US Pays 22.1% of NATO Budget; Germany 14.7%; 13 Allies Pay Less Than 1%

By Patrick Goodenough | March 20, 2017 | 4:21 AM EDT

German Defense Minister Ursula von der Leyen speaks with German soldiers after a NATO exercise in Poland on June 18, 2015. (AP Photo/Alik Keplicz, File)

(CNSNews.com) – While President Trump’s weekend Twitter assertion that “Germany owes vast sums of money to NATO” is disputed by experts – and by Berlin – it draws attention to the fact that Germany, like the majority of the 28 members of the alliance, has yet to meet a NATO-agreed commitment to devote two percent of GDP to defense spending.

At the same time, a closer look at NATO funding also underlines that – as is the case with the United Nations – the U.S. contributes more than one-fifth of the direct, collective funding that keeps NATO’s military and civilian operations on track.

Member countries contribute in line with an agreed cost-sharing formula, based on Gross National Income. (GNI equals GDP plus income obtained in dividends, interest etc. from other countries.)

Under that formula, the U.S. contributes 22.144 percent of the NATO budget, followed by Germany (14.65 percent), France (10.63 percent) and Britain (9.84 percent).

 

Thirteen allies, mostly smaller former communist countries that joined the alliance after the fall of the Soviet Union and disintegration of Yugoslavia, pay less than one percent each – Albania, Bulgaria, Croatia, Czech, Estonia, Hungary, Iceland, Latvia, Lithuania, Luxembourg, Portugal, Slovakia and Slovenia.

(Graph: CNSNews.com/Data: NATO)

The national contributions go towards NATO’s military costs, civilian costs and the NATO Security Investment Program (NSIP), which deals with investment in command and control systems etc.

For 2017, NATO’s military budget is 1.29 billion euro ($1.38 billion), the civilian budget is 234.4 million euro ($252 million), and the NSIP budget ceiling is 655 million euro ($704 million).

Two percent pledge an indicator of ‘political will to contribute’ to missions

The president’s tweeted message about Germany owing “vast sums of money to NATO” likely relates to a related but separate issue, dealing with indirect contributions.

NATO describes these as contributions that are made, for example, when “a member volunteers equipment or troops to a military operation and bears the costs of the decision to do so.”

In order to encourage and allow for such contributions, members agreed in 2014, and reaffirmed at a summit last year, on a commitment for each to spend at least two percent of GDP on defense spending, by 2024.

Impacting NATO’s indirect rather than direct funding, the target is intended to be “an indicator of a country’s political will to contribute” to common defense efforts. It is also meant to send a signal to the rest of the world that the alliance is a credible entity.

The United States has met the target, and dedicated 3.36 percent of GDP (around $664 billion, according to NATO figures) to military spending in 2016. Germany has not, having devoted 1.20 percent of GDP on defense (about $41.6 billion) last year.

In fact, only five of the 28 NATO allies have made the grade: Aside from the U.S., the other four were Greece (2.36 percent in 2016, amounting to $4.6 billion), Estonia (2.18 percent, $503 million), Britain (2.17 percent, $56.8 billion) and Poland (2.01 percent, $12.7 billion).

 

NATO’s other North American member, Canada, spent 1.02 percent on defense last year ($15.5 billion), while the average across its European members was 1.47 percent.

 

Closest to achieving the target were France (1.79 percent, $44.2 billion) and Turkey (1.69 percent, $12.1 billion); lagging farthest behind were Luxembourg (0.42 percent, $248 million), Belgium (0.91 percent, $4.3 billion) and Spain (0.90 percent, $11.2 billion).

(Graph: CNSNews.com/Data: NATO)

(Iceland, which does not have an army, dedicated 0.1 percent of GDP on defense spending, according to the OECD.)

Nonetheless, overall movement towards the goal was in the right direction last year, according to NATO secretary-general Jens Stoltenberg. He noted that the non-U.S. members’ combined increased defense spending last year amounted to 3.8 percent in real terms.

Those increases were far from uniform, however.

Unsurprisingly, the biggest climbs were recorded in the Baltic states, which have been unnerved by neighboring Russia’s actions in Ukraine: Latvia and Lithuania increased their defense spending in real terms by 42.1 and 33.5 percent respectively. Estonia, one of the five already exceeding the two percent of GDP target, increased its spending by 5.5 percent.

Alongside sizeable boosts from Hungary (11.5 percent) Slovenia (11 percent) and Italy (10.6 percent), some members’ defense spending as a percentage of GDP actually dropped – Croatia by -9.6 percent and Albania  by -1.3 percent.

(Poland and Greece also reduced their defense spending in 2016, but both are already achieving the overall NATO two percent of GDP target.)

Per capita spending

An alternative way of assessing and comparing NATO members’ defense spending is to examine defense spending per capita last year, which produces a rather different picture.

The United States is still significantly ahead, spending $1,877 dollars for each citizen, but Norway comes in second ($1,399 per head), followed by Britain ($907), France ($753), Denmark ($684) and the Netherlands ($602).

Germany is in seventh place ($546), just ahead of Greece ($532).

At the lower end of the scale, Albania spent $50 per capita on defense, Bulgaria $102, Romania $141, and Hungary $151.

German Defense Minister Ursula von der Leyen disputed Trump’s charge that her country owes NATO “vast sums of money,” asserting in a statement that “NATO does not have a debt account.”

Von der Leyen said that Germany’s defense spending is used for other purposes as well, including U.N. peacekeeping missions, European Union missions and Berlin’s contribution to the fight against the Islamic State of Iraq and Syria (ISIS/ISIL).

Chancellor Angela Merkel has already released plans to increase troop numbers for the first time since the Cold War, and says she is committed to gradually growing defense spending to reach the two percent of GDP target.

At her White House meeting with Trump on Friday, she said Germany has increased its defense spending by eight percent last year, and repeated the commitment to reach the two percent of GDP goal by 2024.

Germany recently assumed leadership of one of four new NATO battalions deployed along its eastern flank, part of the alliance’s attempts to deter further aggressive Russian behavior in the region.

Patrick Goodenough
Patrick Goodenough
Spencer Journalism Fellow