NATO: Going From the 2% Non-Solution to Meaningful Planning


By Anthony H. Cordesman


As the Secretary General’s Annual Report for 2018 makes clear, NATO has many productive initiatives underway that focus on its real security needs, and that will help deter Russia and deal with the key issues in its military readiness and force planning. In fact, some 90% of the Secretary General’s report focuses on such issues.

At the same time, NATO does not issue any net assessments of the balance between NATO and Russia and its capability to deter and fight. It does not openly address any of the many national problems and issues in current force structure nation-by-nation strength and readiness, and it has no coherent force and modernization plans for the future.

Setting the Wrong Goals and Claiming Pointless Progress

Instead, far too much of NATO’s public profile is focused on goals that are not only meaningless, but actively counterproductive. These goals set percentage of GDP and total defense spending levels that focus on arbitrary levels of spending with no ties to military needs or effectiveness. As the Secretary General’s report notes (p. 34),

At the 2014 Summit in Wales, NATO leaders endorsed a Defense Investment Pledge. The pledge called for all Allies that did not already meet the NATO-agreed guideline of spending 2% of Gross Domestic Product (GDP) on defense to stop cuts to defense budgets, gradually increase spending, and aim to move towards spending 2% of GDP on defense within a decade. Allies also agreed, in that same time-frame, to move towards spending at least 20% of annual defense expenditure on major new equipment, including related research and development.

What passes for progress reporting is progress in meeting the percentage objectives regardless of whether this is the right priority for a given country or if it will strengthen the Alliance. The Secretary General’s annual report summarizes such progress as follows:

At the Brussels Summit in July, NATO leaders agreed there is a new sense of urgency to invest 2% of GDP on defense and to have credible national plans on how to meet this goal. NATO Allies will continue to invest in developing, acquiring and maintaining the capabilities the Alliance needs to defend its nearly one billion citizens. The Alliance attaches great importance to ongoing efforts to ensure fair burden-sharing in all three elements of the Defense Investment Pledge: defense expenditure; investments in capabilities; and contributions to NATO’s operations, missions and activities.

In 2018, the United States accounted for half of the Allies' combined GDP and almost 70% of combined defense expenditures.

At the same time, European Allies and Canada are continuing to spend more on defense. In 2018, seven Allies reached the 2% defense spending guideline, up from three in 2014. In real terms, defense spending among European Allies and Canada increased by almost 4% from 2017 to 2018. Furthermore, in the period from 2016 to 2018, they have contributed an additional cumulative spending of over USD 41 billion. Allies also made progress on the commitment to invest 20% or more of defense expenditure in major new capabilities. In 2018, 25 Allies spent more in real terms on major equipment than they did in 2017. The number of Allies meeting the NATO agreed 20% guideline rose to 16 in 2018.

As Figure One shows, these goals focus the alliance on the wrong objectives in ways that encourage pointless burdening sharing debates over the wrong objectives, and divide it in ways that serve no functional purpose.

Ignoring the Threat and Russia’s Level of Spending

The NATO percentage goals also ignore a key underlying reality in the relative level of effort by NATO and Russia: Its one major potential threat. This is to some extent the natural result of the lack of any public or transparent effort to tie NATO military efforts to some net assessment of the extent to which Russia is a threat, show NATO’s relative capability by key sub-region and mission, and assesses how well each member is doing in reinforcing NATO’s deterrent and defense capabilities.

As Figures Two and Three show, however, setting such percentage goals ignores a more fundamental reality. It assumes that NATO’s weaknesses are dominated by its level of spending and not by its lack of cohesive, coordinated effort to use its resources effectively. If one uses the Secretary General’s report for NATO data, and the IISS Military Balance for Russian expenditures – spending data which U.S. experts agree are roughly the same as U.S. intelligence estimates – these two Figures show that one gets the following results:

  • NATO spent well over 14 times as much on defense in 2018 as Russia did on military forces. NATO as a whole spent $918.5 billion on defense in 2018. Russia and Belarus spent $64.1 billion (Russia alone spent $63.12 billion)
  • NATO Europe alone spent well over 4 times as much on defense in 2018 as Russia did on military forces. NATO Europe spent $281.7 billion on defense in 2018. Russia and Belarus spent $64.1 billion (Russia alone spent $63.12 billion)
  • NATO Europe has four countries in the IISS ranking of the top 15 nations in terms of global military spending. (France, Germany, Italy, and the UK).
  • NATO Europe accounted for 17.9% of total global military spending. Russia accounted for 3.7%.
  • The IISS data show that all of the World’s top 15 spenders in terms of military spending as a percentage of GDP are medium to token military powers. This is not a meaningful measure of military capability.

NATO doesn’t just need net assessments to determine what forces are best needed to deter and defend, it needs them to address the major difference in its relative use of resources and how to use its vast superiority in resources more effectively.

Setting Goals that Don’t Motivate or Address Key National Differences and Ignore NATO’s Real-World Needs

Figure Four and Figure Five illustrate additional key problems. Figure Four shows that talking about the overall trend in NATO spending says nothing about whether key countries are making a meaningful effort in defense. The lack of any coherent level of effort in NATO’s critical Central Region is brutally obvious.

Figure Five addresses an even more critical issue that is complex and difficult to summarize, but where the trend in national efforts is both striking and illustrate the tangible military realities that have emerged from the disunity and lack of effort shown in Figure Four.

Even a brief summary of a few of the indicators of military strength show that a country-by-country review of what a given nation is spending, its current forces and military capabilities, and its stated future plans indicates that neither goal – nor any reported progress – buys the right forces, will achieve the right results on a timely basis, and will create an effective response to either the reemergence of a Russian threat or other key security objectives like extremism and terrorism.

