Trump keeps criticising NATO allies over spending. Here's how NATO's budget actually works

Reinhard Krause/ReutersPresident Donald Trump generated controversy at a NATO summit in Brussels when he criticised other member states over their defence spending.
  • President Donald Trump’s rhetoric on the NATO alliance has often been misleading, and he has distorted how the historic alliance is funded and operates.
  • NATO is based on the notion of collective defence, which also requires collective spending.
  • Trump’s questionable remarks on NATO have led to criticism from leaders at home and abroad.

Since taking office, President Donald Trump has repeatedly criticised NATO over how the alliance is funded and pressured other member states to increase defence spending.

In the process, he has made a number of misleading claims about NATO, distorting how it works and why it exists in the first place.

In July 2018, for example, Trump tweeted, “Presidents have been trying unsuccessfully for years to get Germany and other rich NATO Nations to pay more toward their protection from Russia. They pay only a fraction of their cost. The U.S. pays tens of Billions of Dollars too much to subsidise Europe, and loses Big on Trade!”

Trump added, “All NATO Nations must meet their 2% commitment, and that must ultimately go to 4%!”

The president is correct that his predecessors also pressured other NATO member states to increase defence spending, but his claim that member states must pay the US for “protection” misrepresents how NATO works.

NATO’s roots

NATO is an alliance that was formed in the wake of World War II as the US and its allies sought to counter the Soviet Union’s growing influence in Europe and beyond.

The alliance was founded upon the notion of collective defence, meaning an attack on one member state is considered an attack on all of them. This is precisely why NATO, for example, rallied behind the US in the aftermath of the September 11 terrorist attacks and has sent many troops to fight and die in places like Afghanistan over the years.

Collective defence requires collective spending

Accordingly, every NATO member state contributes to a relatively modest direct budget: a roughly $US1.4 billion military budget and a $US250 million civilian budget.

Overall, the US provides about 22% of this budget based off a formula that accounts for the national income of member states.

Beyond the direct budget, NATO came to an agreement in 2014 that each member state will increase their own defence spending to 2% of their respective gross domestic product by 2024.

At present, NATO has 29 members and few have reached this goal – only seven NATO members have met the 2% target. Meanwhile, the US spends about 3.4% of its GDP on defence, and comprises roughly 69% of overall defence spending by NATO member states. But the US also spends far more on defence than any other country in the world – approximately $US649 billion in 2018 alone (36% of the global total).

There is no penalty for not reaching the 2% goal; it’s simply a guideline, and most member states have increased defence spending even if they haven’t reached that goal quite yet. NATO members increased defence spending for the fourth year in a row in 2018.

NATO Secretary-General Jens Stoltenberg in March said, “Last year, European Allies and Canada increased their defence spending by almost 4% in real terms. Since 2016, they have actually spent an extra $US41 billion on defence, and we expect that figure to rise to $US100 billion by the end of next year.”

“We have seen significant increase, but I call for and I expect more, because that is what all Allies have agreed, and it’s in the security interests of all Allies to do so,” Stoltenberg added.

Here’s Trump’s big issue with NATO

Trump wants other NATO member states to increase defence spending – and soon.

In July 2018, he tweeted, “What good is NATO if Germany is paying Russia billions of dollars for gas and energy? Why are there only 5 out of 29 countries that have met their commitment? The U.S. is paying for Europe’s protection, then loses billions on Trade. Must pay 2% of GDP IMMEDIATELY, not by 2025.”

Trump hasn’t relented on this message in 2019. On Wednesday, he tweeted, “@NATO very unfair to the United States!”

There is an underlying truth to Trump’s criticism of NATO that the US spends a significant amount of money and provides an extraordinary amount of resources and manpower to the protection of Europe and Asia. But the US benefits a great deal from this, and US involvement in NATO has long helped it solidify its role as the globe’s leading powers, if not the most powerful country in the world.

Read more:

Here’s how Donald Trump took shots at NATO in 2018

Moreover, Trump’s remarks on NATO seem to suggest that Europe must pay the US for protection from Russia, when this is not how the alliance is meant to function. Not to mention, Trump already has a dubious relationship with Russia at a time when much of the world, especially Europe, is concerned about its aggressive military activities. Trump’s repeated criticism of NATO has sparked fears he might try to withdraw the US from the historic alliance.

In this context, Trump’s criticism of NATO has been condemned by politicians on both sides of the aisle in the US as well as by other world leaders and foreign policy experts.

“NATO is still the world’s strongest military alliance. But its single greatest danger is the absence of strong, principled American presidential leadership for the first time in its history,” Former US ambassadors to NATO Nicholas Burns and Douglas Lute wrote in a Washington Post op-ed in April. “Starting with NATO’s founding father, President Harry S. Truman, each of our presidents has considered NATO a vital American interest. President Trump has taken a dramatically different path.”

“Trump has claimed the allies are ‘taking advantage of us.’ Low European defence spending is indeed a problem for NATO’s future. But NATO allies have produced real growth in defence spending for four consecutive years … a collective increase of $US87 billion,” the former ambassadors added. “On this issue, Trump would be smart to continue to push but while doing so strive to transform himself from chief critic into the unifying leader NATO desperately needs.”

Trump has at times conflated the US government’s contributions to NATO’s direct budget with the 2% goal, which is misleading.

During a press conference in late July 2018, Trump claimed the US is “shouldering anywhere from 70 to 90% of the cost of NATO.” This statement misleadingly characterises direct and indirect spending from NATO member states as the same thing.

Trump further claimed “hundreds of billions of dollars will be paid into NATO’s coffers” because of his efforts to pressure NATO member states to spend more on defence. The problem: That’s wildly off-mark.

NATO’s annual overall military budget, aka its “coffers,” is roughly $US1.4 billion (as noted above). Instead, Trump appeared to be speaking of the annual member state commitment to military spending – money that does not go to NATO “coffers.”

The president also said “NATO was going out of business” before he came along, suggesting member states weren’t dedicating enough money to defence – money that they spend on their forces, but which does not directly go to NATO as an organisation. But NATO’s most recent report on this shows annual defence spending from European member states and Canada as a share of GDP has steadily increased since 2015, which was before Trump was president.

Moreover, the 2% GDP commitment was made in 2014, when former President Barack Obama was still in office. NATO member states reaffirmed that commitment at the Brussels summit earlier this month, meaning virtually nothing has changed under Trump – except a growing sense of unease.

Read more:
NATO secretary general’s unprecedented speech to Congress downplays disagreements with Trump, but sends ‘powerful reminder’ to the president

With that said, Stoltenberg has praised Trump for pressuring other member states to increase spending.

In a speech to a joint meeting of Congress, Soltenberg said, “NATO allies must spend more on defence. This has been the clear message from President Trump and this message is having a real impact. All allies have increased their defence spending. Before they were cutting billions and now they’re adding billions.”

Some experts have suggested Stoltenberg has been “flattering” Trump to make his job easier while hoping the president won’t be reelected.

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