2 Percent Is No Magic Number

When the leaders of NATO’s 28 member countries gather in Brussels on May 25, all eyes will be on U.S. President Donald Trump. Russia, Afghanistan, and questions about America’s commitment to Europe will be on the allies’ agenda, but the elephant in the room will be burden-sharing — and in particular the president’s demand that there be more of it.

While Trump has backed off many of his previous criticisms of NATO — even declaring the alliance “no longer obsolete” after a meeting with its secretary-general last month — his administration’s emphasis on the need for allies to spend more on defense has endured. Trump has pointed out that just five members currently meet the defense spending target that NATO set in 2014. In February, Secretary of Defense James Mattis offered “clarity on the political reality in the United States” to his fellow defense ministers, saying that if the allies do not want to see America reduce its commitment to them, “each of your capitals needs to show its support for our common defense.” In March, Secretary of State Rex Tillerson told his counterparts that they should prepare action plans to meet their defense spending commitments. And after meeting with Chancellor Angela Merkel at the White House, Trump tweeted with characteristic bluntness that “Germany owes … vast sums of money to NATO.”

Trump is right to protest insufficient defense spending among most NATO members. And by putting NATO members on notice, his efforts, along with rising concerns about Russia’s ambitions, have already persuaded members to invest more. But the president should consider that there’s no guarantee that NATO members that spend more will do so wisely and that the measure of an ally’s worth is broader than the top-line dollar amount in its budget. An overweening focus on budget metrics risks distorting, to NATO’s detriment and America’s, what it means to be a good military ally.

Trump’s call for NATO members to shell out more money has a lengthy pedigree. Richard Nixon’s secretary of defense, James Schlesinger, for instance, called on members to spend 5 percent of their GDP on defense. By the time Bill Clinton took office, officials took pains to note that average NATO defense spending had fallen from 4.4 percent of GDP in 1989 to 3.8 percent in 1993. During the Barack Obama administration, Robert Gates worried openly that for most allies, “defense budgets — in absolute terms, as a share of economic output — have been chronically starved for adequate funding for a long time, with the shortfalls compounding on themselves each year.”

Now the magic number is 2 percent, agreed to at the 2014 NATO summit in Wales. There has been progress; since the summit, 20 of the 28 NATO member countries have increased the percentage of GDP they devote to defense. Still, with Greece, Poland, Britain, and Estonia the only members other than the United States to crack the 2 percent threshold, Americans rightly challenge the rest to increase their budgets.

To stop there, however, forsakes a much broader and more accurate picture of an ally’s worth.

There is spending for spending’s sake — and then there is spending wisely. In some European countries, for instance, defense spending is as much about job creation as it is about safeguarding national security. In Greece, for instance, 2.7 percent of the entire labor force is in the military.

Others are squeezing greater capacity out of smaller total expenditures, which deserves to be commended, not discouraged. Norway, for example, saved funds by shuttering bases and identifying cost efficiencies and redirected the funds into training, exercises, and new procurement. Denmark, too, eliminated its costly submarine fleet a decade ago in order to afford a doubling of its expeditionary forces, which can be deployed quickly in a crisis.

It’s instructive to look at which ally spends the greatest proportion of its GDP on defense. At the top of the list isn’t Britain, which has fought alongside the United States in Iraq, Afghanistan, Libya, and in operations against the Islamic State. Nor is it the Germans, who, with their paltry 1.2 percent, have made the third-highest troop contribution to the counter-Islamic State campaign. The winner is Greece, which allocates 2.4 percent of GDP to defense but can hardly be considered NATO’s vanguard. (It has helped the numbers that, while Athens slashed its defense spending in absolute terms, its GDP has shrunk faster still.) Today, Portugal is closer to the target, percentage-wise, than the Dutch, and Albania is closer to it than Canada. Clearly such budget numbers tell just part of the story at best.

A more accurate evaluation would look to other important criteria. Some allies bring niche capabilities to the fight, such as Dutch, French, and Spanish special operations forces and British maritime assets, while others, like Italy and Turkey, are integrated into America’s extended nuclear deterrent. Still others host American bases or troops on rotation. At times, allies shoulder some of the defense load in certain arenas. France, for example, took charge of counterterrorism operations in Mali, allowing the United States to focus on other areas. When Germany declined to participate in the 2011 NATO operation in Libya, it subsequently picked up other missions, like patrolling the Aegean Sea in 2016 and deploying a battle group to Lithuania this year.

A broader measure would also look at allies’ reliability and their will to stay engaged in grinding fights. According to the latest available statistics, Denmark and Britain have suffered more fatalities per capita in Afghanistan than has the United States, with Estonia and Canada not far behind. Such comparisons can be crude, but they demonstrate one dimension of their willingness to remain in a war engaged by NATO to defend America, rather than the other way around.

The new administration has an opportunity to build a better transatlantic alliance, should it choose to seize it. Focusing only on the top line of allies’ defense budgets threatens to elevate accounting above strategy. Instead, the president should convert his considerable leverage not only into higher spending but also into plans to spend more wisely. His administration should pursue a broad program of activity, one aimed at redirecting funds toward niche capabilities, redeploying eastward to deter Russia, and enhancing readiness to deal with crises. It should keep the focus not just on the 2 percent Wales summit commitment but also members’ pledge to spend 20 percent of their defense budgets on equipment modernization.

These moves would make NATO fairer. They would also render it more capable and thus more valuable to the United States. And in Brussels, embracing them could produce a transatlantic win, at a time when both sides could use one.

Photo credit: Chip Somodevilla/Getty Images