NATO and 'Fair Share': Trump Should Be Careful What He Wishes For
The Trump presidency has ignited a debate about western military power in Europe. But the debate shouldn’t be so much about how it is paid for, as why it is deployed in the first place. What are the true economic costs and benefits?
President Trump seems to see the U.S military as a band of roving mercenaries, to be leased to long-time valued allies in return for a form of financial tribute. This notion threatens to undermine not just global security, but also tear away at the very characteristics that have undergirded impressive economic growth for the western world as a whole, and for the United States in particular.
Those who favor a shift in the current military paradigm should be careful what they wish for. Americans may bear some grievances and complaints about the existing world order, but do they really want to see a return to the dark, dangerous and less prosperous order of the past - when no one assumed the role, and the attendant costs, of being a global superpower?
The question is especially important for the world’s largest economic power, which has benefited enormously from the current paradigm. Americans should think long and hard before sacrificing, at the altar of short-term political expediency, the enormous long-term economic and social benefits that its commitment to global partnership has engineered and maintained.
The extreme imbalance in the defense spending each NATO member country engages in compared to the United States is central to Trump’s evaluation of the organization’s overall worth. Under this view, collective defense is not so much a partnership as a dollars-and-cents business relationship in which the western alliance is measured not by the totality of its benefits to Americans, but by the virtual rent America’s partners pay, as though they were tenants at Trump Tower.
Trump has berated European countries and Canada for not spending the agreed-upon goal of 2 percent of GDP on defense. It is important to keep in mind, however, that this goal is not a membership fee in NATO. Any increase in defense spending by America’s allies would not go to NATO itself, much less to the United States. NATO is funded by national fees. The United States does contribute more than other countries - because it has a larger economy. It benefits more from stability, therefore it pays more for it. The amount of the U.S contribution - 22 percent of NATO’s budget - reflects the country’s GDP, the common measure by which all NATO members are assessed. No country is in arrears in their NATO dues, and never has been. While it is true that U.S military spending as a whole is greater than its allies, that it is does not reflect their actual relative financial contribution to European security. In fact, while the United States spends a larger proportion of its GDP on the military, that is partly because it is a global superpower, not strictly a European one. Much American military spending is in Asia, the Mideast and North America. In fact, of the standing U.S military of over 600,000 troops, only about 30,000 - or 5 percent - are based in Europe.
Of course, Trump is not the first U.S president to express frustration with the allies’ relatively low levels of military spending. But he has advanced it more vociferously and expressed it as an issue of pivotal economic and fiscal importance to the United States. But is it? Is a significant increase in European defense spending something that Trump or any U.S president should want and seek? Americans spend far more than their allies on common defense, but that is a relationship the United States sought, and one from which it benefits. Just look at the advantages - economic as well as strategic - of the current partnership, both to the United States and its allies.
And look at the potential costs if the United States were to forego its leadership role. Germany spends only 1.2 percent of its GDP on defense, about a third as much as the United States. But after the devastation of two world wars, do we really want to see more Germans rolling around Europe in tanks? Do we want to see France embrace increased military spending to protect itself? Or do we prefer to see the French creating wealth, which Americans can share in - rather than causing destruction, which Americans would ultimately be called on to repair?
Prior to the creation of NATO and other postwar institutions, our world was essentially a Hobbesian one, in which a series of aspiring and potential hegemons emerged, pursuing world orders that were inherently nasty, brutish and short. It was a world of constant balancing and re-balancing, only intensifying the unstable nature of short-term alliances, rather than a long-term partnership that delivers economic growth generally unlinked to military prowess for most nations and people of the world. The relative economic stability and growth we have seen over the past 75 years or so has largely stemmed from this partnership, which has freed us from the yoke of an ongoing competition for military primacy, allowing us to pursue economic betterment.
Rather than competing militarily to achieve and maintain economic advantage, long-time military powers like Germany, Britain, France and Italy (as well as Japan in East Asia) have been freed to channel their energy and resources to economic success and social welfare. Rather than fight each other, they have focused on trading with each other - and with their military bankroller, the United States. This economic pacification generated such success and prosperity that once countries embraced it, they were hooked on it - and diverted from the one-against-all military competition that had plagued them for so many centuries. At the same time, once the United States achieved this partnership, it was freed to pursue both economic and political primacy without fear of being forced to pay the price of imperial overstretch.
The proof of the benefits of this economic pudding is in the tasting. In 1960, about the time the postwar global institutions of defense, trade and monetary policy were fully in place, U.S GDP represented about 40 percent of global GDP. By 2014, that had been cut in half, to 22 percent. On the other hand, total global GDP in 1960 was just $6.8 trillion (USD) compared to over $76 trillion today, according to the World Bank. While the U.S’s comparative share of the common economic pie is considerably smaller than it was in 1960, it is actually a much bigger slice - about $19 trillion today, compared to about $2.7 trillion in 1960. Which would you rather have - 40 percent of a $6.8 trillion pie, or 22 percent of a $76 trillion one?
This unprecedented level of economic growth was achieved largely because a new and unique sense of global security prevailed. Germany, for example, had for decades been a threat to all of its neighbors, feared especially by France. Under the postwar paradigm, it became a willing Gulliver, tied down by the rest of Europe, using economic rope provided largely by the United States. All NATO partners and Japan gave up long-held geopolitical ambitions in return for long-sought security and prosperity. This sense of economic potential redounded to the United States, freeing Americans to pursue beneficial economic relationships and provide goods and services to a growing global network of customers.
It would make no sense to try to replace this metaphorical grand bargain of the western world into a literal grand bargain under which Washington dawns green eyeshades and parsimoniously balances the coins it receives against the dollars it spends. That would be short-changing decades of progress in the hope of pocketing a few pennies.