Monthly Archives: April 2017

Mareike Mller

Policy Researcher at Politheor: European Policy Network

Mareike Mller studies International Security and Political Economy at the LSE and Sciences Po. Prior to her studies she has gained professional experience among others at the World Health Organization, the German Development Agency GIZ and the Federal Foreign Office.

Increased contributions to NATOs budget might not significantly alter member states security situation the aggressive rhetoric around them could.

Rumour has it that at their much-discussed meeting in Washington, Donald Trump handed Angela Merkel an invoice, amounting to the alleged 300 billion US Dollars Germany owed the US for not living up to its NATO budget quota. Although both parties denied this happened, the news still sparked heated debates about NATOs budget and its relevance for security in Europe and the world. To fully understand the breadth and consequences of the discussion, a closer look at NATOs history and recent changes in military spending is needed.

NATO was established in 1949 as an intergovernmental military alliance to provide peace and security for its member states. Based on the principle of collective defence, last reiterated on September 12, 2001, the North Atlantic Treaty Organizations member states are committing to defend each other in case of an external attack. NATOs budget is to consist of two percent of the member states GDP leaving every member to contribute according to national capabilities. This rule was agreed upon in 2014, leaving member states until 2024 to fulfil this goal. Although experts doubt the accuracy of the measure to assess security efforts, debates persist already about some countries paying less, while others, the US in the first place, pay more.

Despite the current debate, Sean Kay from Carnegie Europe points out that most challenges to stability in and around Europethe Eurozone, refugee pressures, energy security, and terrorismhave little to do with conventional military spending. In fact, defence spending diverts resources necessary to meet these challenges. Still, rising challenges and insecurities cause increasing defence spending already. It is actually a strong sense of unpredictability that strengthens the will to secure ones nation against possible surprises regarding recent or potential political changes on both sides of the Atlantic just as much as rising instability in other parts of the world, leading to what some would argue is a redefinition of the post-cold war order.

For instance, for those smaller states at the borders of NATO, fear is rising about potential interventions, and them turning into the playground for disputes between Russia, China, and the US and Europe. In 2016, only Estonia, Greece, Poland, and Great Britain met NATOs two percent goal. Willingness to increase defence spending in the Baltic states is however going up. Secretary General Stoltenberg announced though that Romania too will meet the target this year, followed by Lithuania and Latvia in 2018.

While defence spending is not a predictor of actual security or insecurity, it is a crucial indicator of international tensions. In fact, most of the times rather than expenditures reflecting real threat, an upward spiralling effect leads countries to increase defence expenditures when their neighbours do so. Since Russias annexation of Crimea in 2009, the growth of the Islamic State, and the fear failed or failing states, like Syria, around the same time, defence spending around the globe is not decreasing, and unlikely to do so any time soon. In Europe, Germany is NATOs second largest financer of the civil and military budget, followed by the UK and France.

What economic consequences arise from this? Although increased military spending supports weapon and defence industries, which especially countries like France, Germany, India or South Korea profit from, also negative economic effects exist, which are more far reaching than it appears at first sight: protectionism, increasing nationalism, and a reduction of trust in the international system, combined with the fear of overall security problems, is at the root of crumbling transnational trust and hence increasing defence efforts. In a market-oriented understanding of international economics, the downward spiral of (perceived) insecurity and economic protectionism, manifesting itself in limits to trade, investment, and financial cooperation a prominent example are economic sanctions is thus hardly economically beneficial on neither side of the Atlantic.

Altogether, whether countries meet their NATO target or not does not matter for security what does though is the rhetoric around it. Words have the power to create security, or insecurity respectively. When Donald Trump demands increased spending in order for the US to continue protecting Europe, the real security threat is not NATOs limited budget or need for additional economic resources. Its an aggressive rhetoric that creates an ambiance of instantaneous insecurity and imminent threat, and sets the tone for future debate. Instead, Jan Techau suggest that stepping up defence capabilities consists not only of spending, but more defense cooperation, more shared threat assessments, and more leadership by hitherto reluctant nations. European leaders should hence continue to stay cool and deescalate.

Tags: Europe, NATO, Op-ed, security, United States

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The flawed rhetoric around NATO's two percent - Politheor: European Policy Network

Published on Tuesday, 18 April 2017 10:39 Category: Articles and Commentary Written by Scott Carlson

President Donald Trumps NATO policy is confusing. Regardless of the administrations evolving National Security Strategy, United States role in Europe is in transition. Trumps March 17th meeting with the German Chancellor Angela Merkel reiterated his America First emphasis at home, and an insistence that other NATO members pay their fair share abroad. A picture a "Perfect Storm" of Russian military resurgence, European Union instability skating on thin politico-economic ice and a 20 trillion dollars US cold front. This Trans-Atlantic ice age is capable of putting the freeze on any potential warming of the Alliances regional security efforts. To make the move from a more measured Western European Allied Assurance (2014 Wales Summit) to greater Russian Deterrence (2016 Warsaw Summit) NATO will require greater operational funding. With "Great Recession" contagion and an anaemic economic growth the question we should be asking is whether NATO can afford another Cold War. Past performance is no guarantee of future results. Yet the cold, hard truth comes down to cold, hard cash.

