Military spending of NATO members drops by 200 billion in 6 years

04 May 2016 Consultancy.uk

Total military spending by NATO members has dropped by one fifth over the past six years, a hefty $200 billion, reveals an analysis on new data released by the intergovernmental military alliance. North America accounts for 71% of total expenditure, while the UK continues to spend around 2% of its GDP on its military capabilities.

Founded in 1949, the North Atlantic Treaty Organization (NATO) is an intergovernmental military alliance, which spans both sides of the Atlantic. NATO launched with the support of 12 countries, and currently has 28 member states, including most of Europe on one side of the Atlantic, and Canada and the United States on the other. The organisation constitutes a system of collective defence whereby its member states agree to mutual defence in response to an attack by any external party. Recent ‘missions’ NATO embarked on include the battle against Islamic terrorism in Afghanistan, in Libya, peacekeeping in Lebanon and in the Balkans, and counter-piracy missions.

Biggest share
In 2008, total military spending by NATO members totalled $1.06 trillion, and, on the back of growing expenditures, spending in 2009 grew to $1.08 trillion. Defence expenditure is defined by NATO as payments made by a national government specifically to meet the needs of its armed forces or those of Allies. Armed forces spans the entire defence landscape, ranging from Land, Maritime and Air forces to Joint formations such as Administration and Command, Special Operations Forces, Medical Service, Logistic Command etc. The majority of the spending captured relates to the expenditure that appears in the Ministry of Defence (MoD) budget, yet, other spending areas, such as pension payments, expenditures for peacekeeping and humanitarian operations (which may be paid by ministries other than the MoD) and research and development (R&D) are also included.

In the subsequent years, the global financial crisis – which sparked a range of public spending cuts globally – and changing political aspirations, have put downwards pressure on military spending. In 2012, total spending on warfare, peacekeeping and humanitarian operations, among others, dropped below the $1 trillion barrier, and following year on year declines, spending by NATO members last year stood at $871 billion. The lion’s share of the defence spending currently comes from the North American side, predominantly the US. European countries collectively spend around $253 billion on their respective militaries.

Since the founding of NATO, American military spending has always eclipsed other allies' budgets. Yet following the terrorist attacks of September 11, 2001, the gap grew much wider as the US beefed up its spending to counter terrorism. Even NATO itself admitted a while ago, in the person of secretary general Jens Stoltenberg, that the institution is “over-reliant” on the U.S. for the provision of essential capabilities, including intelligence, surveillance and reconnaissance, air-to-air refuelling, ballistic missile defence and airborne electronic warfare.

Falling spending
When it comes to military spending, NATO has set a long term funding guideline of 2% of GDP – an amount which according to industry experts is needed to sustain a modern military force. However, only a handful of countries actually make this target. Across Europe, the level of funding has trended downwards, following the end to wars waged in Iraq and Afghanistan and economic turmoil on its own soil, falling from 1.7% in 2009 on average to 1.43% in 2015. France expends around 1.8% of its GDP on its military, with expenditure falling almost 0.5% between 2008 and 2015. Germany spends around 1.2% of the economies income on military spending, while Italy spends less than 1%, down almost 0.5% of GDP. For the UK, spending has fallen around 0.4% of GDP in the past decade, it is still however, above the guideline for yearly spending, at 2.07% of GDP.

The US too has too been cutting into its expenditure, following a reduced waging of war in foreign countries, dropping its allocation from 4.94% of GDP in 2009 to 3.37% in 2015. Despite the drop, the US continue to express dissatisfaction with the fact that most European NATO countries spend less than 2% of their GDP on their militaries. President Barack Obama has on numerous occasions complained about a lax attitude towards defence spending in Europe, while presidential candidate Donald Trump recently said that Europe – and Canada – are "freeloaders" for failing to contribute their fair share of spending. Canada's spending comes in at 1% of GDP, or roughly $20 billion a year, and although it in 2006 pledged to meet the 2% target, it has since never really come close. Across the board, only five countries pass the 2% mark: US, UK, Greece, Estonia and Poland.

Now that Europe’s economic outlook is improving, although the environment remains fragile, and Russia is emerging as a growing threat on Europe’s eastern flank, leaders are hinting at the fact that countries may consider making bigger commitments. At the other side of the spectrum, some countries state they are tiring of hearing the repetitive message from Brussels and Washington, pointing at more important economic agenda’s such as dealing with the migration crisis. Germany, Europe’s economic powerhouse, which spends 1.2% of its GDP on defence, instead argues that too much focus is placed on the 2% threshold. More important, the German policy makers say, is that countries maximise not the volume of their spending, but the effectiveness of their military investments, though, for instance, collaboration and joint weapons research.

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