Trump attacked NATO spending on the campaign trail, and he hasn’t forgotten his stance. Talks between the key players in the alliance are already underway, and one way or another things are likely to change.
Trump’s primary complaint is with uneven financial burdens, but when even CNN agrees with him, you know it’s a serious issue. Let’s take a deep look at the breakdown of spending and financial requirements. Spoiler alert: it’s much worse than you think.
The GDP Breakdown
One of the major commitments expected of every NATO member is to spend two percent of their GDP on the alliance. When you consider the 28 nations include the 5 largest economies in the world, it creates a considerable budget and the strongest military alliance in history so far.
NATO does hold considerable power, but that mostly only comes from the U.S. commitment. You see, out of the 28 members, only 5 actually pay their due, and they are the U.S., Greece, U.K., Estonia and Poland.
Germany and France have the second and fourth largest economies in the world, respectively, and they pay 1.19 percent and 1.76 percent of their GDPs. It represents a huge financial burden that has to be compensated somewhere, and for the history of the alliance, the U.S. has been picking up the bill. The story clarifies when you look at raw dollars.
A Look at the Cash
Using figures from 2015 (not all of the 2016 numbers are in yet), the U.S. paid a little over $600 billion into the alliance. The next largest contributor was the U.K. at $56.8 billion, less than a tenth of America’s contribution, and Britain paid almost twice as much as Germany or France.
The biggest mooch in the bunch is Canada. They have the fifth largest GDP in the alliance, but they paid less than one percent of their GDP, amounting to a total commitment of just $18 billion.
Let’s add perspective to these numbers. If you tally the 27 members that are not the U.S., their GDPs make up more than half of the alliance’s total. Knowing that, the U.S. foots more than 75 percent of the bill. That means one country is paying more than twice as much into NATO as the rest, combined.
Justifying the Spending
Proponents of NATO will argue that the ends justify the means. After all, there hasn’t been a major European conflict since the alliance formed, and NATO is largely credited as the deterrent that prevented further expansion of the USSR.
Even if we assume those claims are true (it’s more likely that the U.S. was a deterrent enough on its own for both of those accomplishments), the USSR no longer exists, and the bulk of European military power is unified under the EU.
In fact, the EU represents a stronger military and economic power than NATO (if you exclude the U.S.). There’s no denying the fact that the post WWII climate has completely shifted, and NATO has become more a tool for U.N. agendas than an independent agency. One way or another, it’s time for change.
Possible Reform
Disbanding NATO outright could have large repercussions, and the more likely route in the short term is to renegotiate membership terms. In a Trump-led U.S. that is addressing inefficiency throughout the government and spending, this seems to almost inevitably point at the U.S. reducing its NATO spending.
Just to paint a picture, if America dropped its commitment to the two-percent minimum, it would save roughly $270 billion on the defense budget. While Trump would likely keep that spending related to the military, how much good could be done with that money when it isn’t spent equipping “allies” with detection equipment and missile silos?
It’s also important to consider the downsides of NATO. The Berlin Wall fell almost 30 years ago, and relations between the West and Russia are hardly any better. NATO has been the primary reason the U.S. has been unable to follow through on multiple promises to restore the Russian relationship, and from the perspective of a non-member, it’s the most terrifying military presence in the world.
It’s also regularly active in policing and foreign interventions, making it a major obstacle for forging healthier relationships with non-members. With a reduced NATO role, the U.S. and Russia might finally be able to enter an amicable relationship, and that would be the final nail of obsolescence for the old alliance.
There is no reason it couldn’t be replaced by a smaller commitment between allies that would further promote stability and peace, and it could even form a more effective international front against global terrorism.
Regards,
Ethan Warrick
Editor
Wealth Authority
