Paying For NATO

A perennial complaint about the transatlantic relationship between the US and Europe in the 21st century rests upon the credibility gap between the latter’s military ambitions and its actual capabilities. Since the end of the Cold War Europe has loudly embraced the cause of international human rights and humanitarian interventionism where a state fails to protect its citizens or breaks down. The problem with the continent is that as a credible security provider it is distinctly lacking. European governments loudly proclaim about the ‘responsibility to protect’ but in a crisis they struggle to project power abroad independent of US leadership.

The issue begins right at the top, with European security issues divided between two international forums, NATO and the EU. Both are based in Brussels but barely cooperate because NATO member Turkey and EU member Cyprus are entangled in a long-running territorial dispute over the breakaway statelet of Northern Cyprus. EU security cooperation on its own is unimpressive. Many decisions in the 28-member bloc require unanimity and become immediately bogged down whenever perceived interests clash. Aggregate defence spending in the EU stands at nearly €200 billion but this huge sum disguises the fragmented nature of European military organisation. Spending is spread out amongst a myriad of national armed services which duplicate each other’s functions and struggle to integrate together operationally (due to incompatible structures, systems and equipment). Perversely, the Post-Cold War peace dividend followed by austerity has cut defence budgets to an average of 1.5% of national budgets, so that these separate forces are too small to project force overseas alone.

It is hard to avoid the conclusion that Europe’s days of independent overseas operations are increasingly behind it. Certainly compared to the European Union, NATO seems a beacon of efficiency. The problem that this causes the transatlantic community is that major costs from being inside NATO’s fold are currently indirect. They come mostly through participation in NATO missions and the expense of ensuring interoperability. While NATO exists in its current form therefore, the Europeans have no incentive to solve their own security deficits. The declining abilities of European forces have created perverse incentives within the NATO framework. The less capabilities that free-riding Europeans can show, the more the US must bear the costs of NATO actions as the alliance leader.

European nations seem unlikely to reverse these trends within NATO by themselves; rearmament has not been a political priority for Europeans since the fall of the USSR. I believe that a partial solution is to be found in the precedent of the 1991 Gulf War. Although it was American troops who did most of the fighting, almost the entire cost of the war was met by America’s allies. In lieu of sending combat troops, Japan actually raised special taxes to contribute $9 billion to the war, about 15% of the total cost. Today European funding for non-nationals on overseas missions is already not uncommon; all UN members pay for soldiers to serve overseas on UN peacekeeping missions through the joint UN Peacekeeping budget. Security Council members, including the UK and France, pay an extra surcharge.

My suggestion is that in exchange for remaining an influential part of the NATO alliance, the more pacific European states such as Germany help to bear more of the costs of their allies. An annual supplementary fund could be set up for NATO to cover operational costs. Members’ contributions would be judged on a cost-sharing formula that took into account the costs of the military actions and exercises that they had participated in that year. This would raise the contributions of non-participatory states to NATO’s annual budget and subsidise the costs of states which ensure military interoperability together and do the fighting. It is by no means a complete solution to the problem of capability gaps within the transatlantic alliance in the 21st century. However it bypasses the usual political and structural bottlenecks that have blocked previous attempts at European military reform. Having an annual fiscal penalty to pay within NATO may even stimulate some nations to provide some more thought towards modernising and integrating their own military machines better within NATO.

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