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2 Percent Defense Spending Is a Bad Target for NATO

Focusing on military budgets alone hurts the alliance’s relevance.

By , a senior fellow in the International Security Program and the director of the Smart Women, Smart Power Initiative at the Center for Strategic and International Studies, and , a former U.S. deputy assistant secretary of defense and a nonresident senior advisor at the Center for Strategic and International Studies.
A soldier in a tank trains in Germany.
A soldier in a tank trains in Germany.
A soldier sits behind the machine gun of a tank during an exercise at the Hohenfels trainings area, Germany, on June 8. Christof Stache/AFP via Getty Images

It’s like clockwork: As NATO’s late June summit in Madrid approaches, the debate over whether allies spend too little on defense grows louder. NATO defense ministers pledged in 2006 to spend at least 2 percent of their nation’s gross domestic product on their defense annually. Today that’s become a totemic object for the alliance—especially for Americans who insist that others are spending too little. There is a certain truth in that, but there are much more pressing concerns for NATO than tracking this figure. Leaders should be asking harder questions about how the money is being spent and how the security burden can be shared, not obsessing about who’s giving their fair share.

The pledge was reaffirmed in 2014 at NATO’s Wales summit by alliance leaders, because NATO states were collectively failing to meet the 2006 commitment, thanks to decades of chronic underinvestment by European states on their militaries, which, unsurprisingly, led to significant capability gaps in their ability to conduct military operations. This, in turn, meant that the United States, which spends more than 3 percent annually, was absorbing the lion’s share of the costs associated with securing Europe. As the argument went in 2014, the United States would be much more amenable to continuing its investment in trans-Atlantic security if NATO nations would just spend at least 2 percent of their GDP on defense.

Getting all NATO heads of state to agree to the 2 percent minimum target was a laudable achievement—and one that might not have happened if Russia hadn’t invaded Ukraine earlier that year. But the 2 percent target has proved to be both operationally insufficient and strategically counterproductive. Ultimately, without some serious adjustments to the strategic debates, a focus on the 2 percent minimum target only severely hurts NATO’s relevance—and public support for the alliance.

It’s like clockwork: As NATO’s late June summit in Madrid approaches, the debate over whether allies spend too little on defense grows louder. NATO defense ministers pledged in 2006 to spend at least 2 percent of their nation’s gross domestic product on their defense annually. Today that’s become a totemic object for the alliance—especially for Americans who insist that others are spending too little. There is a certain truth in that, but there are much more pressing concerns for NATO than tracking this figure. Leaders should be asking harder questions about how the money is being spent and how the security burden can be shared, not obsessing about who’s giving their fair share.

The pledge was reaffirmed in 2014 at NATO’s Wales summit by alliance leaders, because NATO states were collectively failing to meet the 2006 commitment, thanks to decades of chronic underinvestment by European states on their militaries, which, unsurprisingly, led to significant capability gaps in their ability to conduct military operations. This, in turn, meant that the United States, which spends more than 3 percent annually, was absorbing the lion’s share of the costs associated with securing Europe. As the argument went in 2014, the United States would be much more amenable to continuing its investment in trans-Atlantic security if NATO nations would just spend at least 2 percent of their GDP on defense.

Getting all NATO heads of state to agree to the 2 percent minimum target was a laudable achievement—and one that might not have happened if Russia hadn’t invaded Ukraine earlier that year. But the 2 percent target has proved to be both operationally insufficient and strategically counterproductive. Ultimately, without some serious adjustments to the strategic debates, a focus on the 2 percent minimum target only severely hurts NATO’s relevance—and public support for the alliance.

The 2 percent minimum target was largely intended as a political mechanism—for example, to help defense ministries fend off budget cuts imposed by finance ministers. But 2 percent is an input rather than an output metric. In other words, how that 2 percent is spent is considerably more important than whether countries are spending enough. Although there’s a hearty debate about how much of Russia’s ham-handed approach to its war against Ukraine is due to technological weakness versus Russian strategic incompetence, there is no question that some defense investments need to be rethought, including those needed for stronger territorial defense—including maritime and airspace defense—of a soon-to-expanded northeastern NATO border.

