Redefining NATO Security Investment: Moving Beyond 2 Percent

The fissures between President Donald Trump and Europe span trade, defense, and values. Still, one phrase rises above all others in symbolizing the U.S. president’s wrath: 2 percent. As a result of Trump’s repeated hammering of “delinquent” allies that fail to spend 2 percent of their GDP on defense, the two percent measure has managed to eclipse all other discussion within the alliance. Trump’s singular focus on the dollars, pounds, and euros spent on transatlantic security crowds out the needed conversation about increasing the operational output of Western military forces. It also undersells and undermines NATO’s significant geostrategic value to Americans. It’s true that NATO must assess member and partner contributions to prevent free riders, but focusing on defense spending — moreover as a percent of GDP — risks obscuring more important measures.

Rather than focusing on inputs such as percentage of GDP spent on defense, NATO should find a way to communicate more effectively the direct output of allies’ security investments. No single measure is likely to suffice. Instead, the alliance should develop a suite of evaluative measures and a simplified framework for public discussion. Even with several measures, the emphasis should unequivocally be on measuring ready force capability and investments that the alliance needs.

NATO largely brought the 2 percent emphasis on itself. At the height of operations in Afghanistan, the alliance’s planning system focused on measuring capability and commitment. As NATO shrunk its operations in that country, and the United States and Europe contracted defense spending as a result of budget deficits, the alliance turned to measuring costs. In the absence of a significant external threat to the alliance (less than one year before Russia invaded Ukraine and annexed Crimea, and in the midst of a significant migration crisis in Europe), NATO heads of state formally embraced the aim of each member spending 2 percent of its respective GDP on defense as one of the alliance’s primary metrics of commitment. Long an informal target for allied defense spending, the Wales Summit marked the first official endorsement that allies would “aim to move toward the 2% guideline within a decade with a view to meeting their NATO Capability Targets.”

The Wales Summit language was soft as far as pledges go. What likely appealed to allies about the 2 percent target was the simplicity of a verifiable input measure that could be used to signal a country’s political willingness to share in the burden of collective defense. According to 2017 estimates, only four member states (the United States, Greece, United Kingdom, and Estonia) currently meet the threshold while Poland falls just short of the mark at 1.99 percent. Eleven more of the 28 NATO military states (excludes Iceland, which has no armed forces) are expected to meet the spending threshold by 2024, the time frame specified at Wales.

The limitations of 2 percent as a metric have been widely recognized and debated. By measuring inputs rather than outputs, the 2 percent goal relays almost no useful information about what countries spend money on and the value of their purchases in contributing to collective defense. For instance, Greece makes the threshold, but most of its spending is on salaries and pensions. France does not make the threshold, but its forces have routinely deployed alongside the United States for advanced operations in Syria, Iraq, and North Africa. Moreover, measuring defense investments as a percent of GDP prejudices against countries who outperform their GDP goals. In 2017, for instance, Poland and Romania were expected to meet the 2 percent threshold, but fell short due to unexpected growth in GDP.

Below are several possible measures built from publicly available data that help illustrate the value of a broadened and deepened lens on European burden-sharing.

Defense Investment Spending. Alongside the 2 percent spending goal, allies agreed at Wales to aim to spend 20 percent of defense expenditures on “equipment” — the procurement of major military equipment and associated research and development costs — by 2024. This is an important goal for ensuring that defense spending contributes to modernizing military capabilities, rather than simply covering personnel costs that do not benefit collective defense efforts. However, equipment spending is still an input measure, and therefore a less useful proxy for the country’s commitment to the alliance specifically. Measuring the percent of defense allocations spent on equipment does not distinguish between spending that helps the country meet NATO capability targets and spending on investment priorities important only to the country, such as excessive subsidization of domestic defense industries or ill-advised “trophy” purchases of high-end platforms.

Troop Contributions. A true output metric could assess troop contributions measured as a percent of active duty force, which would allow a comparison between countries with militaries of varying size. Such an assessment demonstrates that several countries currently spending below the 2 percent threshold are making greater contributions to operations than many of their peers. Denmark, for example, a spender of 1.17 percent of GDP, landed in the top quartile of contributions across four time phases of Afghanistan operations as measured by CSIS, while Greece, which spends 2.36 percent, fell in the bottom quartile for three of the four phases.

Readiness. A metric or set of metrics assessing ready military capabilities also needs to assess the readiness of those forces. Readiness, which may include the interoperability of different allies’ platforms, is notoriously difficult to measure for one military, let alone 28 different armed forces. The lack of a standard definition for readiness, as well as the shortage of publicly available data, prevents a comprehensive assessment in the unclassified realm. However, approximate measures for readiness could assess military mobility, or the ability to respond quickly and effectively to threats and incursions in different parts of Europe, across NATO members and partner states. The data that is currently accessible includes evaluations of ground mobility (measured in terms of air points of debarkation, sea points of debarkation, rail head, road systems, and diplomatic clearance time) and air mobility (in terms of over flight permissions, landing permissions, and clearance windows for time on the ground). Ideally, a more comprehensive analysis would include detailed public information on location throughput, including types and sizes of platforms and units as well as speed of loading and other capabilities. The European Union’s 2017 Permanent Structured Cooperation in Defence seeks to improve the EU’s mobility. NATO could build on progress made there with tailored mobility improvements to better meet its own needs.

Security Beyond Defense. Some NATO members have urged the alliance to view security contributions more broadly, to account for contributions that fall outside of defense budgets but nevertheless enhance general security and stability. Such a lens would incorporate soft power approaches to collective defense. For instance, government-wide funding (outside of defense budgets) for building partner capacity, conflict prevention, and stabilization initiatives should be counted in members’ contributions towards NATO investment goals. This approach would acknowledge the contributions of countries like Germany, which leads NATO members in security assistance expenditures as a share of GDP.

Another soft power measure we have examined is the forgoing of economic gains by allies who have participated in economic sanctions against adversaries. Assessments of trade flow with Russia and Iran generally demonstrate a decline in trade for NATO members and partners following the imposition of sanctions, a sacrifice willingly made in the interest of collective defense.

Perhaps most controversially, NATO could measure countries’ average refugee intake as a proxy for bearing the burden of conflict on NATO’s periphery. Instability in Syria, North Africa, and Ukraine has led to massive population movements that European states have struggled to accommodate. Some countries, especially Turkey, are bearing a much greater share of the burden for enhancing the stability and security of the continent than others.

As NATO faces a resurgent military threat from capable adversaries, the alliance’s focus should shift from measuring costs to boosting its collective capability. Yet even as external challenges become more potent, the toxicity of the 2 percent debate is creating challenges to the alliance from within. Weakening the unity of NATO for the goal of a 2 percent of GDP defense spending target is like trying to save a village by destroying it. The limited value of the 2 percent measure makes today’s dilemma particularly regrettable. If the United States and NATO want to get serious about burden-sharing, they need to get serious about developing solid measures of members’ and partners’ security output, creating feasible plans for improving those capabilities and communicating them effectively in public. Even then, measures of NATO’s military merit should serve rather than obscure the alliance’s ultimate geopolitical purpose.

Seamus P. Daniels is a Research Assistant in the Defense Budget Analysis Program within the International Security Program at the Center for Strategic and International Studies (CSIS). Kathleen H. Hicks is the Henry A. Kissinger Chair and Director of the International Security Program at CSIS. Along with co-authors Jeff Rathke, Michael Matlaga, Laura Daniels, and Andrew Linder, they recently published a report on credible measures of collective security contributions in Europe.

Image: Photo by The White House from Washington, DC, via Wikimedia Commons