Press Briefing: Allied and Partner Contributions to NATO: Redefining Security Investment

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KATHLEEN H. HICKS: (In progress) – Kathleen Hicks. I direct the International Security Program and I’m the Henry Kissinger chair here at CSIS. And, together with most of our study team, we’re here this morning to preview for you a forthcoming report that we have put together, entitled “Counting Dollars or Measuring Value: Assessing NATO and Partner Burden Sharing.”

The report is supported in part with grants from the governments – (phone rings) – me; I did it to myself – the governments of Canada and – excuse me, I wanted to say Mexico! Canada and Sweden. The Mexicans are not involved in any way, shape, or form. (Laughter.) And what we wanted to do in undertaking this report was to have something available in advance of the Brussels summit, which we will be on that timeline with a report release on July 3rd that tried to probe the issue of the 2 percent debate, if you will, and broaden it into a discussion of what are the right ways to think about measuring burden-sharing and contributions.

What we found is that the 2 percent discussion that has so focused attention really has obscured the larger debate about how countries are spending what they are buying and what the value of that is. In the report, we conclude that if NATO wants to have a serious burden-sharing conversation, it needs to get serious about having the right data with the right standards and measuring outputs and, wherever possible, outcomes, rather than focusing solely on inputs.

I’m going to introduce our team here and then turn it over to Jeff Rathke to provide a few more points before we begin on the briefing. So to my immediate left is Jeff Rathke. He’s the deputy director of our Europe program here at CSIS. To his left is Michael Matlaga, who is a research assistant in the international security program. And to my right is Seamus Daniels, who is a research associate in the international security program. First, let me turn it over to Jeff to say a few remarks, and then we will turn it to Seamus and Michael to brief further.

JEFFREY RATHKE: Well, thank you, Kath. And thanks to all of you for coming this morning.

I guess I would just start by stating what may be obvious, but the transatlantic security alliance has three major components. One of those is a shared vision of the strategic interests and values that we have. The second is the political cohesion of NATO allies, and the third is a sharing of the burden for collective defense.

Each of these obviously is under stress at the moment, and this brings about a certain discord that can undermine our shared security, especially if it damages the political cohesion of NATO allies. And I agree completely with Kath’s point that we need to have – we need to scrutinize how we measure burden-sharing in order to have a substantive, and focused, and productive conversation.

I think that some of the things that you will hear this morning and that rise above the surface as important are, first, that there is a lot of data out there, but much of it is not made public. That was one of our biggest frustrations in this study – is that there is a lot of restricted or unreleased data that nations collect and share in a standardized form within NATO, but for a variety of reasons, that is not made public. And I think that a change in that practice would make it possible to have a much more substantive discussion, in part because it would also involve the public through journalists, through policy analysts, and through members of parliament, who then can have a much more detailed and knowledgeable discussion about what their commitments are, whether they are meeting those commitments, and what needs to be done to close those gaps.

And I think that, you know, certainly for the United States, we are in a period of enhanced scrutiny of our alliance relationships, and it is important – particularly at this time – to have a more detailed and deeper discussion about all of the ways the United States and our allies contribute in order to preserve and improve our alliance relationships.

I’ll stop there.

SEAMUS P. DANIELS: Thanks, Jeff.

For the purposes of this briefing, Michael and I will briefly walk through the seven metrics that we explored. At that point we will move on for questions after that.

So first, if we can just run through the list of the seven metrics that we assessed in the study, the first two are the obviously NATO-mandated metrics that came out of the 2014 Wales Summit, which is the standard defense expenditure as a share of GDP, the 2 percent measure, and equipment expenditure as a share of total defense expenditure.

Then we move into the additional metrics that we chose to explore in the study, which are security systems expenditure as a share of GDP, troop contributions as a share of total active duty force, pre-crisis military mobility, trade with sanctioned competitors, and average refugee intake as a proxy for bearing the burden of peripheral instability.

We’ll start out with the first two NATO-mandated metrics, and I think obviously a great place to begin is with the standard 2 percent measure. And just for a little background, the 2 percent measure – it has been an informal standard since at least the 2002 NATO Summit in Prague, where countries, through a gentleman’s agreement, of sorts, agreed to strive towards that, but it wasn’t officially mandated until the 2014 Wales Summit, at which point heads of state agreed that they should aim to reach the 2 percent of GDP on defense mark by 2024.

Now if we dive into the data here on the screen, we can see that only four NATO members meet or exceed the 2 percent threshold, and Ukraine, as a non-NATO member, is the second greatest contributor in this regard. Eight allies and one partner fall within the 1.5 to 2 percent band, but I think it’s significant to note that a majority of allies and partners – 16 out of 28 NATO allies and four out of the six partners that we assessed – don’t even spend 1.5 percent of their GDP on defense.

Q: Could I ask you a quick question –

MS. HICKS: Could you use your microphone? It will help. Thank you.

Q: Thank you. Sorry for interrupting, but is the report out or do we have to take notes?

MS. HICKS: Yeah, the report is not out. This is being Web-captured, so you can take notes. You can also watch back the video. And we’re happy to send everyone in the room a copy of all the data slides.

Q: Yeah.

MS. HICKS: But the commentary will not be on the slides.

Q: OK.

