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A Project of The Annenberg Public Policy Center

Trump Still Distorting NATO Spending

President Donald Trump continues to wrongly claim that the United States is paying as much as 90 percent of the cost of operating the North Atlantic Treaty Organization.

In reality, the U.S. share of the commonly funded NATO budget is currently just over 22 percent, according to the most recent figures from NATO.

Trump’s complaints about NATO spending are actually based on how much the U.S. spends on its own defense compared with what other member nations spend on theirs.

Still, the U.S. share of total defense spending by all alliance members in 2017 was an estimated 67 percent, according to inflation-adjusted figures from NATO.

Trump’s most recent criticism of NATO came in a series of morning tweets on July 9, just days before he attends a two-day summit in Brussels with other NATO leaders.

He wrote that it “is not fair, nor is it acceptable” that “The United States is spending far more on NATO than any other Country.”

As we have written before, Trump is conflating NATO’s direct and indirect spending to claim that the U.S. “is paying for 90% of NATO.”

In direct costs, the U.S. currently pays about 22 percent of NATO’s “principal budgets” that are funded by all alliance members based on a cost-sharing formula that factors in the gross national income of each country. The principal budget categories include the civil budget, the military budget and the NATO Security Investment Programme (NSIP).

“Direct contributions are made to finance requirements of the Alliance that serve the interests of all 29 members — and are not the responsibility of any single member — such as NATO-wide air defence or command and control systems,” NATO says. “Costs are borne collectively, often using the principle of common funding.”

NATO says its military budget for 2018 is €1.325 billion (or about $1.55 billion). Its civil budget is €245.8 million (or about $289 million). And the ceiling for the NSIP is €700 million (or about $822 million). That means the U.S. share for all three combined would be around $590 million, at most.

Direct spending may also include other “joint funding” projects that are arranged by participating NATO countries, but that are still overseen politically and financially by NATO. Those programs “vary in the number of participating countries, cost-share arrangements and management structures,” NATO says.

Trump, however, is referring to so-called indirect spending, which is the amount that the U.S. and other NATO countries willingly spend on their own defense budgets.

The 90 percent figure cited by Trump is still too high, according to NATO estimates.

In a June 27 update on spending, NATO said: “Today, the volume of the US defence expenditure effectively represents some 67 per cent of the defence spending of the Alliance as a whole.” That disparity “has been a constant,” NATO says, and has only grown since the U.S. began increasing its defense spending after the terrorist attacks on Sept. 11, 2001.

All together, the 29 alliance members spent an estimated $917 billion on defense in 2017, and the U.S. portion was about $618 billion.

(NATO says those figures are based on 2010 constant prices and exchange rates. In current prices and exchange rates, the U.S. share would be roughly 72 percent of total defense spending by the alliance.)

Either way, that still isn’t how much the U.S. “is paying for NATO,” as Trump has repeatedly described it.

As NATO said in its June update: “This does not mean that the United States covers 67 per cent of the costs involved in the operational running of NATO as an organisation, including its headquarters in Brussels and its subordinate military commands, but it does mean that there is an over-reliance by the Alliance as a whole on the United States for the provision of essential capabilities, including for instance, in regard to intelligence, surveillance and reconnaissance; air-to-air refuelling; ballistic missile defence; and airborne electronic warfare.”

On the other hand, Trump is right that many countries in the international security alliance come “nowhere close to their 2% commitment.”

In 2006, NATO members agreed to try to spend at least 2 percent of their gross domestic product on defense spending. In 2014, they agreed again to aim to meet that standard by 2024.

But in March, NATO said that only four nations met that guideline in 2017: the U.S. (3.57 percent), Greece (2.36 percent), Britain (2.12 percent) and Estonia (2.08 percent). Poland, at an estimated 1.99 percent of GDP, was just shy of the goal.

Trump is pushing for other countries to spend more on their own defense, while taking credit for some increases that have already occurred.

“While these countries have been increasing their contributions since I took office, they must do much more,” he wrote on Twitter.

There was an estimated 4.87 percent increase in total defense spending by Canada and European allies in 2017, marking the third straight year that defense spending by those countries increased, according to NATO. That was after several years of declines in spending by those countries.

NATO Secretary General Jens Stoltenberg told Politico EU’s Confidential podcast this month that he expects eight nations will cross the 2 percent threshold in 2018, which he said was up from three countries in 2014.

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"By some accounts, the U.S. is paying for 90% of NATO, with many countries nowhere close to their 2% commitment."
Monday, July 9, 2018