Trump criticized NATO defense spending and he made a very valid point

Do you really understand how NATO funding works?

NATO is funded with direct and indirect contributions

Ensuing NATO readiness for future conflict

An indicator of each state’s political will

Few countries ever spend 2% on their defense

Trump’s criticism still hold true today unfortunately

Netherlands - Not Meeting the Obligation

Czech Republic - Not Meeting the Obligation

Slovak Republic - Meeting the Obligation

North Macedonia - Not Meeting the Obligation

Trump was right

It isn't often we write that "Donald Trump was right" but early this year, President-elect Trump was very vocal about criticizing NATO defense expenditure. Further analysis reveals complexities in the financial contributions underpinning the North Atlantic Treaty Organization (NATO).

NATO has a problem

Comprising both direct and indirect funding from member countries, these contributions are essential for maintaining NATO's operational readiness and strategic capacities. The intricacies of this financial framework, critical to the alliance’s efficacy, tend to remain obscure to those outside the field of international defense studies.

Do you really understand how NATO funding works?

This dual-funding structure involves direct contributions to NATO's budget for common expenses and indirect contributions through individual member nations' defense spending, collectively ensuring the alliance's preparedness and operational efficacy.

NATO is funded with direct and indirect contributions

For example, direct contributions to the defensive alliance are made by every one of its member states based upon an “agreed cost-sharing formula” derived from each state’s Gross National Income according to NATO. This funds many of the alliance's functions.

What do direct contributions fund?

NATO’s civil budget, military budget, and Security Investment Program are funded by its common fund. But the other aspect of the defensive alliance’s readiness comes from its indirect funding, including the contribution of assets to missions.

Indirect funding and the 2% guideline

NATO’s 2% defense spending guideline, which is likely the alliance’s most understood aspect, is also included in its indirect funding. In 2006, the Defense Ministers of all NATO states agreed that they should commit 2% of their Gross Domestic Product to their defense spending. This was reaffirmed in 2014 with NATO's Defence Investment Pledge and again in 2023.

Ensuing NATO readiness for future conflict

This 2% defense spending target was designed to ensure the defensive alliance’s readiness. However, the 2% guideline is just that: a guideline. There is no set rule that must be followed according to NATO’s website, which may be why the guideline is so misunderstood.

An indicator of each state’s political will

The 2% defense spending guideline was meant to serve as an “indicator of a country's political will to contribute to NATO's common defense efforts” according to NATO, and it helped display the alliance’s “credibility as a politico-military organization" according to the alliance's website.

Few countries ever spend 2% on their defense

However, few countries meet the 2% spending target and it has become a major sore spot for some politicians who think some member states aren’t paying their fair share. Chief among these politicians has been Donald Trump.

Donald Trump has been a big NATO critic

Throughout much of Trump’s time as President of the United States, he criticized many of the alliance’s member states for not paying what they owed, something he did during a 2018 press conference while at NATO headquarters.

The spending charts are public

“Take a look at the chart. It’s public,” Trump explained according to the National Archive. “And many countries are not paying what they should. And, frankly, many countries owe us a tremendous amount of money for many years back.”

Accusing Germany of not paying enough

Trump accused Germany of only paying a little over 1% at that time whereas the United States was paying 4.2%. "I think that’s inappropriate," Trump said at the time. "You know, we’re protecting Germany, we’re protecting France. We’re protecting everybody."

Trump’s criticism still hold true today unfortunately

It’s been five years since Trump made those comments but his remarks still ring true. As of July 2023, the most recent statistics released by NATO on defense spending by all of its member states showed only 11 were spending 2% or over. So which of the over 30 members are meeting the perceived spending obligation?

United States - Meeting the Obligation

Percentage of Real GDP: 3.49

United Kingdom - Meeting the Obligation

Percentage of Real GDP: 2.07

Germany - Not Meeting the Obligation

Percentage of Real GDP: 1.57

France - Not Meeting the Obligation

Percentage of Real GDP: 1.90

Italy - Not Meeting the Obligation

Percentage of Real GDP: 1.46

Poland - Meeting the Obligation

Percentage of Real GDP: 3.90