Wednesday, May 18, 2016

America Funds 73% of NATO: Fact or Fiction?

The claim that the United States funds 70% (or more) of the North Atlantic Treaty Organization (NATO) has been around for years, however, 2016 Republican presidential candidate Donald Trump has been using that figure in defense of his foreign policy ideas - specifically that we get nothing from NATO while paying the "lion's share" of funding. In short: we're subsidizing Europe's defense and thus it's a "bad deal" for America.

NATO was formed out of the chaos of World War II and not only helped to keep western Europe stable after so much disaster, more importantly, it served as a bulwark against a highly aggressive Soviet Union. And, the organization has always been dominated by America, after all we were the only democratic superpower in the world during the post-war era. Today, NATO still serves as a military deterrent to Russia and is involved in fighting terrorism, but it also enables an overarching sense of security that the trillion-dollar European marketplace needs.

Not only does NATO provide military security, but military security and a peaceful and stable region contributes to economic well being. As I discussed in another article, trade between the US and European Union amounts to $700 billion a year. I think that's a pretty good bang for the buck.

So, let's take a look at the reality of American funding.

NATO is funded based on a cost sharing arrangement that allows each of its 28 members to pay a percentage based on their respective GDPs and other factors.

For 2011, NATO's entire common budget - both military and civilian - amounted to $3.5 billion (3.1 billion euro). Meaning the US paid approx. $775 million. That's less than 40% of the current city budget of Nashville, TN.

Then where does the 73% figure come from?

NATO is a joint-security & coordinating organization that is based on the NATO treaty agreement. It has no standing army of its own. The military of NATO is similar to the military of the European Union, or even NAFTA (though the latter two aren't military organizations). In other words, the military capacity is whatever the combined domestic militaries and military spending of all of 28 member states equal.

The combined forces of NATO amounts to 7.3 million active and reserve personnel and costs $920 billion. Now, Spain spends $12.7 billion a year on their military. Does that somehow mean Spain funds 1.38% of "NATO"? No. In fact, Spain funds 5.78% of NATO's "common budget", which is the budget of NATO. Likewise, of the $920 billion in combined, domestic military spending, the US spends around $610 billion. That equals 66% of the combined expenditures of those 28 countries.

Thus, the 73% figure is actually an older number based on what the US spent as a percentage of the combined military spending of all NATO states. Another way to look at it would be: annual global military spending equals $1.2 trillion. Since America's spending is $610 billion, is it fair to say America "funds" 50.8% of the world's military? Not at all. The "world" doesn't have a military, it has ~190 different militaries, all of which are funded by the respective ~190 sovereign countries.

So if Trump really wants things to be fair and logically consistent, since America's military spending represents 66% of the combined spending of those 28 states, we should be paying for 66% of NATO's common budget, not the 22.1% we actually pay. But even that 66% would only equal $2.3 billion - or 18% of the cost of a single new Gerald R. Ford-class aircraft carrier.

In the end, Donald Trump either really doesn't understand the distinctions between NATO's actual budget and the domestic budgets of its members combined or he is willfully spreading misinformation to achieve his goals. Either way, it's a bad thing.

--Jacob Bogle, 5/18/16

1 comment:

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