Why NATO’s defence pledge matters

The price tag of collective defence is more disputed than ever as NATO allies struggle to respond to Russia’s aggression in Ukraine while balancing budgets back home. NATO heads of state and government have promised to do more, and there should be no mistake that their targets are sound. Political leaders should not draw back from the challenge of educating the public as to their targets’ origins and importance.

In 1991 when the Cold War waned, NATO adopted a new Strategic Concept that maintained that the alliance “depends critically on the equitable sharing of roles, risks and responsibilities”. In case any missed the point, prospective new NATO members were explicitly advised that they will share the “responsibilities, costs and benefits”. Yet the erosion of defence commitments has become so serious that at the summit in Wales last September, NATO chiefs had to make a 2/20 “Defence Investment Pledge” (DIP) to spend at least 2% of GDP on defence and 20% hereof on major new equipment and R&D.

These targets are not new, NATO defence ministers endorsed both in 2006, but they have gained new prominence since defence budgets recently declined. Amazingly, the 2/20 yardsticks were intended to be easily reachable. When looking at defence spending 1991-2003, staff at NATO headquarters in Brussels noted that the median was 2.05% – so half the allies already spent over 2%. The 2% target was thus a soft target intended to get the bottom half to make a greater effort. The 20% investment target was to ensure a degree of modernisation got built into the effort. Ever since 2006, European allies have been heading in the inverse direction. Only four allies met the 2% standard in 2013: the United States, Estonia, Great Britain and Greece.

The allies are not in formation. Some have promised to gear up – among them Latvia, Lithuania, the Netherlands, Norway, Poland and Romania. France is struggling to stay level at just below 2%, while Britain, Germany, Canada, Italy, Belgium, Hungary and Bulgaria plan new defence cuts. The United States has led the charge to put the new DIP before the remaining NATO chiefs. The US will not let them off the hook easily. With geopolitical priorities in Asia, defence budgets cuts back home, and a Congress increasingly wanting to share NATO’s burden with Europeans, the US president can be trusted to press the issue.

Reluctant countries can of course argue that the 2/20 targets are irrelevant or impossible to reach, but it would be wrong to think that the targets are detached from the reality of economics and defence planning. On the contrary, they are linked to economic performance by design. As GDP grows, so too should defence expenditure; if a country is in recession or at a standstill, it should strive not to cut budgets. Moreover, the targets are for the long haul. Countries have a full decade – from 2014 – to “aim to move towards” the guidelines. Finally, they are explicitly linked to gaps in NATO’s armour, so-called capability shortfalls. The targets are not about adding fat, they are about filling critical gaps.

The gap between commitments and capabilities is not a surprise to leaders. Back in 2004 at NATO’s Istanbul summit, the chiefs tasked the North Atlantic Council with developing “input and output indicators” to put the spotlight on the growing gap. Today, NATO has a set of 11 such indicators to measure the defence efforts of individual allies: the 2/20 targets are two indicators, and a range of indicators related to deployability and sustainability comprise the rest. The wording of the DIP leaves no doubt that it is not about pouring money into a pot just for the sake of it, it is about filling capability shortfalls and meeting commitments.

The defence investment pledge is a welcome opportunity for NATO leaders and the public to engage in a debate on defence priorities. Europeans can look in any direction and spot turbulence; the challenge is to prioritise and invest. As they debate, we can be sure the political battlefield will be the 2% of GDP target. The true drama, though, concerns NATO as a defence community. Does NATO have the capacity to match commitments and capabilities, and perhaps most fundamentally, to create a transatlantic bond of understanding in the area of defence economics? This, and no less, is what is at stake behind the dull façade of 2/20 and the DIP.