Effectively, Donald Trump has issued an ultimatum to NATO member states forcing them to allocate at least 5% of their Gross Domestic Product (GDP) annually to defense. Should they fail to comply, the US may withdraw from the alliance. Achieving this target poses significant challenges and necessitates unpopular political decisions. Presently, NATO requires its members to commit at least 2% of GDP to defense expenditures to maintain their membership. While Trump may concede to a 3.5% target, he will concurrently demand better trade agreements from European allies in exchange.
A recent RAND commentary considers the issue of US allies’ contributions to global security, a topic highlighted by Trump during his initial term in office. Although 23 out of 32 NATO nations have successfully met the 2% defense spending threshold, the actual financial contributions of these countries are inconsistent. RAND posits that NATO should engage allies with specific inquiries regarding their contributions rather than relying solely on GDP figures to ensure a fair distribution of responsibilities. The analysis further reveals that the US share of the total security expenditure burden has diminished from 53% at the conclusion of the Cold War to 39% by 2023, whereas the contribution from other NATO nations has been gauged at 38%. This shift reflects a notable redistribution of financial obligations to allied countries. The paper also suggests more accurate methods for assessing allied contributions based on their capabilities, rather than just mere fiscal outlays. Furthermore, it acknowledges that certain nations, such as Spain, may experience disproportionate adverse effects due to sanctions imposed on countries like Russia, regardless of their comparatively low defense budgets. For example, excluding sanctions from the index increased the US share to 47%, while the remaining NATO countries accounted for 29%. Other contributions were detailed as follows: NATO allies contributed 38%, Asia 13%, and both the Middle East and South America 10%. A fair contribution index score exceeding 1 was achieved by 19 nations in 2023, including the US, France, and the UK.
Eastern European countries, Greece, Italy, Poland, and the Netherlands are in the lead. Notably, South Korea has emerged prominently, despite US claims regarding its passive stance. Countries such as Canada, Slovakia, Australia, and Brazil are urged to augment their defense expenditures.
Trump needs to boost European defense spending to free up resources, as the new administration seeks to pivot towards enhanced defense collaboration under AUKUS. Peter Hegseth, a nominee for the Pentagon leadership, has indicated that the United States may reassess the global deployment of its military forces in light of the escalating competition with Russia and China. This recalibration necessitates that the US invests in its own defense without being encumbered by the repercussions of European military hysteria. Internal optimization initiatives were started by Michael Bloomberg, Chairman of the Defense Innovation Unit (DIU), who recently proposed a revamped defense procurement approach in the United States termed a “disinvestment” strategy, which involves reallocating up to 15% of the Pentagon’s budget from obsolete systems to innovative projects from offbeat suppliers, including unmanned systems across various applications. Bloomberg has called for increased funding for the DIU.
The forthcoming changes and collaborative plans in defense innovation will be extensively discussed at the ADM AUKUS Pillar II conference in February, centered on enhancing technological cooperation among Australia, the United Kingdom, and the United States, with a focus on building up military capabilities with latest technology initiatives. The conference will examine how trilateral collaboration can advance capabilities in artificial intelligence, hypersonics, cyber capabilities, robotics, machine learning, quantum and other emerging technologies.