MS. HICKS: But you will get the data.

Q: But there’s – fine, thanks.

MS. HICKS: Yeah.

MR. DANIELS: Great. So now moving briefly into a discussion –

MR. RATHKE: Sorry. If I could just interrupt with one point to make. You know, there’s been a lot of discussion about how many NATO allies meet the 2 percent target. You’ll notice, based on this most recent data, which comes from NATO, you have four countries. In the past this number has been higher.

There are two of these that have fallen below the 2 percent target, Poland and Romania, for different reasons; Romania in the case because they spent less than they had planned. Their expenditure was significantly lower than they had originally estimated for 2017. In the case of Poland, it seems to have been a more rapid growth in GDP than they had expected. So the Polish expenditure was basically on target, but their GDP grew faster. So they fall below the 2 percent, which points at one of the weaknesses of 2 percent as a measure.

MR. DANIELS: Exactly. And that’s something that we’ll address when we come to sort of the weaknesses of the 2 percent metric. The benefits – I mean, obviously people like to discuss that it’s an indicator of political willingness. Countries who meet or are planning to meet the 2 percent threshold are perceived as willing contributors to the collective defense effort, whereas those who show no willingness to meet 2 percent are often perceived as free riders on the alliance.

And for this simple measure, I mean, it’s really used as a tool for naming and shaming the countries who either are or are not paying their fair share. But as Jeff alluded to, one of the primary weaknesses here is that this measure, as a percentage of GDP, fluctuates with the strength of the economies. So you can look at countries that have smaller economies and it’s perceived that they’re paying a greater share towards defense, as opposed to countries with greater – with larger, stronger economies.

But another issue here is that we often look at this metric in terms of a snapshot of one year, as we can see right here. And countries are either meeting it or they’re not meeting it. It doesn’t take into consideration the broader context, both economically and politically.

And so if we look here at this slide, you’ll see that all but six countries in NATO have actually increased their defense expenditures between 2013 and 2017. And of those 22 countries that are increasing their defense expenditures, a majority are actually seeing defense expenditures grow above the rate of GDP. So we’re actually seeing real growth for the majority of the allies here.

And then the other primary weakness of the 2 percent measure is that it’s a measure of inputs rather than the outputs. We’re not actually seeing what we’re spending on defense. We’re not seeing what comes out of this and how efficiently we’re actually spending the defense expenditures.

Now, moving on to the second NATO-mandated threshold, which is equipment and expenditure as a share of total defense expenditure – so this also came out of the Wales summit, as I mentioned, and it’s one – equipment and expenditures makes up one of four categories: Equipment, personnel, infrastructure, and other, which is sort of an operations-and-maintenance account.

But equipment really includes procurement spending on major equipment and the associated research-and-development costs for that. And there are benefits to looking at this. I mean, it shows which allies are spending on useful items that can modernize and strengthen NATO’s capabilities. And this is especially true of former Eastern Bloc NATO members using Soviet-era equipment that’s increasingly outdated.

But it’s also important to look at in the context of the recent economic crisis, when some countries were forced to cancel acquisition programs or jettison some military equipment to basically reduce expenditures of that time.

Now, if we’re looking at the data, 11 out of 28 NATO nations meet the 20 percent threshold. And included in the top five, encouragingly, are Romania, Lithuania, and Bulgaria, former Eastern-bloc countries. And it’s also noteworthy that five of the 11 countries meeting that 20 percent threshold participate in the F-35 Joint Strike Fighter program. But on average, countries spent – allies and partners spent 19 percent on equipment versus 52 percent on personnel costs. And what we see is a negative correlation between equipment expenditures and personnel expenditures. For example, if you look at the bottom with Belgium and Slovenia, they spend 4 and 5 percent, respectively, on equipment, yet they both spend over 75 percent on personnel.

And so, similar to the 2 percent metric, this is a measure of inputs rather than outputs. We’re not actually seeing what NATO ‒ we’re not actually seeing what NATO allies and partners are getting out of this equipment expenditure. Some may be using it for costly procurements or upgrades of fighter aircraft that don’t actually contribute to NATO capability targets. And so, ideally, we’d want a metric that captures the ready capabilities of allies and partners in the context of transatlantic security challenges.

Now, moving on to the metrics that we chose to assess in this report. We’ll start off with security assistance expenditure as a share of GDP. Now, this falls into the context of requests from partners and allies, including Germany, that argue contributions to NATO need to be viewed in a broader lens, they need to be viewed in not only the context of a defense budget and 2 percent of GDP, but also other peace and security investments that really fall outside of defense budgets.

And so one specific area within that broader scope is security assistance. Now, we define security assistance as spending outside of defense budgets aimed at capacity-building, conflict-prevention and stabilization initiatives abroad that contribute directly to security. And within that, that covers peacekeeping operations, training for partner militaries and crisis management, among other things. And it’s important because it adds nuance to burden-sharing agreements.

But the problem we ran into in collecting this data is that there’s no standard reporting template across NATO and the EU. So I think we can largely look at the data here as conservative estimates. And for the purposes of explaining the graphic, really, the security-assistance spending is the blue on top of the orange bar there.

