jumps from a little over 3 percent to a little over 4 percent, so it looks like Obama increased military spending when he didn’t. Often budgets are immobile and you can’t change them as quickly. So right now because U.S. economic growth has been so strong, it looks like from 2010 U.S. military spending as a percentage of GDP has dropped from a little over 4 percent to a little over 3 percent. And, in fact, in recent years it looks as if European military spending as a percentage GDP has been declining, but mostly that’s because of the late recovery that started in 2013 and 2014, when a lot of their economies started to rebound.
To what extent, then, was this current conflict within NATO a matter of long-term trends?
I think this is absolutely a longer trend. Military spending obviously is always driven by economic development. When countries become more developed they are able to dedicate less money for defense respective of GDP because if your GDP doubles and you maintain 1.5 percent level of GDP on military spending that still means a huge increase in military spending. And there are also fewer conflicts in the world and less sort of external violence and need for defense: Ever since the end of the Cold War there’s been less need of unified-alliance defensive efforts.
In recent years in Europe, of course, the Russian aggression in Crimea and Ukraine has been a huge worry, and has led to an increase in military spending in the Baltic and Eastern European countries. Military spending is always driven by threats as well, and some European countries don’t feel the threat as acutely as others.
In general, the Trump administration’s, or Trump’s, efforts are very disingenuous, because European countries already agreed in 2014 to start increasing their military spending. This was a whole NATO-wide effort projected to last until 2024, and it’s in response not to U.S. needs but to increased threats from Russia, and trying to create more unity within the alliance.
What about Germany’s difficulties meeting its targets, with Merkel recently downgrading expectations about when the country is going to reach two percent spending?
Well, typically I’d say it’s very much a positive thing that a country takes care in terms of planning military spending increases very carefully and slowly. When you rapidly increase military spending, that creates opportunities for waste, for rent-seeking, for companies to take advantage of opportunities that are not well-thought-out—opportunities for defense contractors to make a quick buck.
All these spending increases are always slow anyway, because governments have other budgetary concerns. For Europe as a whole, and particularly Germany, the big policy problem right now is the refugees and immigration, which is creating a huge deal of tension within the Merkel administration—that’s their priority. So I’m not surprised at all that this is not one of their pressing concerns right now and they don’t quite necessarily see Russian threat as an acute one that they would require massive quick spending increases. Whether they’ll meet those targets or not, that’s somewhat arbitrary, because if the German economy increases rapidly they’d have to ramp up spending even faster to meet that target. So that’s a mechanism that’s difficult to predict overall.
In that case, should we just ditch spending as a percentage of GDP as a way of measuring military contributions?
I think tying to GDP is a good measure for scholars like myself. As a target I find it very arbitrary: I don’t think it’s useful. You could devise different kinds of metrics based on not just size of the economy but population and so forth. But overall I just think that’s not really how the generals would plan their defensive efforts. I mean they would have to look at cost of certain defensive technologies, for example. And of course NATO does so much more than just prepare for conflict or threats towards one of their member states: They do missions in Middle East and also peacekeeping efforts and other things. So I’m not sure what would be the best metric for this kind of thing.
NATO has been increasing military spending since the 2014 decision. The spending of non-U.S. NATO states has increased, and of course U.S. spending has increased as well—the Trump administration increased military spending rapidly, which I personally think was rather foolish, because rapid spending does create opportunity for waste and fraud, and I don’t think there are very credible threats worldwide for the United States at the moment, it’s the sole superpower in many ways. (If you look at Chinese spending they’re about 2 percent of GDP. Russian spending, yes, it’s over 4.5 percent, almost 5 percent of GDP, but Russian GDP is rather low. U.S. GDP is almost eighteen, ninteen times higher than Russian GDP.) In fact, if you look at some of the figures from the Stockholm International Peace Research Institute, by their calculations the U.S. still accounts for 35 percent of all military spending in the world.
So what’s the takeaway?
I’ve been baffled by this current administration, by what they’re doing. European nations, especially NATO nations, are very concerned about the ambivalence that’s being signaled from the U.S. towards NATO—whether its commitments to the defensive umbrella are credible or not. This is felt acutely by several of the Eastern European nations who are at the front lines of potential conflict with Russia. Countries like Estonia, Latvia, Lithuania—these countries are extremely concerned. They don’t quite understand what on Earth is going on with the U.S. It’s also creating some problems, mostly with Sweden and Finland, who are not NATO nations but have been considering that in the long run. This is strengthening the opposition in those countries toward NATO membership because they see that the U.S. is not a credible NATO ally, won’t stick to agreements—whether on climate or security—and see that maybe NATO is not a useful defensive mechanism that would protect them against Russian aggression if that were to happen. So this is truly creating a lot of animosity towards the United States within Europe. And I would argue that it comes from the top: The president with his comments publicly and otherwise is seriously undermining the credibility of the whole defensive alliance.
He’s possibly ignorant [of the 2014 agreement] or he’s willfully trying to pressure with this crude rhetoric, trying to pressure them to do even more. I don’t personally know the decisionmakers involved in NATO, but they’re not used to operating on these kinds of terms, where someone’s making statements that are not true, or half true, and not always affirming the idea that NATO would come to the defense of some of these smaller countries in Europe.
This interview has been edited for length and clarity.