Someone’s missing from NATO’s spending debates

As leaders meet in Vilnius for the 2023 NATO Summit, the war in Ukraine will be at the top of the agenda. However, the perennial issue of defense spending, or lack thereof, among NATO members will not be far behind.  

Many are familiar with NATO’s Article 5 security guarantee. This is the provision in the 1949 North Atlantic Treaty stating that an attack on one is an attack on all. Fewer are familiar with Article 3 of the treaty. This says that NATO members, at a minimum, will “maintain and develop their individual and collective capacity to resist armed attack.” Only a handful of NATO members can say that they are living up to their Article 3 commitment. Over the years, low defense spending across Europe has led to a significant loss of capabilities and embarrassing gaps in readiness for NATO. Arguably, without meeting Article 3 commitments, Article 5 serves as less of a deterrent to NATO’s adversaries.

The debate about defense spending is nothing new. In 2006, NATO defense ministers agreed to spend 2 percent of their GDP on defense. Only a few members ever achieved this goal in the following years. Within months of Russia’s illegal annexation of Crimea in 2014, NATO leaders used the Wales Summit to recommit to the 2 percent goal. However, this time NATO leaders picked 2024, NATO’s 75th anniversary, as the deadline to achieve this spending target.

With only one year to go, NATO’s defense spending remains pathetic. In 2022, the 2-percent benchmark was met by only seven of the group’s then-30 members: Greece, the United States, Lithuania, Poland, Britain, Estonia, and Latvia. This is one country fewer than 2021. The inability of so many members to spend 2 percent of GDP on defense is worsened by the fact that the definition NATO uses for defense spending is both broad and generous. For example, retirement pensions for civilians working in defense related government jobs can be included in the tally. Civil service pensions are hardly what one thinks of when it comes to generating military capability in the 21st century. In the aftermath of Russia’s large-scale invasion of Ukraine last year, many countries announced increases in defense spending. Even so, only a handful more NATO members are expected to meet the 2 percent target by next year.  

While there is no easy answer to the defense-spending crisis, one new approach the alliance should take is getting the finance ministers, or their equivalent, involved. In most parliamentary democracies in Europe, the purse strings are held by the finance minister. Unlike in the U.S. system of government, where the legislative branch holds the powers both of authorization and appropriations for public spending, this is not the case across most of Europe. 

Also, with a few exceptions, in most European parliamentary democracies the position of defense minister in the cabinet ranks low in terms of seniority and influence. Meanwhile, the finance minister is often the most influential and important member of the government after the prime minister. This contrasts with the U.S. system, where the position of defense secretary is constitutionally mandated to rank high in the cabinet and is therefore an influential and important member of the government. 

This is why the next NATO summit should include a special session for the finance ministers to meet and discuss defense spending. Between summits throughout the year, NATO’s finance ministers should meet regularly as their defense and foreign minister counterparts already do. Introducing the finance ministers into the NATO world would help them understand why defense is so expensive and why the geopolitical stakes are so high. 

As an intergovernmental security alliance, NATO is only as strong as its individual member states. This is why Article 3 is so important and why the 2 percent target is a reasonable goal. While getting finance ministers involved in the NATO process is not a silver bullet to increasing defense spending, it can only help. Ultimately, giving finance ministers a stake in the NATO process could help lead to better policy and higher defense spending at home.