Diving into the actual contributors, Germany is the leading contributor with about .06 percent of their GDP spent on security assistance, followed by the U.S., Norway and the Netherlands. You can see that a little more easily here.

But it’s also worth noting that a significant portion of EU member security expenditures are a portion of EU contributions. And so within that, the EU Commission dedicates about .7 percent of their total revenue toward security-assistance spending as well.

So the problems here – I mean, it is helpful in considering that it’s a more nuanced look at what we are spending on security. But the problem is there’s no standard reporting and it’s really ‒ it’s really difficult to actually assess what it’s going to.

The next metric we’ll cover are troop contributions as a share of total active duty force. And this really gets into where we’re looking at output metrics instead of input metrics.

And so this is one metric that is frequently cited by countries that are not meeting the 2 percent of GDP measure as a show that they’re actually making meaningful contributions to the alliance. But in measuring this, we ran into some data limitations. You know, we were largely subjected to what is publicly available out there and also to the reliability of that data.

So you’ll see ‒ for instances where we trust the veracity of the data, we looked at it as a percentage of total active duty force for select operations, including Afghanistan and other NATO, U.N. and the global coalition against ISIS.

For other operations ‒ I apologize for how small the text is here ‒ we looked at participation and, largely, which countries were participating. For some instances, we were able to look at, you know, what platforms they were actually contributing to if we’re looking at the Libya operations in the second column here.

And so if we look at this data, specifically starting with Afghanistan operations, which includes the International Security Assistance Force, the U.S.-led Operation Enduring Freedom and the Resolute Support mission, which is going on right now, the data does appear to vindicate arguments that 2 percent overlooks significant contributions made elsewhere. Denmark, for example, falls into the top quartile for all periods in Afghanistan, and Germany falls in the top eight of contributors in three of the four periods assessed. It’s also noteworthy that Canada was the leading contributor in the first two phases of the war. And so this really – you know, these countries that are spending under 2 percent but are still making meaningful contributions in troop count are contrasted with countries like Greece, that is the second-greatest contributor as far as percent spent – percent of GDP spent on defense, but as far as Afghanistan operations it fell in the bottom quartile three out of four periods.

But, I mean, there are shortcomings to looking at this metric as well, because you can’t really – you can’t really compare deployments and missions because they vary in type or difficulty. They vary in financial costs and the danger to various troops. So alternative metrics, where you may want to look in with more specificity would include munitions expended or platforms used or sorties flown. And I think another area which speaks to this is, you know, some countries are limited by their geography or the platforms or capabilities available to them. So they may not be able to participate in all missions, specifically if you look at the Libya operations.

So now we’ll move over to Mike to talk about the four concluding – the four remaining metrics.

MICHAEL MATLAGA: Thanks, Seamus.

The next measure we looked at for contributions to European security has been widely recognized as a crucial issue that NATO must resolve in order to not only respond to potential aggression, but also to prepare for pre-war ambiguous situations, as I’ve said pre-crisis military mobility. Now, the data – our team collected the data from U.S. Army Europe, who classifies these five categories for ground mobility based on a color coordination – green being the highest rating and red being the lowest rating.

It rates each country based on its air points of demarcation, sea points of demarcation, railhead and road system, and diplomatic clearance times. And if you just take a quick look at the map, you can see that for the bottom sliver diplomatic clearance times, this has been particularly worrisome for not only – for not only Northern Europe but particularly for Southern Europe as well.

For air mobility, they use the same color-coding system with additional, with additional colors included, to measure overflight times – overflight clearance times, landing clearance times, and clearance windows for time on the ground. Now, Europe performs a little bit more average in this category, whereas compared to ground mobility the issues of infrastructure are doing – or, Europe is performing slightly better, but diplomatic clearance times, as I said, are particularly poor.

Now, there are promising resolutions to this. PESCO, Permanent Structured Cooperation for defense, is promising to try and tackle one of these issues. And if NATO can partner with them to resolve these legal and diplomatic issues, the diplomatic clearance times could be resolved a little bit more easily.

Now, moving onto the slightly more out of the box measures of defense contributions, we are starting with trade with sanctioned competitors, namely Iran and Russia. Now, most countries – most measures of security focus on investment. But states also forego economic gains in the name of security. So the effect of enforcing sanctions, agreed upon sanctions against potential adversaries, is one metric that could be used to measure this sacrifice.

When one state imposes sanctions on another, the state is also inflicting an economic harm on itself, as well as the target. As so, as I said, this report examines trade relations between Europe and NATO – and the United States and Canada with Russia and Iran, specifically surrounding the time frames for the imposition of widely known sanctions regimes.

For Russia, we took a look at a timeframe of 2012 to 2016, with the intent of surrounding the 2014-2015 sanctions regimes that were in response to the Ukraine crisis. And as you can see above, nearly all NATO and EU member states suffered economic loss from 2012 to 2016. Ukraine naturally saw the most substantial decrease in trade, at 88 percent. While Iceland, Turkey, Sweden, the Netherlands and Canada followed with more than 60 percent drops each.

For Iran, we looked at the 2010 to 2011 sanctions regimes, which yielded more mixed results than Russia. Yet, when you look at who actually saw increases in trade over that time, you see that either those were small economies who could respond more drastically to changes in trade, or non-EU members. For the second period of Iran – for consistency, we also looked at trade with Iran over the imposition of the JCPOA. And naturally, we saw increases in trade over those time periods almost across the board.

