Donald Trump recently wrapped up a trip to the Middle East and Europe in which he met with NATO leaders in Brussels. During one of his public statements at the NATO meeting, Trump heavily criticized European defense spending levels. The question of European defense spending has been a major source of frustration within the United States, as many American citizens and policymakers believe that European countries are free-riding on American-funded security. It’s hard to argue that European members of NATO are sufficiently funding their militaries, as the military capabilities of most European countries are woefully inadequate to the point of absurdity. Trump, therefore, has some right to criticize the lackadaisical approach most European countries take toward defense. However, his fixation on the 2% of GDP spending mandate is misplaced and ill-informed. It is absolutely absurd to determine defense capabilities by looking at an arbitrary number in a vacuum. After all, what about 2% suggests optimal spending. Why is 1.9% too little? Why is 2.1% an overly excessive demand? As I have previously argued, a more effective way of ascertaining defense capabilities is to, you know, actually focus on capabilities. Most European militaries are a joke when compared to the United States, but this has as much to do with poor interstate optimization and coordination as it does with overly constrained defense budgets. European members of NATO absolutely should strive to improve their military capabilities. But the “2% debate” is silly and indefensible, and thus pinning American support for NATO on this metric is unjustified.
The 2% threshold is problematic for a number of reasons. First, it’s utterly arbitrary. During the Nixon administration, for example, the U.S. lobbied its allies to devote 5% of GDP to defense. Then, the Clinton administration decried NATO’s 1993 average of 3.8%. Despite NATO members having less relative power now than they did in 1993, the recommended NATO defense spending level of today is 1.8% lower than the allegedly problematic 3.8% of 1993. Why? Second, it’s unclear how best to go about calculating defense spending. Consider health care as an example. The United States is the only NATO member that doesn’t have some kind of guaranteed healthcare system for its citizens. American soldiers and veterans, however, receive guaranteed health care coverage courtesy of the DoD and VA. This means that health care spending directed toward American soldiers counts as defense spending while health care spending for French soldiers, for example, is classified as a domestic welfare program. This strange accounting practice can lead to flawed assessments of allied capabilities and commitment. It’s not just health care, however, that leads to strange, almost paradoxical, conclusions about NATO members’ military capabilities. By way of illustration, Estonia spends more on defense as a percentage of GDP than Germany, but that doesn’t mean it is a more capable ally. And although Greece has maintained extraordinarily high levels of defense spending as a percentage of GDP, this has more to do with the great recession’s effect on Greek GDP than it does on Greece’s commitment to military excellence. Third, a blind focus on GDP spending fails to account for a range of other indicators such as specialized capabilities, as Richard Fontaine recently pointed out:
Some allies bring niche capabilities to the fight, such as Dutch, French, and Spanish special operations forces and British maritime assets, while others, like Italy and Turkey, are integrated into America’s extended nuclear deterrent. Still others host American bases or troops on rotation.
And he reminds us that “Denmark and Britain have suffered more fatalities per capita in Afghanistan than has the United States, with Estonia and Canada not far behind. Such comparisons can be crude, but they demonstrate one dimension of their willingness to remain in a war engaged by NATO to defend America, rather than the other way around.”
This point is important because it underlines the problem of viewing all NATO members through the same lens. Not every country in the alliance shares the same goals, strategic cultures, or tactical capabilities. But this is not a bug, it’s a feature. And it means that different countries can specialize in areas in which they possess comparative advantages. The United States spends extremely large amounts of money on its military because it seeks to ensure global primacy. The U.S. needs to be able to field an overwhelming force anywhere on the globe at any time, and it therefore pays a premium for advanced military capabilities. This is not the goal of NATO, however, which is primarily focused on the defense of member states and counter-terror operations. This obvious but frequently overlooked fact means that comparisons of defense spending are largely irrelevant: U.S. defense spending is used to maintain a global defense posture while most European defense spending is dedicated toward NATO and E.U.-related missions. And as only about 5% of active-duty U.S. military personnel are deployed to Europe, it is absurd to argue that the majority of U.S. defense spending is dedicated to the alliance, making aggregate defense spending comparison almost meaningless.
Finally, it is worth pointing out that European states spend much more money on foreign aid, refugee assistance, and “soft power” activities than the U.S. At least in this domain, it is the United States that is the free-rider. Andrew Moravcsik demonstrates this clearly in the context of Ukraine:
Europe’s resulting clout is most obvious in the very area in which Trump believes the United States is being exploited the most. The primary external force helping Ukraine resist Russia today is not the U.S. military but European geo-economic and diplomatic power.
No Western policy is more critical to keeping Russia at bay than Europe’s $9 billion in annual economic aid and debt relief to Ukraine, without which the country would long since have collapsed. This is about 10 times more than the United States provides. Europe has a similar though smaller assistance program for other countries in Russia’s neighborhood.
Brussels also recently signed a free-trade agreement with Ukraine, giving it an international lifeline in the face of Vladimir Putin’s tightening trade boycotts. Without this, the country would have no prospects to free itself from the Russian stranglehold and to achieve sustainable growth, since Europe is by far its largest trading partner.
Europe pays a high cost in lost trade to sustain Western sanctions against Russia: Some estimate the total loss at $50 billion annually. This is again more than 10 times more than the United States, because European trade and investment are that much higher.
To be clear, Europe has recently demonstrated an insufficient commitment to maintaining capable and effective militaries. The mindless focus on 2% of GDP is, however, intellectually lazy and undervalues the real and concrete areas of foreign policy excellence that exist among NATO’s European member states. New methods of evaluating alliance members’ commitment have begun to appear. For example, German Defense Minister von der Leyen has argued that “member states that take part in NATO operations and exercises or contribute personnel and hardware should get credit towards their two-percent goal.” And Wolfgang Ischinger has lobbied for a new metric that measures defense spending, foreign aid, and development spending. Even more nuanced measurement standards have been advanced by Garret Martin and Balazs Martonffy of American University. Of course, the challenge is always to balance the necessity of a relatively simple and understandable measurement standard with the need for a more nuanced and revealing barometer of member states’ capabilities and commitment to the alliance’s aggregate power. I don’t have a great way to balance these two demands, but I’m confident that others will develop a better system in time. Until they do, it is imperative that Americans stop mindlessly focusing on defense spending as a percentage of GDP. This statistic isn’t meaningless, but it is far from the whole story and, when viewed in a vacuum, probably hurts more than it helps.