With further Russian aggression likely and Afghanistan in the rearview mirror, there’s going to be a new emphasis on territorial defense and deterrence. That’s more people-heavy than expeditionary operations, and as any comptroller will tell you, people are surprisingly expensive. Yes, a number of European countries—including Germany—have decided to increase their defense spending in the wake of Ukraine, but how will those monies be used?

At the strategic level, the 2 percent minimum target has become even more problematic. Alliances are frameworks for communication and cooperation among states that extend much more deeply and broadly than just security and defense; NATO’s benefits for the United States go a long way beyond military cooperation. Unfortunately, the 2 percent minimum target reframes the conversation about security burden-sharing into one about transactional cost-sharing. But the value of alliances cannot be measured in terms of dollars and euros.

The danger of overemphasizing a minimum figure that European partners may not be comfortable with meeting is that it contributes to the impression the United States is somehow being cheated. Is it any wonder that after years of hammering Europe about the 2 percent minimum target that the previous U.S. president decided that his country was getting an unfair deal—and reportedly almost pulled the United States out of NATO? Support for NATO may be strong among the traditional foreign-policy establishment, but in a time of rapidly shifting U.S. domestic politics, it’s also potentially fragile.

Nor does the 2 percent minimum account for the nonmilitary dimensions of contemporary security needs. Economic and political dynamics are critically important to a nation’s security—and from the perspective of the public in NATO states are perhaps even more important than military capabilities. European states have been at the forefront of coping with challenges such as disinformation and cyberwarfare—capacities and experience that are vital but not fully reflected in military budgets.

This is, arguably, why NATO’s Article 2 exists: to underscore that economic and political policies must reinforce military alliance commitments. As the Chinese tech giant Huawei’s investments in NATO countries demonstrate, failure to consider the security dimensions of commercial investments can have an adverse impact on the alliance. The conversation on burden-sharing must better account for the broader trade-offs and risks associated with choosing alliance security over commercial profitability. Those costs of NATO commitment in Europe are rarely visible in Washington discussions.

When NATO governments meet in Madrid, they will endorse an updated “Strategic Concept,” a vision document for how the alliance views—and should prepare for—the current and emerging strategic environment. Yet in order to turn that concept into a meaningful and sustainable political reality, the alliance must then have a tough but necessary conversation on how to recalibrate burden-sharing—and embed that new understanding in any implementing guidance it develops for the Strategic Concept.

Strategic and operational lessons resulting from the war in Ukraine need to inform the conversation about sharing security responsibilities—and allies may find out in the process that 2 percent is a necessary minimum but not a sufficient overall allocation of resources to meet the demands of tomorrow’s warfare. But ultimately, if the rhetorical 2 percent minimum drumbeat continues, NATO is in very real danger of cutting off its nose to spite its face.

This is no theoretical matter; the current high levels of public support for NATO might flag as the war in Ukraine continues and political will across the public in NATO states begins to diverge. Russia will remain a threat to the alliance’s easternmost neighbors regardless of when the war in Ukraine is resolved—not to mention the myriad other security challenges that NATO is tasked with addressing. To deter Russia and to defend Europe, NATO needs to have real strategic discussions about how to operate and modernize. Focusing only on levels of dollars and euros spent misses the bigger target. No NATO nation—and particularly not the United States—can afford for that to happen.

Kathleen J. McInnis is a senior fellow in the International Security Program and the director of the Smart Women, Smart Power Initiative at the Center for Strategic and International Studies.

Daniel Fata is a former U.S. deputy assistant secretary of defense for Europe and NATO in the George W. Bush administration. He is currently a nonresident senior advisor at the Center for Strategic and International Studies.

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