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Here’s how NATO’s budget is funded

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Donald_Trump_NATO
President
Donald Trump generated controversy at a NATO summit in Brussels
when he criticized other member states over their defense
spending.

Reinhard
Krause/Reuters


  • President Donald Trump’s rhetoric on the NATO alliance
    has often been misleading, and he has distorted how the
    historic alliance is funded and operates.
  • NATO is based on the notion of collective defense,
    which also requires collective spending. 
  • Trump’s questionable remarks on NATO have led to
    criticism from leaders at home and abroad. 

Since taking office, President Donald Trump has repeatedly
criticized NATO over how the alliance is funded and pressured
other member states to increase defense spending.

In the process, he has made a number of misleading claims about
NATO, distorting how it works and why it exists in the first
place. 

Earlier this month, Trump reiterated his criticism of NATO in
a
tweet
, stating, “Presidents have been trying
unsuccessfully for years to get Germany and other rich NATO
Nations to pay more toward their protection from Russia. They pay
only a fraction of their cost. The U.S. pays tens of Billions of
Dollars too much to subsidize Europe, and loses Big on
Trade!”

Trump
added
, “All NATO Nations must meet their 2% commitment, and
that must ultimately go to 4%!”

The president is correct that his predecessors also
pressured other NATO member states to increase defense
spending
, but his claim that member states must pay the US
for “protection” misrepresents how NATO works. 

NATO’s roots

NATO is an alliance that was formed in the wake of World
War II as the US and its allies sought to counter the Soviet
Union’s growing influence in Europe and beyond.

The alliance was founded upon the notion of collective
defense, meaning an attack on one member state is considered an
attack on all of them. This is precisely why NATO, for example,
rallied behind the US in the aftermath of the September 11
terrorist attacks and has sent many troops to fight and die in
places like Afghanistan over the years. 

Collective defense requires collective spending

Accordingly, every NATO member state contributes to
a
relatively modest direct budget
: a roughly $1.4 billion
military budget and a $250 million civilian budget.

Overall, the US provides about 22% of this budget based off
a formula that accounts for the national income of member
states. 

Beyond the direct budget, NATO came to an agreement in 2014
that each member state will increase their own defense spending
to 2% of their respective gross domestic product by 2024.

At present, NATO has 29 members and few have reached this
goal — only five NATO members are expected to meet the 2% target
by the end of the year. Meanwhile, the US spends roughly
3.6% of its GDP on defense
, as its military budget in 2017
was approximately $618 billion.

There is no penalty for not reaching the 2% goal; it’s
simply a guideline, and most member states have increased defense
spending even if they haven’t reached that goal quite yet.

Moreover, NATO estimates collective defense spending among
all member states will total more that $936 billion in 2018.
US defense spending accounts for
roughly 67%
of this, but it’s also true the US has the
highest defense budget in the world by far and this is linked to
both its strong economy and internal politics. 

Here’s Trump’s big issue with
NATO

Trump wants other NATO member states to increase defense
spending — and soon. 

In early July, he
tweeted
, “What good is NATO if Germany is paying Russia
billions of dollars for gas and energy? Why are there only 5 out
of 29 countries that have met their commitment? The U.S. is
paying for Europe’s protection, then loses billions on Trade.
Must pay 2% of GDP IMMEDIATELY, not by 2025.”

There is an underlying truth to Trump’s criticism of NATO that
the US spends a significant amount of money and provides an
extraordinary amount of resources and manpower to the protection
of Europe and Asia. But the US benefits a great deal from this,
and US involvement in NATO has long helped it solidify its role
as one of the globe’s leading powers, if not the most powerful
country in the world. 

Moreover, Trump’s remarks on NATO seem to suggest that Europe
must pay the US for protection from Russia, when this is not how
the alliance is meant to function. Not to mention, Trump already
has a dubious relationship with Russia at a time when much of the
world, especially Europe, is concerned about its aggressive
military activities.

In this context, Trump’s criticism of NATO has been condemned by
politicians on both sides of the aisle in the US as well as by
other world leaders and foreign policy experts. 

Trump caused a crisis at the NATO summit over the issue of
defense spending

Trump reportedly broke diplomatic protocol on Thursday by
referring to German Chancellor Angela Merkel by her first name,
and his intense demands regarding defense spending saw NATO
leaders enter
a special emergency session
.

After the session, Trump said NATO member states had agreed
to quickly increase spending. 

“We’re very happy and have a very, very powerful, very, very
strong NATO. Much stronger than it was two days ago,” Trump said
in an unscheduled statement. 

Trump has at times conflated the US government’s
contributions to NATO’s direct budget with the 2% goal, which is
misleading.

During a press conference on Monday, for example, Trump
claimed
 the US is “shouldering anywhere from 70 to
90% of the cost of NATO.” This statement misleadingly
characterizes direct and indirect spending from NATO member
states as the same thing. 

Trump further claimed “hundreds of billions of dollars will
be paid into NATO’s coffers” because of his efforts to pressure
NATO member states to spend more on defense.
But, as
noted above, NATO’s relatively modest overall military budget is
roughly $1.4 billion. 

The president also said “NATO was going out of business”
before he came along, suggesting member states weren’t dedicating
enough money to defense. But NATO’s most recent report on this
shows annual defense spending from European member states and
Canada as a share of GDP
has steadily increased since 2015
, which was before Trump was
president. 

Moreover, the 2% GDP commitment was made in 2014, when
former President Barack Obama was still in office. NATO member
states reaffirmed that commitment at the Brussels summit earlier
this month, meaning virtually nothing has changed under
Trump. 

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