Countries with weak forces may never correct their problems in the near- or mid-term by going to 2% of GDP or 20% of annual defense expenditure on major new equipment. Strong, effective defense efforts by some countries can be offset by critical weaknesses in the forces of neighboring states that leave them open to intimidation and actual attacks that bypass the more capable neighbor. Equipment spending can be focused on the wrong expenditures in terms of NATO’s overall priorities and supporting national economies and industry – with limited interoperability and relation to NATO’s overall mission priorities.

Such country-by-country reviews take time, involve a great deal of detail, and involve military judgements that should come from NATO commanders. NATO stands or falls, however, on the extent to which each nation provides the right forces to deter and defend, and not on the basis of what percentages its defense expenditures are as a percent of GDP. Equipment expenditures have to focus on the right mission priorities, interoperability, and the balance between readiness, force strength, and modernization. The chance that this goal should be to eventually get to precisely 2% of GDP or 20% of annual defense expenditure in any given country in any given year is negligible.

The Focus on 2% is Divisive and Wrong if it does not Adequately Reflect Increased Spending

Figure Six shows that if one looks at total NATO European spending in 2018, it comes very close to the total during the Cold War in 1989, and that NATO Europe has cut its spending far less than Russia has cut it as a result of the break-up of the former Soviet Union.

Figure Seven shows that many countries that fell short of the 2% goal did, in fact, make increases in defense spending. Focusing only on % of GDP ignores key national efforts.

Meeting the 2% Goal Has little Meaning if It Doesn’t Buy Capability

Figure Eight shows that the United Kingdom – which did exceed the 2% of GDP spending level – has far lower forces than in 1989, and it now has the equivalent of a “hollow” army and serious modernization and force level issues in its navy and air force. The 2% of GDP goal is nonsense even when countries meet it.

The U.S. Needs to Stop Lying and Bullying About Its 70% Share of NATO

Figure Nine shows that the United States grossly exaggerates its role in NATO by claiming credit for total defense spending. It does have major power projection forces that should be credited in part for their potential role in NATO. But, it only deployed 14% of its active forces overseas in March 2019, and only 3% were forward deployed in NATO Europe on a permanent basis.

It is unclear that even the most generous estimate of real-world deployment capability would credit the U.S. with devoting even 30% of its forces to NATO.

The Focus on Spending at least 20% of Annual Defense Expenditure on Major New Equipment. – Including Related Research and Development – May Be Even Sillier than the 2% of GDP Goal

Even a cursory examination of Figure Ten shows how silly this goal is. The most “successful” investor is Luxembourg? More seriously, anyone who has seriously examined the patterns of fleet modernization of armor, aircraft, and ships by country will immediately recognize that meeting or not meeting the goal says nothing about getting the right pace of modernization and making the right trade-offs between force strength, modernization, and readiness. (Here Figure Eight has already provided a tangible example for a country that exceeds the 20% goal.)

A similar point is made in Figure Eleven. There is no clear correlation between a high equipment percentage and an adequate level of national defense spending

Selecting the Right Investment, Force Strength and Readiness Needs

Figure Twelve provides an illustrative list of how investment in equipment and R&D should be judged and analyzed on a NATO-wide and sub-regional basis. The list is only illustrative and should be determined by NATO’s military and civilian planners.

The goal behind it, however, should be clear. NATO does not need some arbitrary spending goal. It needs to create alliance capabilities that are focused on the right missions and priorities. It needs to ensure interoperability, achieve synergy between member countries wherever possible, and exploit the relative weaknesses of the potential threat.

NATO Focuses on the Right Investment Priorities

Figure Thirteen illustrates two important points. First, data on investment in equipment, R&D, and operating costs only matter if they show where the money actually goes in terms of function and mission. Second, spending on NATO is sometimes criticized as if it was being spent on bureaucratic functions. In practice, it is spent largely on key missions and activities.

Setting the Right Goals and Objectives

Figure Fourteen summarizes kind of objectives NATO should be pursuing, many of which are already key goals set forth in body of the secretary General’s report, in NATO military headquarters, and in U.S. and other efforts to update NATO’s strategy.

Many of the reasons for these recommendations have already been addressed in the course of this analysis. NATO should operate from a clear analysis of the priorities set by a net assessment of the balance; Russia’s capabilities for hybrid, conventional, and nuclear warfare; and current nation-by-nation member country forces and capabilities. It should focus on deterrence, but recognize that deterrence is often determined by actual warfighting and contingency capability.

An effective NATO force planning effort must focus on mission capabilities – balance force strength, readiness, and modernization – and set rolling force goals at least five years in the future.

NATO also, however, needs to make such efforts transparent. It must earn public confidence and support, and accept outside criticism and debate. It must also accept the fact that major NATO plans and activities cannot in practice be kept secret. They have too much visibility, and over-classification is likely to do more to confuse NATO efforts than a potential threat.

At the same time, NATO military and civilian staffs need the authority to criticize and analyze on a country by country basis, and not simply rubber-stamp national plans. They need the authority to report even when some aspects of what they report can embarrass member countries.

At the same time, The U.S. – and all member countries – should approach force planning from the view of creating an effective partnership – not bullying other states or using the effort to get other nations to do more so they can do less.

Anthony H. Cordesman holds the Arleigh A. Burke chair in Strategy at the Center for Strategic and International Studies in Washington, D.C. He has served as a consultant on Afghanistan to the United States Department of Defense and the United States Department of State.