Now, in order to add a little bit of rigor to the data here, we decided to zoom in on the sanctions regimes. So specifically for Russia, we zoomed in on 2014. For Iran we zoomed in 2011 and 2012 and then also the implementation of the JCPOA, and we looked at the month-to-month trade data for each of those – each of those sanctions. And so here we decided to show you the Russia sanctions, which you can see clearly follow basically the same pattern that it does over that time period from the entire window of 2012 to 2016.

And last, we are looking at the average refugee intake for Europe, United States and Canada as a way to measure how much of the burden each European country and North American country in NATO is bearing for the Mediterranean – the refugee crisis in the Mediterranean.

First, we just chose to look at the average refugee intake per year in pure volume. And as you can see, Turkey stands far above the rest in this category, perhaps unsurprisingly, most of those refugees coming from Iraq and Syria. But Germany, the U.S., France, Sweden and Canada follow behind them, but Turkey still takes in more than five times as many refugees as those next closest competitors.

Next, we decided to adjust that number for population size. And as you can see, Turkey is still out front, but the rest of the change – picture shifts quite a bit. For example, the U.S. goes from third place in the amount of refugees it takes in to 18, Norway goes from 11th to 3rd, and Montenegro goes from 19th to 5th. So this metric also helps show that not only as you would expect Southern Europe is bearing a burden for this refugee crisis, but also Central and Northern Europe have borne their fair share as well.

And with that, we’d like to turn it over to you for some questions.

MS. HICKS: And let me just do a quick summation. What we – the way we looked at this report is really to begin a deeper conversation than has been had to date. We don’t conclude in the report with a particular mix of measures that we recommend NATO use. In fact, we go back largely to what Jeff said, that there’s a significant lack of data made available and unclassified and standardized, and that that should be the first order question: What should be those measures.

Overall, we believe today it is difficult for NATO to claim it has its handle on how to measure states’ contributions, and certainly that those input measures of 2 and 20 percent alone are insufficient. We do emphasize in particular combining a variety of measures, and even if input measures are included, to put particular emphasis on developing output measures. In this light, the NATO summit’s expected emphasis on the Four 30s Initiative, which is their emphasis to have the alliance able to deploy 30 battalions, 30 air squadrons and 30 warships in 30 days, is a good example of trying to move in the right direction of how to measure actual output for the alliance, and that’s the direction we ought to be going in these conversations about measuring burden.

Concluding remarks for me, Jeff?

MR. RATHKE: Just to add maybe a little bit more detail to that NATO portion, you know, NATO tracks a variety of measures, including capability targets which are agreed and assigned through the alliance. And, you know, NATO has made much recently of the fact that all nations have accepted their capability targets. And but what would add to this discussion would be public release of the data on which countries are fully, partially or not meeting the capability targets to which they have agreed.

Second, there is something called a capability review overview, which NATO compiles for each country, and that is not releasable publicly, although some countries will release them to their parliaments on a case-by-case basis. We think this should be standardized so that it is made publicly available. NATO also tracks information such as what they would call person days deployed, so for troops. They also track vessel days and airframe days deployed. Again, those data are not made public, but they would add a whole lot of detail and substance to our discussion, in particular when you look at military deployments on NATO or partner-led operations.

And the last thing I would mention is that for over a decade NATO has tracked what they call usability and sustainability. These come out of the early 2000s. And this data also gives us a much better picture of readiness of NATO forces. And this should be – this should be part of the public discussion.

When it comes to the civilian spending – we talked about security assistance – it would be – it would be valuable to have a standardized measure. This could perhaps be tracked by the OECD, which looks at – which currently tracks overseas development cooperation assistance. And this could become a portion, a subset of that metric perhaps. But there is a whole lot of information out there if there is sufficient interest in having a constructive and sustainable discussion on burden-sharing.

I’ll stop there.

Q: Yes, thanks a lot for all this detailed information you gave and presented. And in spite of the fact that you want to have a deeper discussion, I would like to simplify things dramatically. If you are asked if Germany is doing enough in order to fulfill its NATO obligations, what is your answer?

MR. RATHKE: Well, I don’t want to speak for the German government, but I think the German – I think Germany accepts that it needs to do more, which is why there is an agreement within the government to increase defense spending. I realize there’s some discussion about exactly how much, and there the defense minister may have a different point of view than some other government officials.

I think it’s – so I think the short answer to that is, is Germany at the place where it should be to meet its obligations? No. But is Germany moving in that direction? Yes. And then you can have a discussion about is that movement quick enough? Is it addressing all or only some of the necessary contributions? And if not, then, you know, where can further improvements be made?

I think people, of course, in the United States have noticed recent official reports from the Bundeswehr Commissioner, or the Commissioner for the Armed Forces, as well as some other reports that have been – appeared in the press that address readiness challenges that the Bundeswehr faces, especially before it takes over the VJTF leadership next year.

So I think there are plenty of areas where additional resources would contribute meaningfully to those gaps and to those targets Germany has set for itself.

Q: Christian Thiels of ARD TV.

