NATO's 2% of GDP spending goal paints partial picture

President Donald Trump has used NATO's 2 percent target for members' defense spending to argue that the U.S. gets a bad deal from allies. But internally, NATO doesn't use the figure as a stand-alone measure of what makes a good ally.

At a 2014 meeting in Wales, the North Atlantic Treaty Organization set a goal for members to spend a set proportion of gross domestic product on defense.

The 2 percent target "was a politically acceptable compromise" that NATO governments agreed to "so they wouldn't have to talk about the more difficult measures," said Kathleen Hicks, director of the international security program at the Center for Strategic and International Studies, a Washington think tank.

"I don't think it's the real issue for Trump either -- even if all members met the target, I think he'd still be pressuring them," Hicks said before the NATO summit that began Wednesday.

Indeed, Trump on Wednesday sought to raise the bar for members' spending, calling for them to double their spending commitments to 4 percent of gross domestic product.

One problem with meeting even the 2 percent target is math: The numbers are as dependent on shifts in economic growth as they are on changes in defense spending. German officials, for example, say that in the 10 years to 2024, the country will have added 80 percent to its defense spending despite only inching up to 1.5 percent of GDP. Yet by 2024, Germany would be spending about as much on defense as Russia does today. By the same token, China has increased its defense spending to $228 billion since 1990, but the share of GDP has barely moved.

Defense-budget increases in inflation-adjusted dollars could make for a more reliable measure of higher spending. On that score, NATO experienced a significant boost last year. Romania spent 38.6 percent more in 2017 than in 2016. For Germany, the focus of much of Trump's criticism, that number was 6.6 percent.

Few European governments dispute that they could do a lot better. Some came close to disarming after the end of the Cold War. Germany may already spend about $40 billion a year on defense, but it gets little combat-ready capability for the money.

The 2 percent target also doesn't reflect many of the members' other contributions to the alliance, such as which nations are more willing to deploy troops and which ones pay for training and force-building in failing states.

NATO has a published a secondary measure, for the proportion of national defense budgets spent on equipment. Greece, for example, exceeds the 2 percent spending goal but fails on the equipment measure. Almost three-quarters of its budget goes to paying salaries and pensions that can't be deployed to any battlefield.

Information for this article was contributed by Patrick Donahue of Bloomberg News.

A Section on 07/12/2018