{"id":1942,"date":"2021-02-01T11:34:44","date_gmt":"2021-02-01T11:34:44","guid":{"rendered":"http:\/\/atauk.org\/?p=1942"},"modified":"2022-09-19T20:41:50","modified_gmt":"2022-09-19T20:41:50","slug":"nato-funding","status":"publish","type":"post","link":"https:\/\/atauk.org\/index.php\/2021\/02\/01\/nato-funding\/","title":{"rendered":"Spot the difference: Funding for NATO and Funding for Defence"},"content":{"rendered":"\t\t
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Germany\u2019s direct contribution to NATO now equals that of the United States. What does that mean and is there a lesson there for the UK?<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Starting this year, Germany and the United States are both contributing the same amount to NATO\u2019s budget. Yet, while the United States already exceeds NATO\u2019s defence spending target, Germany won\u2019t do so until the early 2030s.<\/span><\/p>\n

For those people who don\u2019t pay close attention to NATO\u2019s budgeting practices, this might seem like a contradiction, but it isn\u2019t: \u201cdirect contributions to NATO\u201d are not the same thing as \u201cspending on defence\u201d.\u00a0 Far from it, as the numbers clearly show.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Defence Spending: A note on the Numbers<\/h4>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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All the amounts cited are from NATO\u2019s own figures<\/a> and definitions which can differ from national figures because they are adjusted to compensate for different national defence accounting practices.\u00a0 Spending on civil defence, for instance, is excluded, while military pensions are included, whether they are paid by from a nation\u2019s defence budget or any other ministry.\u00a0 Also included is the funding for deployable, militarily equipped armed forces \u2013 gendarmerie, carabinieri, coast guard, border troops etc.\u2013 which are not funded from their national defence budget<\/em><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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In 2020, NATO member nations spent over $1,092 billion on defence.\u00a0 Almost 72 per cent of that \u2013 about $785 billion \u2013 was spent by the United States. Put another way, the United States spent more than twice as much on defence as the rest of Alliance put together.<\/p>

As a global power, of course, not all US defence spending should be counted as a contribution to the Alliance, but no matter how the figures are massaged, the United States is by far the largest contributor to the Alliance in terms of financial outlay and military capability.<\/p>

This situation isn\u2019t new, and there have been numerous attempts to boost the non-US share.<\/p>

The latest effort was launched in 2014, just after Russia occupied Crimea and while ISIS was occupying swathes of Syria and Iraq.\u00a0 In their summit in Wales that year, NATO\u2019s leaders agreed upon an impressive range of initiatives to deal with new security challenges, and to address this \u201cburden sharing\u201d problem.<\/p>

They decided that defence cuts would be halted, and that all Allies would aim to spend at least 2 per cent of GDP on defence by 2024.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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There has been a lot of progress since then, but \u2013 as 2024 draws closer \u2013 it\u2019s clear that not all the Allies are going to meet the 2 per cent goal by then, and Germany has declared as much: it won\u2019t reach 2 per cent until early in the next decade.<\/p>

Needless to say, that did not go down well with former President Trump \u2013 nor will it with President Biden, who was Vice President when the Allies made all those momentous decisions in 2014, although at least he has frozen the withdrawal of 9,500 US troops from Germany that former President Trump announced in July 2020.<\/p>

Burden sharing will inevitably feature in the NATO summit on 14 June 2021 and Allies will certainly want to highlight a ray of budgetary sunshine: Allies\u2019 direct contributions to NATO.<\/p>

This is what all the Allies chip in to cover the costs of running NATO headquarters, the military command structure, certain forms of support for military operations, and some shared infrastructure.\u00a0 \u20ac2.6 billion has been budgeted for 2021<\/a>, a significant amount, although rather less than 0.3 per cent of NATO\u2019s total spending on defence.<\/p>

NATO has a cost-sharing formula for this common funding which is based \u2013 for the most part – on Gross National Income.\u00a0 Until about 20 years ago, the formula was updated rather infrequently, but since then, it has been tweaked roughly every couple of years, and when needed to incorporate new Alliance members.<\/p>

The common-funding formula announced in January 2021 is remarkable in that both the United States and Germany will contribute an identical share \u2013 just over 16 per cent each.\u00a0 Never before has the United States share been less than 20 per cent, and never before has Germany\u2019s share been as high as 16 per cent.<\/p>

Overall, the new formula should save the United States about \u20ac120 million a year, with all the other Allies picking up a share of that.\u00a0 Germany\u2019s increase, for instance, amounts to about \u20ac33 million compared with the previous year.<\/p>