I was just wondering, when we’re talking about readiness, that mostly for many countries within NATO that’s classified information, basically. And now while we know about our sobering – pretty sobering state of our readiness in the Bundeswehr, how would you address that challenge that most of the NATO countries will probably say, well, that’s confidential; we can’t publicly address that?

MS. HICKS: I do think that’s the heart of the matter. I think one way to do it is to show the counterfactual, if you will, which is where we are today, which is that the entire debate over burden and capability has come down to a fight about whether people are at 2 percent or not.

Now, that’s not only distracting. It would not solve – it would not be sufficient to have everyone at 2 percent. I don’t think any analyst who works with military measures would be comfortable saying, therefore, NATO is both sufficiently sharing burden and capable. So that’s a tradeoff that countries have to make. The United States has to make that. And we’re talking about countries that are democratic – democratically elected nations, by and large. And they therefore already have a domestic impetus to have transparency.

So what we’re saying is that there needs to – there need to be ways to have those conversations that hopefully are already happening in capitals, but in a way that’s standardized across the members, and hopefully also with key partners, so that that can then rise beyond the national level into the broader international discussion; so, for instance, in the United States, where we already struggle, as all countries do, with how to measure readiness, as an example.

There are – again, the Four 30s Initiative is one example that can help. There are other ways we measure in terms of ability to achieve key milestones and plans, things of that sort, and I am quite confident that NATO could devise ways to keep certain data below – in the classified realm while still allowing for a transparent discussion of how ready and what the output is of the dollars being spent for nations.

MR. RATHKE: I think the distinction would have to be between what is a – would compromise national security and what simply avoids national embarrassment. And so there is a big – there is a big difference between those two things, and it’s certainly possible to have aggregate data available without compromising, you know, national security. And I think as, you know – Kath made this point quite clearly, and it bears repeating – you know, for all democratically elected governments, there is a public interest and a legislative interest in ensuring that we are doing as much as we can for our security obligations, both national and in an alliance context, so that’s a natural part of the oversight function of parliaments.

Q: I have – I have – OK?

MR. RATHKE: Or talk louder.

Q: I have a question for Kathleen. It was actually quite close, so I – it would work anyway.

You said you want to have a good burden-sharing debate which is not focused only on output. That’s obviously what the German government wants, as well, and would rather get rid of the 2 percent debate. And we learned yesterday here that also part of the American administration says the 2 percent goal is connected with the Obama time and not really something that is necessarily in the focus of the American debate.

Would you comment on that? I mean, how open is – what’s your impression how open is the American administration – in particular, not only the Pentagon, but also the rest of the administration, the White House – to alter the view? I mean, your suggestion to have a different debate is probably not mainly a problem of the Europeans, I think.

MS. HICKS: I think the reality in the United States is there is no one voice for the administration, but it is certainly fair to say that the president is probably the most important voice in any U.S. administration, and I think it would be extremely difficult to get the U.S. president to move off of the 2 percent measure because he has focused so much on it.

That said, in the course of conducting this report we did a lot of consultation inside the U.S. government and beyond, and I agree with what you just said. There are many voices inside the government who for years – I mean, in the Obama administration let alone this administration – have felt that the 2 percent measure, which was done for expediency of public discussion, has actually created more harm than good; you know, created more noise than clarity in the debate over burden-sharing, and it has gotten away from those analysts and those transatlanticists who were looking for a way to communicate development of capability. And I think in particular that’s been true in the Defense Department and the State Department.

I think where our – if you are looking just at the U.S. domestic debate, we are better off with our expectations set on slowly shifting that consensus viewpoint, sort of broadening it and elevating it, but I think expecting the U.S. president, Donald Trump, to change – to come off of 2 percent as something he wants to talk about is probably a little too much to ask. Getting him to see it as part of a context is probably more realistic, and that’s where this kind of work – we hope – can provide some tools to those who want to have a deeper debate.

Q: I’m Christiane –

(Off-side conversation.)

Q: I am Christiane Hoffman from Spiegel magazine, and I’d like to ask a more political question to you. How important is it that the spending is done in the framework of NATO? And how worrying or not is it, from an American point of view, if it’s done in the framework of the European Union, of other European projects?

MR. RATHKE: Yeah, that’s a great – a great question. And that also gets at some of the things that we – that you either capture or you miss in these different data sets. The United States, of course, spends about 3.7 percent of its GDP on defense, but has global security obligations – in East Asia, in the Middle East – in addition to the – to Europe. The Canadians would argue as well that they have responsibilities for the defense of North America, and therefore that can be overlooked. So there is – there is always that discussion.

I think for the – from the United States’ perspective, this administration, more than many previous administrations, is rather agnostic about the vehicle through which defense dollars are spent in Europe. So if European countries, in the framework of the European Union – PESCO being one example but not the only one – are able to channel effectively their defense spending to meet capability – to close capability gaps, then that is a contribution to burden-sharing. And I think if you – in fact, I could point you to a conference we hosted last week at which some Defense Department officials spoke and made essentially the same point.

So there’s no – you know, there’s no ideological hurdle, I think, in the United States right now for increasing spending on projects that take place inside the European Union – with one important condition, that they not be exclusive. In other words, capabilities developed in a European Union context by countries that are members of both organizations should also be available to NATO. And in particular, when you look at smaller countries that are not able to deal with conflicting capability requirements from two organizations, there is a need to ensure that these remain complementary, coherent, and not duplicative. And so as long as those conditions are met, I think there’s quite a bit of willingness in the United States to see a strengthened European contribution to defense.

