Blog post

Trump, NATO and European defence spending

US President-Elect Donald Trump made critical statements about low European defence spending during the election campaign - signaling an expectation t

Publishing date: 15 November 2016
Authors: Justine Feliu

In the aftermath of Donald Trump’s election, European defence spending has come into focus. During the campaign, President-Elect Trump’s stance on NATO and the US contribution to its funding was persistently critical.

Indeed, Trump has called for a major rethink on NATO: “We pay, number one, a totally disproportionate share of NATO. We’re spending the biggest, the lion share’s paid for by us, disproportionate to other countries.”

NATO membership comes with financial obligations. Members have to contribute to the organisation’s core budget (calculations rely on gross national income). More importantly, they are also expected to meet a defence spending target of 2% of GDP but most NATO members have long failed to reach this level.

Table 1 displays defence spending to GDP per country over the time period 2009-2016.

Table 1 – Defence expenditures as percentage of GDP (based on 2010 prices), expected defence expenditures in 2016 and “2% target” defence expenditures in 2016.

* Data do not include pensions. ** based on 2010 prices.

Source: the above table was created using time series computed by NATO. We used the last press release on defence expenditures: http://bru.gl/2fcxLKJ.

Only five countries out of the 28 NATO members were above the 2% target in 2015: Estonia, Greece, Poland, the United Kingdom and the United States. France spent less than 1.8% of its GDP on defence in 2015; Italy and Germany less than 1.2%. However, it is worth noting a shifting global trend amongst the NATO countries: after six years of decreasing defence expenditures, NATO estimates that 18 of the 28 members will increase their defence spending in 2016 (mainly due to the refugee crisis and fears over a potential Russian threat). Nevertheless, most NATO members will remain below the 2% target in 2016.

Donald Trump’s statements call into question the security guarantee that the US has offered European countries through NATO, especially if the 2% targets are not reached. We therefore also calculate the potential rise in defence spending for NATO members who wish to increase spending to the 2% target. In total, the 21 EU27 countries which are also NATO members would need to spend 96 billion US dollars annually more than they currently do.

Chart 1 – Defence expenditures as percentage of GDP (based on 2010 prices)

Source: the above chart was created using time series computed by NATO. We used the last press release on defence expenditures: http://bru.gl/2gde2ir.

About the authors

Justine Feliu

Justine Feliu is a French citizen and works at Bruegel as a Research Assistant in the area of Global and European Macroeconomics. Prior to joining Bruegel, Justine worked as a Trainee in the Money Market and Liquidity Division (Directorate General Market Operations) of the European Central Bank, and as an intern in the Structural Surveillance Division (Economics Department) of the Organisation for Economic Co-operation and Development.

She holds a Bachelor's degree in Economics, a Master's degree in Economics and a Master's degree in Public Policy and Development from Toulouse School of Economics (Université Toulouse 1 Capitole). The main purpose of her Master's internship report was to quantify the impact of structural reforms on long-term growth using a Bayesian meta-analysis.

Her research interests include macroeconomics, monetary and fiscal policies, international economics, behavorial economics and growth.

She is fluent in French and English, has good knowledge of German and basic knowledge of Russian.