As a concrete example of America\u2019s Allies doing more, the new cost-sharing formula has potentially significant PR and political value, and it might well help to deflect or soften some of the anticipated criticism on burden sharing.\u00a0 Stories about \u201cGermany matching the US on funding for NATO\u201d will certainly catch the eye.<\/p>

This recalibration of cost shares will also subtly shift perceptions about \u201cstanding\u201d within NATO\u2019s administrative structures, and there might be a lesson here for the UK, which is currently in third place, contributing just over 11 per cent to the common budget.<\/p>

Brexit raised concerns among many neighbours that the UK might be becoming less engaged internationally. Twenty-one of those neighbours are members of both NATO and the European Union, and it would be surprising if their attitudes were completely unaffected by the whole Brexit experience.<\/p>

British political leaders and diplomats are quick to reassure their international counterparts that the United Kingdom has not wavered in its commitments to other international bodies \u2013 especially NATO – and the United Kingdom makes a good case for itself.<\/p>

Even so, additional reassurance wouldn\u2019t go amiss, so why not join the \u201cbig league\u201d by upping the UK\u2019s contribution to NATO\u2019s common budget to match those of the United States and Germany?<\/p>

And to avoid upsetting the current framework which will be in place until 2024, if could be proposed as a budget augmentation rather than a means of reducing the contributions of others.\u00a0 NATO could use the funding boost: indeed, a cogent case was made in the recent \u201cWise Persons\u2019 group, which can be seen as a precursor to preparing a new NATO Strategic Concept, an initiative likely to be announced at NATO\u2019s next Summit.\u00a0 That extra funding would put the UK in an excellent position to influence the nature of additional HQ priorities.<\/p>

The price tag would be about \u00a0\u20ac150 million a year, but it could \u2013 and should – be phased in: new programmes need to be thought through and grown carefully.<\/p>

Having the UK spend as much as the US on NATO wouldn\u2019t just be an appealing headline: it would provide unassailable reassurance about the UK commitment, while also placing the UK even more squarely on the moral high ground in any discussions on burden sharing.<\/p>

And it would be nice to be in joint first place rather than a slightly distant third\u2026<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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ATA UK 1 February 2021<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

Germany\u2019s direct contribution to NATO now equals that of the United States. What does that mean and is there a lesson there for the UK? Starting this year, Germany and the United States are both contributing the same amount to NATO\u2019s budget. Yet, while the United States already exceeds NATO\u2019s defence spending target, Germany won\u2019t […]<\/p>\n","protected":false},"author":2,"featured_media":1971,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[12],"tags":[43],"ppma_author":[23],"class_list":["post-1942","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-perspectives","tag-nato-defence-spending"],"authors":[{"term_id":23,"user_id":2,"is_guest":0,"slug":"david","display_name":"David Hobbs","avatar_url":"https:\/\/atauk.org\/wp-content\/litespeed\/avatar\/f56c47d2d70950af82ff4169662fcce1.jpg?ver=1775848783","author_category":"","user_url":"","last_name":"Hobbs","first_name":"David","job_title":"","description":""}],"rttpg_featured_image_url":{"full":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640.jpg",384,256,false],"landscape":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640.jpg",384,256,false],"portraits":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640.jpg",384,256,false],"thumbnail":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640-150x150.jpg",150,150,true],"medium":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640-300x200.jpg",300,200,true],"large":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640.jpg",384,256,false],"1536x1536":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640.jpg",384,256,false],"2048x2048":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640.jpg",384,256,false],"xs-thumb":["https:\/\/atauk.org\/wp-content\/uploads\/2021\/02\/mixture-69523_640-64x64.jpg",64,64,true]},"rttpg_author":{"display_name":"David Hobbs","author_link":"https:\/\/atauk.org\/index.php\/author\/david\/"},"rttpg_comment":0,"rttpg_category":"Perspectives<\/a>","rttpg_excerpt":"Germany\u2019s direct contribution to NATO now equals that of the United States. What does that mean and is there a lesson there for the UK? Starting this year, Germany and the United States are both contributing the same amount to NATO\u2019s budget. Yet, while the United States already exceeds NATO\u2019s defence spending target, Germany won\u2019t…","_links":{"self":[{"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/posts\/1942","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/comments?post=1942"}],"version-history":[{"count":45,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/posts\/1942\/revisions"}],"predecessor-version":[{"id":5445,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/posts\/1942\/revisions\/5445"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/media\/1971"}],"wp:attachment":[{"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/media?parent=1942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/categories?post=1942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/tags?post=1942"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/atauk.org\/index.php\/wp-json\/wp\/v2\/ppma_author?post=1942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}