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Defence Spending Challenges

The election of Donald Trump as the 45th President of the United States has elevated the issue of defence spending performance to a make-or-break issue for the Western security community.

The most headline-grabbing aspect concerns the spending level of America’s NATO Allies. President Trump has been right to call for a greater effort on the part of NATO members. But note that the US concern is nothing new.

For several years now, top-ranking US officials have delivered repeated warnings to NATO members that they needed to up the ante. In 2014, this led to an Allied agreement to ensure a spending level of 2% of GDP by 2024. What is unique about the Trump initiative is his preparedness to hang out the Alliance’s dirty linen in public – and hang the consequences.

The warnings from Washington that Allies that did not pay their way could not count on NATO Article V, the mutual defence commitment, being acted upon, have not been without effect.

Several allies have recently taken measures to increase their expenditures. The overall increase in 2016 was 3.8%, worth some ten billion US dollars. Of special significance, Germany has just announced its first build-up of military personnel since the end of the Cold War.

To put the defence spending numbers in perspective, in the last decade of the Cold War, EU countries’ defence spending ranged around 3.5% of GDP, America’s around 6% and Canada’s around 2%, more than twice what it is now. The overall spending effort of NATO members averaged out at about 4.5%. NATO’s is currently at roughly half that. These numbers underscore that there is slack here that can be taken up.

The asymmetries between the defence spending levels of the US and its Allies are in part explained by what Ike Eisenhower, in his parting address as US President some six decades ago, called the military-industrial complex, a relationship that sought to drive up defence expenditure no matter what was going on strategically.

Several NATO members’ defence establishments work to a similar paradigm. The complex is, however, infinitely more significant in the US because of its sheer enormity, political-party financing rules as well as the unique leadership role America has played in the security of the Western world since World War II.

At the same time, even more important than the defence-spending shortfalls of America’s Allies, is their continuing incapacity to pool and rationalize their defence procurement.

For example, research reported by the Munich Security Conference in 2017 shows that while the US has one main battle tank, its NATO allies have sixteen, whereas the US has six fighter planes, its allies have twenty, and where the US has four different destroyers and frigates, its allies have twenty-nine.

These numbers underscore that there is a clear case for rationalization of the defence procurement process among America’s NATO allies, especially those that are also members of the European Union. The EU has structures in place that could facilitate this process but it is an open question whether its 28 members share the political will to do so.

Then there is the question as to how much does a country need to spend responsibly on its defence? So, for example, American spending on its defence sector is said to have comprised 37% of the global expenditure effort in 2016. Notwithstanding this, America has failed spectacularly to bring its campaigns in the greater Middle East to viable conclusions within a reasonable period.

In Afghanistan, after over a decade and a half of war, the Taliban has during the last three years or so been steadily increasing the amount of territory under its control. In Iraq, where the intervention is now in its fourteenth year, the country’s fate is still up in the air, notwithstanding the recent successes against IS in and around the now much-beleaguered Mosul.

According to Harvard economist Linda Bilmes – in a calculation made in 2013 – the wars’ total costs come in at between $4 trillion and $6 trillion. This includes “long-term medical care and disability compensation for service members, veterans and families, military replenishment and social and economic costs.”

US performance in these two conflicts underscores that defence effectiveness is not just about money. As a case in point, there is Russia’s performance in Syria, where a victory of sorts has been secured at a much lower annual cost.

Then there is the question of how countries’ contribution to NATO defence is calculated.

The criteria used from one Allied country to another vary significantly. For example, the US military’s medical costs, roughly ten percent of the total, are paid out of its defence budget. US NATO Allies in contrast tend to cover these costs out of their civilian budgets.

Moreover, defence is not just about military capacity. Being able to defend one’s country’s is about so much more than the prowess and preparedness of the armed forces, however important this is.

It is about whether and how the range of a country’s security actors – police, coast guard, border guards, intelligence and the like – are prepared to deal with security challenges and can deal with them jointly when necessary.

It is also about whether and how they are subject to an oversight regime that aims to ensure that their first responsibility is to serve the population and that their activities on their behalf are being conducted in a financially responsible manner.

And finally, it is about whether a country has the soft power resources that can be crucial in convincing other countries to become and remain their allies.

The spending debate also needs to take into account the fact that the NATO 2% target also does not consider the resources that member countries spend on diplomacy and development. This is a huge failing. Diplomacy and development are key to avoiding situations in which the use of military force becomes the only viable option.

Against this background, how to assess Trump’s recently announced increase of some 57 billion dollars for the defence sector? Is this an initiative that comes none too soon, considering that the US may end up having to deal with a Russian-Chinese tactical alliance? Or is it yet another manifestation of Washington feeding its military-industrial complex?

Note that the 57 billion would represent an augmentation of some three percent, below what leading Republicans, such as John McCain, have advocated. But note as well that the President’s proposal would be financed in part by transferring resources from the State Department. This has evoked comments from some members of the military elite to the effect that having fewer diplomats means having to buy more bullets.

Whether Trump’s three percent is too much or too little begs another question. The Trump Administration does not have a National Security Strategy, outlining its strategic objectives and priorities, and the resources it is prepared to put in play accordingly. This is not surprising, so soon into its mandate. Yet such a strategy is essential if the US is to be able to make a case for the defence spending levels it aspires to. For the time being, Trump’s policy seems to be about throwing money at problems that have been ill-defined or not at all.

The bottom line, NATO’s two percent goal is important but it needs to be viewed from a much broader perspective: defence spending is not just about numbers, and defence capacity has to be seen in tandem with the overall capability of a country’s security sector as well as its soft power.

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