NATO: What’s in 2% Between Friends?

“Is your plan as cunning as a fox who’s just been appointed Professor of Cunning at Oxford University?”

Blackadder

Alphen, Netherlands. 13 March. I have a cunning plan. Bear with me. Last week I was in Reykjavik, you know the one in Iceland, and attended the fascinating NATO Resource Conference 2017 (well, it was for me). There I gave a brilliant and very reasonably-priced speech entitled “The Global Cost of Adaptation”. At the centre of the debate were three issues: the habit NATO Europeans have acquired of relying on the US Bank of Mom and Dad when they cannot be bothered to spend enough on their own security and defence; will aforesaid NATO Europeans ever discover the Holy Grail of Alliance, aka the 2014 Wales Summit Defence Investment Pledge (the DIP), of 2% GDP on defence of which 20% must be invested in new defence equipment; and upon just what should NATO and the Allies spend any additional moneys?  

The goodish news first. Apparently, the decline in NATO Europe’s defence spending stopped in 2015, and even increased a bit (3.8% or some $10 bn) in 2016. And, if NATO Europe ever does honour the DIP, the biggest ‘if’ since ‘if’ was introduced into the English language by King Ethelred the Literately Uncertain, NATO (or someone) would suddenly have an additional $100 bn to spend.

On the European side the message was clear as mud…hurry up and wait! Yes, NATO Europeans are fully committed to spending 2% GDP on defence…but. Why the ‘but’? Europe is still driven by the assumption that sooner or later the US Bank of Mom and Dad will come out late on a dark, stormy night to pick up their siblings who not only forgot to save the bus fare home, but got hammered on a toxic brew called ‘Welfare’ and thus completely missed the last bus. The trouble is that Mom and Dad might not always be there. First, there is growing irritation in some parts of the Administration why Euro-Junior refuses to get off its fat ass and get a job. Second, Mom and Dad are not as flush as they used to be. Third, Mom and Dad now have to deal with noisy neighbours at the other end of the street.

Throughout the gathering rafts of judgement shot down upon the throng from high in the rafters like the latter day Gods in a Viking saga of old. One bolt in particular struck home; even if the DIP’s fabled $100 bn was ever to see the light of political day what would it actually be spent on? One group, for sake of argument the Easterners, wanted it spent on high-end, expensive, big bang stuff that would render the NATO Defence and Deterrence Posture credible not just in the eyes of the Brigade of Budgeteers, but also Russia. Another group, for sake of argument the Southerners, think this is nonsense and want the bulk of the money spent on counter-terrorism and counter-criminal activities, most notably human trafficking. Very few want NATO to have the money and most would prefer to spend it on themselves.

Now, here’s the cruncher as the Yanks would say; if NATO is to remain Valhalla’s insurance company on earth, then NATO must both deter and defend at the high-end of conflict, i.e. prepare to fight and if needs be win a war, and play a full role in protecting its home base from penetration and attack by terrorists and globally-capable criminals.

Whatever way one looks at this challenge any new money should be spent on reinforcing the NATO Command Structure to cope with a complex and potentially vast array of risks, threats and challenges, AND a modernised NATO Force Structure able to get the right type and mix of national forces in both coalition and alliance to the right place at the right time. Cunning? It is not even rocket science.

Which brings me back to the DIP and the need for outcomes not inputs. Yes, I am the first to say that 2% GDP spent on defence is better than 1%, however ‘brilliantly’ that 1% is spent. Canada, are you listening? What concerns me is the growing obsession amongst the NATO Europeans with inputs as a way to avoid seriously looking at outcomes, which at the end of the day is what security and defence must be about. Worse, I am not at all sure any NATO nation really knows what it is really spending its defence budget on these days, let alone how it can get from say 1% GDP to 2% GDP. Other, that is, than fiddling the figures. Britain, are you listening?

There is one other issue; should all NATO states spend 2% GDP on defence? This week Chancellor Merkel will meet President Trump. High on the agenda will be German defence spending, or as the Americans see it, the lack of it. Last Friday the 2018 German defence budget was released at 1.2% GDP, way below the 2% target (albeit set for 2024). In 2017 it is estimated that the German economy will be worth $3.62 trillion of which $43.4 bn is planned to be spent on defence. Whilst this figure is significantly smaller than the planned defence expenditures of both Britain and France, it is still a significant sum.

Which brings me back to my cunning plan. Whilst I personally have no problem with Germany spending 2% GDP on defence, history is still powerfully eloquent in Europe and the fact of German power is already an issue. Therefore, to my mind it might instead make more sense for Germany to spend the gap of between 1.2% GDP and 2% GDP by investing an additional $30 bn on some form of debt forgiveness for heavily-indebted Eurozone states. Now, I would not offset such investment against the DIP target, because 2% GDP on defence is already an historic low and at some point (2024?) Germany should meet that target.  However, right now it would make sense to permit Berlin a ‘defence holiday’ if Germany in return was prepared to make a security investment in the financial stability of Europe.

As for NATO it must be far more rigorous about what the nations currently spend on defence, what they should spend on defence, and how best to spend it. Until political leaders in NATO capitals stop sacrificing sound, long-term strategy for the sake of facile, short-term politics, which is the real reason why hard truths are hidden, then I fear the artifice of input will continue to exercise tyranny over the strategy of outcomes.

Julian Lindley-French