Breaking Down the Spending Gap of NATO’s Freeloaders

President Donald Trump reportedly handed German Chancellor Angela Merkel a mock invoice for the amount of money “owed” to the U.S. by Germany for NATO spending during an official visit earlier this month.

While the veracity of the exchange has not been confirmed — the White House denies any such event took place — one thing is certain: A vast majority of NATO states are indeed failing to meet their defense obligations to NATO.

NATO members agreed that each member state would spend at least 2 percent of their respective GDPs on defense resources in 2006. Eight years later, NATO members recommitted to the 2 percent target in 2014 after it became clear that most were not meeting the original target. Three years past the recommitment, and not much has changed.

“The Germans were shy of the 2 percent target by over $28 billion in 2016.”

Of the NATO’s 27 members, only five spent at least 2 percent of their GDP on defense in 2016: the U.S., Greece, the United Kingdom, Estonia, and Poland. NATO estimated that in 2016, the U.S. spent 3.61 of its GDP on defense spending, while Greece spend 2.8 percent, the U.K. spent 2.21 percent, Estonia spent 2.16 percent, and Poland 2 percent.

France is NATO’s sixth-biggest spender on defense, but it spent only an estimated 1.72 percent of its GDP on its military in 2016. France’s estimated GDP in 2016 was $2.48 trillion according to the International Monetary Fund. Assuming the relative accuracy of both NATO and the IMF’s estimates, France should have spent $49,765,600,000 on defense but spent only $42,798,416,000 — meaning it fell nearly $7 billion short of the NATO threshold.

Turkey, which has the seventh-largest defense budget relative to GDP, spent 1.56 percent of its GDP on defense in 2016, according to NATO. The IMF estimated Turkey’s 2016 GDP to be $755.7 billion, suggesting it spent roughly $11.8 billion on defense, or $3.3 billion less than it agreed to spend.

[lz_table title=”NATO States 2016 Defence Expenditure as Share of GDP (est)” source=”NATO”]
United States,3.61%
Greece,2.38%
United Kingdom,2.21%
Estonia,2.16%
Poland,2.00%
France,1.78%
Turkey,1.56%
Norway,1.54%
Lithuania,1.49%
Romania,1.49%
Latvia,1.45%
Portugal,1.38%
Bulgaria,1.35%
Croatia,1.23%
Albania,1.21%
Germany,1.19%
Denmark,1.17%
Netherlands,1.17%
Slovakia,1.16%
Italy,1.11%
Czech Republic,1.04%
Hungary,1.01%
Canada,0.99%
Slovenia,0.94%
Spain,0.91%
Belgium,0.84%
Luxembourg,0.44%
[/lz_table]

Norway spent an estimated 1.54 percent of its GDP on defense in 2016, per NATO estimates. The IMF estimated that Norway’s 2016 GDP was $376.26 billion, which suggests the Scandinavian country spent $5,794,527,200 on defense — nearly $2 billion shy of its target of $7,525,360,000.

As for Germany, the country sits comfortably in the bottom half of NATO spenders when it comes to defense. Germany spent only 1.19 percent of its GDP on defense in 2016, according to NATO. Germany’s GDP was estimated to be $3.4 trillion in 2016. This suggests the Germans fell short of the 2 percent target by over $28 billion in 2016.

According to NATO, U.S. defense spending currently accounts for 72 percent of all defense spending across the alliance.

“This does not mean that the United States covers 72 percent of the costs involved in the operation running of NATO as an organization,” NATO said last week in a statement to German newspaper Deutsche Welle.

“But it does mean that there is an over-reliance by the alliance as a whole on the United States for the provision of essential capabilities, including for instance, in regard to intelligence, surveillance and reconnaissance; air-to-air refueling; ballistic missile defense; and airborne electronic warfare.”

[lz_table title=”NATO States % of 2016 Defense Spending on Equipment (est)” source=”NATO”]
Luxembourg,32.82%
Lithuania,27.65%
Romania,26.13%
Poland,25.79%
Norway,25.60%
United States,25.03%
France,24.51%
Turkey,23.58%
United Kingdom,23.41%
Italy,20.24%
Slovakia,19.12%
Canada,18.06%
Latvia,17.86%
Spain,15.23%
Greece,14.91%
Netherlands,14.43%
Germany,13.67%
Estonia,13.50%
Hungary,13.00%
Bulgaria,12.55%
Denmark,12.41%
Portugal,9.43%
Croatia,8.27%
Albania,7.81%
Czech Republic,7.23%
Belgium,2.17%
Slovenia,1.17%
[/lz_table]

A review of NATO’s expenditure figures demonstrates how much more the U.S. contributes to its defense than fellow NATO countries. Not only do many NATO members fail to meet the 2 percent GDP defense spending threshold — many do not even follow basic NATO guidelines for parceling what they do spend on defense.

NATO guidelines recommend members allocate at least 20 percent of their defense budgets toward equipment. Only 10 member states met that target in 2016, according to NATO estimates. Germany spent only 13.67 percent of its defense budget on equipment, roughly $5,685,258,677 based on IMF and NATO figures. The U.S., on the other hand, spent $167,521,454,350 on equipment in 2016 — over 33 times more than Germany.

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“America will meet its responsibilities, but if your nations do not want to see America moderate its commitment to this alliance, each of your capitals needs to show support for our common defense,” said Secretary of Defense James Mattis after meeting with NATO members’ defense secretaries in Brussels last month.