MS. HICKS: Can I just – I just wanted to point back to the example that Michael mentioned when he was talking about pre-crisis mobility and the work that PESCO has done to take on this issue of access in Europe, which is immensely beneficial to NATO. To the extent that’s something that the EU can take on. And in many ways, the EU is well situated to do that because of the regulatory nature – the regulatory paradigm in which those access issues arise are more – you know, more to be solved on the civilian side for nations than the military side. So that is a concrete example of where I think the U.S., but also we’ve heard across the NATO community a great openness to having the EU take on some of these issues that are helpful for both organizations.

Q: (Name inaudible) – Focus Magazine.

We had discussion in Germany to include development aid in order to reach the 2 percent goal. Is there any justification from real point of view to do this? And did you include it in your – this in your report? And also, if you’re into, let’s call it the after-crisis management, like confidence-building measures, even drug – anti-drug trafficking measures, and it’s just the Bundeswehr, for example, was very much involved in Afghanistan. So is there, again, any justification to include those measures into your measurement?

MR. RATHKE: So we are – you know, we are aware of the – of the idea of basically adding development assistance to defense spending, to diplomatic spending, and taking an aggregate measure of that. Our view is – was more narrow, because on the one hand development assistance is a critical part of many nations’ international relations strategies – Germany being a good example, but not the only example. But what we’re looking at in this case is security burden-sharing, not overall diplomatic engagement. And so our position was that we wanted to narrow down and count only those contributions that have a direct first-order effect on security.

Now, we’re not saying other types of development spending are unimportant ‒ of course, they’re important, important for the United States, too ‒ but they are ‒ it is a bit of a stretch to try to count them as a contribution to shared security. It’s a ‒ it’s a ‒ it’s spending in pursuit of other goals, which are legitimate, but not directly related to improving security in the transatlantic space or more generally.

MS. HICKS: And I’ll just add, because we went through the data so quickly, one of the things we will talk about in the reports are the limits of ‒ which I do think you, Seamus, hit on briefly ‒ the limits of the data analysis here.

Our analysts had to go into budgets nation by nation. And we used some basic criteria or rulesets to develop the dataset here. Every country is collecting their data on how they do security assistance somewhat differently.

But do you want to just talk briefly about the categories that were included?


MS. HICKS: Yeah.

MR. DANIELS: So, largely, the categories that we looked at were peacekeeping and stabilization, crisis prevention and crisis management. And that excluded a few categories, like election monitoring, democracy-promotion activities, et cetera, that, you know, impact security down the line, but it’s not directly first-order impacting security. We did look at some development spending that was targeted at law and order and defense institutions, but that’s largely where we limited the development spending.

Q: Barb Hagatenbein (ph), German media, armed forces.

I have one question concerning the measurement of training foreign forces ‒ for example, Germany trains Georgia ‒ and providing them with the vehicles and the arms. Did that enter into your analysis?

MR. DANIELS: Yes. Training for building partner capacity and building up partner militaries, that is included within this metric.

Q: Yes. I’d like to ask an even more political question. (Laughter.) Well, once we have the chance to talk to you here, we all are very curious what is going to happen at the NATO summit and how you see it. And, you know, there’s a sort of ‒ it has become a habit of having a parallel drawn between what happened at the G-7 summit to what might happen in Brussels. So how do you see that? What is ‒ what is your prediction?

MR. RATHKE: Well, predictions are always a challenge. But I think there are a couple of distinctions to the G-7. First, NATO is a much more ‒ much more formalized organization with daily interactions of diplomats and military representatives who are focused only on that agenda, whereas the G-7, as an intergovernmental body, has a much looser coordination, I would say.

I would also say that the significance ‒ you know, a summit declaration, for example, in a NATO context has much greater operational significance than a summit declaration generally does for a body like the G-7. So in a NATO summit declaration, they are making specific decisions that will translate into specific actions that will be, in some way, monitored and verified.

So I would ‒ that cuts in both directions. On the one hand, that means there’s, I think, a higher degree of certainty about the work that leads up to a summit in a NATO context because it is the everyday occupation of dozens, if not hundreds of people within each government. But by the same token, a failed summit has even greater consequences, so the risk or the downside ‒ yeah, the downside risk is much more substantial, the impact is much greater. How it will turn out is anyone’s guess.

I would say, though, if you look at the work that has been done in particular by defense ministers at NATO to develop an agenda that touches on readiness, as Kath already discussed, as well as the plans for increasing defense spending, the force posture, and the future of the presence along the Eastern flank, and so forth, there is – much more of this is worked out ahead of time.

So perhaps that makes it less subject to the vagaries of, you know, what happens on a particular day at a summit meeting. But I would also say that, yeah, failure of NATO to reach agreement on those things would have, in some ways, farther-reaching consequences than the failure of a G7 declaration.

Q: When you talk about a failed summit, how would you define a failure of the summit, besides, you know, let’s say, the summit declaration, I mean, which is already almost prepared by now?

