NATO Defense Spending

 In Perspectives

US President Donald Trump’s recent statements about NATO’s defense spending re-ignited debate over how much money NATO member states should be spending on defense. While having a member state spend 2% of their GDP on defense has been the stated goal since 2010, Trump went further last week by saying that he wanted NATO member states to spend 4% of GDP on defense.

While increases to 4% will almost certainly not happen in the foreseeable future, it raises the issue of how much more each member state would be contributing were they to reach the 2% threshold that has already been agreed upon. Depending on how far a given country is from a given GDP target, reaching that target may yield additional defense spending contributions that range from marginal to major.

The charts below examine the following metrics in different charts:

  1. 2018 NATO Defense Spending
  2. 2018 NATO Defense Spending at 2% of GDP
  3. Additional 2018 Funding Needed to Reach 2% of GDP

Although these charts use 2018 GDP and spending figures, and NATO members have until 2024 to hit the 2% threshold, the charts give a sense of how far each country still has to go to reach 2%. We also examine historical levels of spending of the top seven spenders in NATO.

It should be noted that the details of this 2% debate can vary significantly depending on whether pension costs are factored into NATO spending.

NATO’s calculation of defense spending does not include pensions. For at least 15 NATO members, combined personnel and pension costs comprise over 50% of their defense budgets. This issue of pensions is also linked to the broader future of the European economy.

Europe’s population is aging, which will likely force governments to budget more funds for pensions. Combined with Brexit and lingering debt problems, these issues present immense uncertainty with regard to what GDP will look like for NATO members in 2024.

2018 NATO Defense Spending

2018 NATO Defense Spending at 2% of GDP

Additional 2018 Funding Needed to Reach 2% of GDP

The chart below takes SIPRI Military Expenditure data to give some historical context to NATO defense spending trends for the seven largest NATO members by defense spending.


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