Do U.S. Allies Contribute Enough? Alliances Are Worth More than Money

On February 25, Russia invaded Ukraine after months of troop buildup along the border. The invasion has united the West in ways Russia never intended. Instead, Russian President Vladimir Putin likely expected to drive a wedge between the United States and its European allies. In another turn of events, Russian aggression in Ukraine brought back the question of whether Europe needs to provide more for its own security.

Do American Allies Pay Enough for Defense?

This is a question that has plagued nearly every American administration since the end of World War II. In that time, every president, in some form or fashion, has encouraged, at times even demanded, that Europe contribute more to its security after spending much of the Cold War under America’s security umbrella. Former President Dwight Eisenhower in the 1950s complained that its North Atlantic Treaty Organization (NATO) allies needed to contribute more while Richard Nixon similarly criticized Asian allies in the 1970s for not paying more for their defense. Presidents George W. Bush and Barack Obama pressed NATO allies to increase military spending. More recently, President Donald Trump lambasted both European and Asian allies for not paying enough.

Germany was the central target for Trump’s haranguing, even threatening to remove U.S. troops stationed in Germany as a punitive measure. Ironically, it was the recent Russian invasion that pushed Germany to commit to sharply increasing defense spending to more than the arbitrary 2/% of its gross domestic product (GDP) on its defense, a target set by NATO in 2014 that Germany has not met since the end of the Cold War. Despite being arguably the most powerful country in Europe, Germany spent 1.53% of its GDP on defense in 2021, significantly lower than the agreed upon target. Germany’s commitment revives an age-old debate in U.S. foreign policy: Do American allies pay enough for defense?  

Europe’s Defense Spending Is Increasing

Trump often railed against U.S. allies, calling them “free-riders.” In ranting against America’s European allies, he called NATO “obsolete.” He alienated key European allies. He caused Asian allies to wonder about U.S. reliability. In fact, Trump spent much of his four years as president carping at NATO allies in Europe for not contributing enough to the alliance.

He was right on one point: The United States, unmistakably, spends more than any other of the 29 NATO members, with estimates putting U.S. spending at more than 3.7% of its GDP on defense in 2020. Following Russia’s annexation of Crimea in 2014, NATO leaders agreed to spend at least 2% of their GDP on defense by 2024, a target that only nine alliances members met by 2019. However, in 2020, the average percentage spent by the European members of the alliance and Canada, conversely, was 1.77%. While most have not met that target, defense spending among NATO countries has been increasing as 10 NATO members hit or exceeded the target in 2020.

What Trump Got Very Wrong

Trump’s arguments were incorrect in another facet of NATO finances. He consistently conflated the pledge to spend 2% of GDP on defense with the agreed cost sharing formula. NATO’s annual budget is approximately $3 billion annually and, to cover this, NATO members agreed to a complex formula to pay for NATO’s day-to-day operations. This concept is separate from spending 2% of GDP on defense as the formula is based on national income.

It is true that the United States, again, paid the most, covering 22% of these costs. However, NATO allies are contributing more to NATO’s annual budget. Now, from 2021 through 2024, a more equitable breakdown has been established, with the United States and Germany paying about 16%. NATO’s other strongest militaries – the United Kingdom and France – now pay 11% and 10.5%, respectively. However, none of the NATO allies are outstanding in their contributions to this formula, despite accusations made by the Trump administration.

America’s Asian Allies Already Contribute A Lot

America’s Asian allies were not immune from the criticism of needing to contribute more to defense. In late 2019, the Los Angeles Times ran an op ed, correctly arguing that the Trump administration risked doing serious damage to two key U.S. allies in Asia, Japan and South Korea. During that time, Trump demanded a “five-fold increase” in the amount South Korea paid toward U.S. troops stationed there. Similarly, Trump asked Japan to increase its payments for housing U.S. troops. He even brazenly and foolishly suggested that the United States should encourage both countries to acquire nuclear weapons rather than rely on the U.S. for security, a statement he conveniently denied.

Yet, Trump’s accusations were again misguided. Both Japan and South Korea contribute significantly to defense as countries pay billions of dollars to cover the cost of housing U.S. troops, primarily under bilateral agreements. South Korea spends 2.6% of its GDP on defense, higher than U.S. NATO allies. From 2015 through 2019, South Korea purchased $13 billion in arms from the United States.

Japan, on the other hand, does not spend as much on defense compared to South Korea due to constraints imposed by the United States after World War II. Though, Japan purchases most of its weapons and defense systems from the United States so its contribution to its own defense in coordination with the United States is not fairly measured through how much of its GDP it dedicates to defense. In short, America’s two key Asian allies sufficiently contribute to burden sharing when it comes to defense spending.

What’s Next?

During his presidency, former President Trump maintained a transactional style to foreign policy. His approach to the United States’ closest allies and partners was no different, often berating allies to take on more of the burden sharing. Yet, alliances are about more than money. The United States gets a good return on investment for its alliances as the America’s alliances have allowed the United States to keep foreign threats at bay and continue to lead the liberal world order put in place after World War II. This is especially true in the fight against its adversaries, particularly China and Russia, who are looking to undermine the U.S.-led liberal world order.

However, that is not to say that the United States should not continue to encourage its key allies to contribute more to collective burden sharing and their own defense. What is necessary is a change in the messaging. Instead of lambasting allies into paying more for defense, which only causes damaged relations and defensive rhetoric, the Biden administration is right to reinforce America’s alliances through cooperation, coordination, and reasonable expectations.  

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