And then my second question would be – I mean, it’s not really, but I would be interested in your opinion. It’s not part of your study. But NATO, from my point of view, really has one problem, because they stuck very much like an old-day sort of propaganda style, because, you know, they come together in a summit and they want to cover, like, every conflict, which is very obvious amongst the members. That was already the case 10 years ago or 15 years ago. Like, as long as I cover NATO, you know, they always try to, you know, present unity, but everyone who knew the issues knew, OK, there are, like, you know, at least, you know, like, some arguments between the countries and so on.

So would you agree that also NATO, in its, let’s say, public appearance and how, you know, the leaders sort of point out, you know, what their will is, has to be reformed as well?

MR. RATHKE: So I think, on your first question, there will undoubtedly be disagreements at this particular summit, as we saw last May when NATO leaders met in Brussels, their first gathering since President Trump’s taking office. So I would not consider that – the airing of divergent opinions is not failure, in my view. What would be failure would be a failure to – would be not agreeing on specific steps that NATO is going to take to address particular – the particular challenges it sees.

So if, for example, NATO is unable to agree on a readiness initiative, then that’s – I think that is clearly a failure. But the fact that leaders will express different opinions, and perhaps even in critical terms, you can consider that unfortunate, but it’s something I think we’ve gotten used to over the last 18 months.

Should NATO do its work differently? I understand your argument. The question comes down to, in a way, time and focus. NATO does not meet every few months the way the European Union does. It doesn’t have that same regularized interaction. And so it requires a whole lot more sort of hierarchical buildup of decisions.

I don’t see – but it also requires the continued – you know, the sustained attention of leaders. That’s a necessary element, because you don’t reach decisions unless leaders meet. It’s only then that you address the really difficult issues. So that needs to be part of it. But, yeah, I think it’s – it’s a bigger question whether it should – whether they should meet more often, less often, in a different format, and make different sorts of decisions.

NATO has always been, in a way, the expression of the views of the West. It was that during the Cold War, and it has remained that after the Cold War. There’s a value in that. And as long as the member states continue to value speaking with one voice, then I think it’s necessary that they address more than just the particular decisions they’ve made on that day.

MS. HICKS: We have time for – to sort of collect, I think, remaining questions, and then we’ll answer them all at once. So why don’t we go around with all the remaining?

Q: We are talking now about the 2 percent goal. But Stoltenberg, the sec gen, in the last days pointed out that there are quite more problems in the alliance. He mentioned trade, environmental issues, JCPOA. How bad is the situation for NATO, when you take all those issues together? And is it as easy to isolate the 2 percent question from the other questions?

Q: My name is – (off mic). I want to follow up – (off mic).

(Comes on mic.) In case of failure at the NATO summit, I would like to carry on at that point. Is there a plan B? Failure meaning something like happens – something happens like at the G-7, the president walks out, whatever, something like that start. Is there a plan B within the American government, or within NATO, or does the CSIS have one – or should it have one?

Q: Joachim Käppner of the Suddeutsche Zeitung newspaper in Munich.

Did your study take into account how modern or not modern military forces of member state are? Let’s say, for example, if a member state has a large, but outdated, force of main battle tanks, is it same kind of contribution if you have got a small but very modern state-of-the-art force?

Q: Can I have a last question? Yes, I mean, what we see from the U.S. is sort of a bit of a double face. One is the thing that the president has called NATO obsolete. He has not – you know, he has not repeated that lately publicly, but we’ve heard that he has done so behind closed doors, basically. And on the other hand, the U.S. is meeting all its commitments to NATO, very active there. So, you know, how reliable is the U.S. within NATO? And that’s obviously the question about the future of NATO in general.

Q: You said at the beginning that from the three components – political cohesion and common strategic interests, all the three – and the expenditure question – all three are under stress. Very simple question: Where do you see the common strategic interest of NATO countries in times where we have America first and denying of multilateralism on one side?

MS. HICKS: I’ll walk through a couple of these and leave all the hard ones for Jeff. (Laughter.)

On the first of the questions, some of these get into – my answer will respond probably to a couple of these – but the idea of how to – how well can you segregate, if you will, the military channel and the NATO discussion from other things, I think we are in an active test of that right now. I think this sort of gets to the last piece. I do think there is a very strong, enduring transatlantic sentiment in the United States from the Congress, to the public, to key members of the administration. And that’s what you see paying out, for example, in the U.S.-European Deterrence Initiative and the increased spending and focus, for example, of the Army, but other services as well, on defense of Europe – elements that are driving a lot of our own thinking about defense modernization.

So that’s pretty important. Like, Europe is a centerpiece, particularly the eastern flank issue, of how the United States itself is thinking about building and maintaining and executing forces in the future. That’s incredibly powerful. It doesn’t, however, deny the reality that we have a political cast a pall within the United States and beyond that is stress testing the alliance from multiple quarters. And obviously the United States is a key element of that, with the president’s words as a candidate in terms of NATO obsolescence, and then the things he has said since then. But we don’t stand alone. You know, there are other countries that are going through many of the same elements. So I think this is – we are in the active stress test of how much the alliance can serve as a symbol of unity in a period in which there are a lot of factors that are pulling at individual countries and then us collectively as a West, and our values.

