BRUSSELS — After a lengthy trend downward in defense spending, there has been, “for the first time in many years,” three consecutive years of increases, said NATO’s annual report for 2017.
At the 2014 summit in Wales, NATO signed up to a ‘Defence Investment Pledge’ which called for all allies that did not already meet the NATO-agreed guideline of spending 2 percent of gross domestic product (GDP) on defense to stop cuts to associated budgets, gradually increase spending, and aim to move towards the goal within a decade.
They also agreed to move towards spending at least 20 percent of annual defense expenditure on major new equipment, including related research and development, in the same timeframe.
“After years of defense cuts, the trend over the last three years has been one of increased defence spending,” said the report, unveiled at NATO’s Brussels HQ.
In 2017, the trend continued, with European allies and Canada increasing their defense expenditure by almost 5 percent.
Many allies have put in place national plans to reach 2 percent by 2024 and are making progress towards that goal. In real terms, defense spending among European allies and Canada increased by 4.87 percent from 2016 to 2017, with an additional cumulative spending increase of $46 billion for the period from 2015 to 2017, above the 2014 level. In 2017, the United States accounted for 51.1 percent of the allies’ combined GDP and 71.7 percent of combined defense expenditure.
But, the report adds, at the same time, European allies and Canada helped “to redress the balance.”
Progress was also made on the commitment to invest 20 percent or more of defense expenditure in major new capabilities. In 2017, 26 allies spent more in real terms on major equipment than they did in 2016. The number of allies meeting the NATO guideline rose to 12 in 2017.
A “league table” of NATO members shows that the United States is still way ahead of other allies’ spending, with defense expenditure accounting for 3.57 percent of its GDP in 2017.
Greece at 2.36 perpercent, the U.K. at 2.12 percent, and Estonia at 2.08 percent are the next best performers in terms of meeting the GDP target. The laggards are tiny Luxembourg (0.46 percent), Belgium (0.90 percent), Spain (0.92 percent) and Slovenia (0.98 percent).
In 2017 the report says the U.K. spent some $55.2 billion on defense, Germany $45.4 billion and France $45.9 billion. But this still pales when compared with the United States’ $685.9 billion in spending.
When it comes to the proportion spent on defense as a share of GDP, Europe has fallen from just under 3 percent in 1989 to 1.95 percent last year.
This compares with the U.S. where the share is down from nearly 6 percent to 3.57 per cent over the same period.
The report, launched by NATO secretary general Jens Stoltenberg, noted that back in 2014, when the pledge was first made, only three countries met the 2 percent guideline. This year, eight allies are expected to meet the 2 percent guideline. As important, according to the report, is the fact that those countries that have yet a way to go before they reach the target are also increasing significantly.
For instance, Germany increased defense spending last year by around 6 percent in real terms. The country is also upping contributions to NATO missions and operations, recently announcing it will increase its presence in Afghanistan, from around 1,000 to 1,300 troops.
“ I think this shows that European allies and Canada are doing more, stepping up, contributing more to our shared security,” said Stoltenberg said during a news conference.
The report also reveals that more than 15 NATO allies spend well over 50 percent of their defense budget on personnel and pension costs; for Belgium and Greece that accounts for more than 75 percent of defense spending.
Stoltenberg was asked whether it was now time for NATO to also introduce guidelines on a pensions limit.
“In the long run, it’s very hard to have good soldiers and good officers without paying them, and they also have to pay pensions,” he said. “So, that’s part of the cost of having an army. How much they (allies) pay in salaries and pensions, I leave that to nations as long as they deliver what we ask them to deliver.”
Stoltenberg was also quizzed about the importance and weight President Trump has put on the 2 percent spending goals and the link, in the United States at least, to other issues such as aluminium and steel tariffs.
“It’s not for me to comment on trade tariffs and trade issues as Secretary General of NATO,” he said when asked if that was an appropriate use of NATO spending targets,. “What I can say is that we have seen, throughout the history of NATO, differences between NATO allies on different issues, including trade issues; but we have always been able to avoid these differences [undermining] the unity of the alliance when it comes to the core task of NATO — that we protect and defend each other.”
He added, “I am absolutely certain that we will be able to do that this time. Yes, there are some differences when it comes to trade. But at the same time, I am absolutely certain that NATO will stand united again to defend and protect each other. “
Martin Banks covered the European Union, NATO and affairs in Belgium for Defense News.