The NATO countries have set themselves the goal of increasing their defense spending to two percent of economic output. However, that was in peacetime. Secretary General Stoltenberg has therefore announced negotiations. They shouldn’t be easy.

There is a risk of a new dispute in NATO over the level of defense spending by member states. According to Secretary General Jens Stoltenberg, some of the Allies want to significantly tighten the current two percent target. It envisages that by 2024 all NATO countries will approach the benchmark of spending at least two percent of their gross domestic product (GDP) on defense.

“Some allies are determined to make the current two percent target a minimum,” Stoltenberg said in an interview. As chairman of the North Atlantic Council, he will now lead the negotiations on the subject. “We will meet, we will have ministerial meetings, we will hold talks in the capitals,” he said. The aim is therefore to reach an agreement at the latest at the next regular summit. It will be organized in Lithuania’s capital Vilnius on July 11th and 12th.

Stoltenberg did not say which NATO countries are calling for a significantly more ambitious goal. According to diplomats, eastern alliance states such as Poland and Lithuania as well as Great Britain have recently spoken out in favor of agreeing on stricter guidelines in view of Russia’s war against Ukraine. In Germany and some other countries such as Canada and Belgium, the idea is unlikely to meet with much approval. So far, they have been spending significantly less than two percent of GDP on defense. For Germany, for example, only a rate of 1.44 percent was last expected for 2022.

According to a study by the German Economic Institute (IW), even the recently approved special fund of 100 billion euros will not bring about a long-term improvement. According to the calculations, NATO’s two percent quota could only be reached with the money in 2024 and 2025. According to previous financial plans and growth forecasts, the share in GDP could fall back to 1.8 and 1.2 percent in the two following years.

Stoltenberg did not want to say whether he personally supports the demands for a minimum amount. However, he made it clear that he considers a further increase in defense spending to be indispensable. “NATO is there to ensure that a conflict like the one in Ukraine does not escalate beyond Ukraine. For that we need credible deterrence and defence, and that is why we need to invest more in our security.”

“Of course it’s always easier to invest in education or infrastructure,” said Stoltenberg. But if you don’t keep the peace, you won’t create anything else and neither secure economic prosperity nor win the fight against climate change. “As the world becomes more dangerous, we need to invest more to prevent war,” he argued.

Referring to the Vilnius summit, Stoltenberg said, “I think it’s too early to say what our allies will agree on.” However, he assumes that all allies are aware that the war in Ukraine makes investments in defense even more important. He is sure that there will be an agreement at the summit in Lithuania.

According to NATO figures, the leader in the relationship between economic power and defense spending was Greece with a value of 3.76 percent. Then comes the United States with 3.47 percent, which in absolute terms at 822 billion US dollars (768 billion euros) recently spent more than twice as much money on defense as all other alliance states combined. For comparison: Germany, the largest European economy, spent 55.6 billion euros according to NATO standards, Great Britain as number one in Europe around 53.9 billion pounds (60.9 billion euros).

The dispute over defense spending last escalated during the tenure of US President Donald Trump. He had accused European allies like Germany of free-riding and at times even threatened that the United States would leave the alliance.

(This article was first published on Tuesday, January 03, 2023.)