So I think it’s difficult. I think it’s extraordinarily difficult. It’s not the first time. Certainly, the Iraq War was a period of great stress. I think this is worse, personally. But there – I’ll leave to others whether there were – there are better analogies of how to come through it.

I do think I’ll go back to something I said earlier, which is in the U.S., like in all countries, you know, in the West, the president is one and a very important actor, but there are many other actors. And I think Europe has seen that. They’ve seen a very strong sentiment coming out of the U.S. Congress in support of alliances in general and NATO in particular. They have seen incredible investment from Congress in things like European Defense Initiative. They have seen Secretary Mattis’ unwavering both rhetoric and action. And, you know, I – you know, for those of us who care very much about the relationship, we hope those signals are being seen and heard.

Modernization of military forces, that’s something we point to as a gap in the current data. When we showed you that second measure on defense – percent of defense expenditures in investment, that is the proxy NATO is using right now. But the question gets to the criticism we have, which is it doesn’t actually tell you anything about what that investment is going toward. And not only the modernization – how modern is the equipment, which is one piece of it, but also what is the degree to which that equipment is actually fulfilling some kind of NATO need, and that is also not assessed, which is why Jeff talked about his understanding that NATO collects some of that data and having that transparent and unclassified would be helpful to the public debate. I’ll stop there.

MR. RATHKE: Maybe to pick up where Kath finished, another thing we find difficult to assess from publicly available data is the question of interoperability, which if you talk to, you know, folks in the military establishments of NATO countries, they will stress how important this is, especially as multinational units cooperate at lower and lower levels, unlike sort of Cold War mass-armed, you know, scenarios. So the smaller the units you have interoperating across national structures, then the more you need to focus on that. And there is very little that is available to assess how well countries are doing in that particular respect.

And it's also complicated because countries – some countries have global security roles and responsibilities, not just the United States. The U.K. and France are good examples of that. And so not every dollar they – or euro or pound they spend will be devoted to a NATO capability target, but it is still contributing to shared security. It’s a different story when you have countries that are spending money on equipment that is not part of their NATO target and they don’t have some other justification in a global – in global responsibility terms. So I think that is a crucial distinction.

Maybe to come to the question of, you know, is there a Plan B, you know, governments are not usually in the business of developing Plan Bs of that sort, although, you know, we’re not here representing any government, so it’s hard to tell what’s on their minds. But basically, if you fail to reach agreement on your ambitious goals, then you compromise. That’s typically been the way. So it’s not that you have a Plan B, what happens if everything falls apart. Instead it is you prioritize your goals. And when you can’t meet them, you find a fallback position. So those are incremental adjustments rather than a complete kind of collapse of a multilateral process. Again, it’s hard to make a prediction about what’s going to happen on July 11th or 12th, but that would be the typical approach I think that governments would take.

Maybe to get to the first and the last question, which were kind of related, one is how bad is it. And I think, you know, there was the reference to Secretary-General Stoltenberg’s recent speech. I think the point that the secretary-general was making, the way I read his speech, was that there have always been disagreements within NATO and there are disagreements today. Some of the disagreements outside the security realm are quite difficult and hard to resolve. But they have thus far not affected the willingness of NATO allies to sustain and increase their efforts at transatlantic security.

So his – you know, he’s saying that the glass is half-full. And I think he has – he has a point because, as Kath mentioned, you see in the United States a growing commitment across Washington to U.S. alliances, even as the president has from time to time questioned them. You know, just looking at what the United States has spent additionally on European security since 2014, it adds up to about 16 billion (dollars), in addition to what we are already spending through our troop presence in Europe, through our activities in NATO, and so forth. That was just an incremental increase. So I think that testifies to a high value placed by the Washington defense and security establishment on the transatlantic relationship.

And why? And this gets maybe to the last question, what is the common strategic interest. There is – you know, there are several elements of it. The most obvious one, we are – we are living not just since 2014, but clearly since 2014 in an age where the Helsinki consensus on European security is under threat. It’s under threat from Russia. Russia has tried to redraw borders. It has – I mean, you know, I don’t need to go through the whole litany of aggressive actions, of assertive stances, and so forth that Russia has taken. But it’s a real and acknowledged challenge to the NATO alliance. It’s a challenge to the transatlantic community, which is the – as we’ve, you know, heard elsewhere, is the biggest economic relationship on the planet. It is the – (audio break).

And so there is one clear strategic interest, but then also dealing with security challenges that come – (audio break) – the consequences of conflict and instability in the Middle East and North Africa. Those are issues that the United States and Europe are best-served confronting together whenever possible. And so I think – I think there is a – there remains a firm recognition of that shared interest on this side of the Atlantic, even though you can’t overlook the fact that the president has been very critical. Still, there is an abiding foundation for that relationship.

MS. HICKS: I want to thank everyone for coming today. We have the emails for everyone who is in the room and we will send you the slides immediately after this. And then, also, we will have video uploaded that will have this conversation as well as the slides with the commentary. And the report will be out on July 3rd with interactive graphics so you can – you can move around to check, for instance, a subset of countries or a subset of factors that you’re particularly interested in.

So thanks to the team – Michael, Seamus, and Jeff, and Andrew Linder, who’s in the back there – and thank you all for coming today.