Current Balance Sheets: The European Reassurance Initiative

To fund the Alliances mission, 28 NATO members unanimously agreed at the 2014 Wales Summit that they would aim to move towards the 2 per cent guideline within a decade. Three years later, only five countries are fully fulfilling this obligation. Against this backdrop, nervous EU diplomats are pushing for more US financial support to counter a Russian military now on the rebound. All Alliance members are in support of the mission, even if they do not currently meet the 2 per cent threshold. Allies have increased activities along five lines of effort (troops, training, equipment, infrastructure and building capacity) through an enhanced strategic exercise design known as the Readiness Action Plan. This strategy will train elements of the NATO response force, joint NATO elements that build capacity through stability operations.

These efforts arise from the European Reassurance Initiative (ERI), a combined effort that demonstrates a united NATO commitment designed to deter growing Russian aggression. Funded as part of the Consolidated and Further Continuing Appropriations Act of 2015, this additional military spending supplements Operation Atlantic Resolve (OAR), a multi-year US led NATO endeavour. ERI recently quadrupled, growing from less than one billion to over 3.4 billion US dollars in fiscal year 2016. From US Air Force hangar upgrades in Iceland to US Navy Baltic, Mediterranean and Black Sea operations, Operation Atlantic Resolve demonstrates the US commitment to the security of NATO. In the US Army alone, ERI funding will bring almost 5,000 personnel, more than 2,600 vehicles and 84 aviation assets to Europe. Yet with deficit spending, overleveraged European governments and the US approaching its 20 trillion dollar debt limit, can NATO actually continue to follow the money?

Accounts Past Due

As defined by the Stockholm International Peace Research Institute (SIPRI), military expenditures include all current and capital expenditures on the armed forces, peacekeeping forces, defence ministries and other government agencies engaged in defence projects, paramilitary forces, and military space activities. Of note here is a critical point when the trend lines crossed in 2013: A 1.5 per cent GDP rise in Russian spending in comparison to a 1.5 per cent GDP decline in UK and US expenditures. The Russian Federation is now spending twice the amount of what it produces domestically on its military than the United States, Greece, the UK, Estonia and Poland.

As the Alliances largest contributor, the US's GDP per capita is two times that of Russias GDP. As a result, Russias economic ambitions for military development are not only elevated, but clearly claim a higher national priority at the expense of other Russian domestic programmes. Spending is not the only criteria for measuring military advantage, however if these trends continue Russia will be able to further leverage its regional influence through an enlarged military presence. It is already a reality.

Future Lines of Credit: How NATO Warms Up the Cold War

Not only has Russian military spending doubled from the mid-1990s, the Federations debt has decreased by 90 percent, from almost 100 percent to 10 percent of the GDP. Inversely, with the exception of Estonia, NATO members government debt increased, in some cases dramatically. Notably, US government debt has doubled in the past 15 years.

Combining the data reveals a sobering reality. In the past 15 years, Russias military spending has doubled while debt levels have decreased by 90 per cent. US military spending has been cut in half while debt levels have doubled. If current trends continue, US and Alliance credit lines will have to be raised. The end result is greater national debt, further deficit spending and less funding for other domestic programmes. Although this is not optimal, the alternative is even worse.

Correlation is not necessarily causation. Factors that shape European regional security are not limited simply to straight line economic comparisons. The strategic effects of Russian and NATO funding entail more data analysis than basic correlations between military spending as a percentage of GDP and government debt. Fiscal numbers alone are not the sole indicator of military advantage. Quantitative evidence is more helpful when assessed qualitatively.

Two conclusions are offered. First, a strategic view. The US will likely continue to fund the largest portion of the NATO budget (22 per cent at the end of the Obama Administration). Yet according to the National Intelligence Councils Global Trends 2030 report Alternate Worlds, it is highly likely that Americas global economic impact over the next decade will diminish. As first among equals the US will continue its role in world leadership, however, unless reversible steps are taken US debt service will continue to grow. To advance the Alliances mission, increased NATO monetary contributions will be required from other members. Second a tactical view. Anticipate Trumps "America First" mantra to be tweeted only with regards to domestic social programmes. With a ten per cent requested increase in defence spending, expect the debt ceiling to be raised. Follow the money NATO for as long as possible.

Scott Carlson is United States Naval Reserve Officer and Operations Officer for the US military with 25 years of Department of Defense service in training, education, critical thinking and policy formation. He holds an MA degree in National Security and Strategic Studies from the United States Naval War College. His research interests focus on European-Russian geo-political interactions.

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Follow the money: Can NATO afford another Cold War? - New Eastern Europe