Although the COVID-19 pandemic has massively reduced revenues of national governments in 2020, NATO allies significantly increased their military spending and eleven out of 30 alliance members reached the target of earmarking at least 2% of GDP for defence, according to NATO’s annual report released on Tuesday (16 March).
“NATO’s ability to defend our nations’ populations remained as strong as it was,” Stoltenberg said, emphasising the “steady increase in defence spending”, which has been on the rise for the sixth consecutive year.
Over the past year, NATO’s European members and Canada increased spending to an estimated 1.73% GDP, up from 1.55% in 2019, according to the report.
In 2020, NATO members spent a total of around €930 billion on defence, an increase that came despite economic disruptions caused by the COVID-19 pandemic. Compared to the previous year, this corresponded to a real increase of 2.7%, according to the annual report.
The figures are particularly relevant to NATO because Washington has been calling for years for a more balanced burden-sharing within the alliance.
The US still remained by far the NATO member with the highest defence spending, accounting for 3.7% of GDP and thus making up 71% of NATO’s combined defence expenditure.
A total of eleven NATO members – in addition to the US, this includes Slovakia, Greece, Great Britain, Romania, France, Norway, Poland, and the three Baltic States, Estonia, Latvia and Lithuania – had defence expenditure of 2% GDP.
Inner-alliance relations were strained under former US President Donald Trump’s administration, who had been frequently scolding European allies for not spending enough on their own defence.
Germany, the largest European NATO member, had particularly been the target of Trump’s criticism, with him even accusing Berlin of “dishonest behaviour” and announcing plans to withdraw 12,000 US troops stationed in Germany.
With a defence share of 1.56% of GDP, Germany was still well below the target last year, although Berlin’s expenditures rose from €46.9 billion in 2019 to €51.6 billion in 2020, according to the annual report.
Joe Biden’s new US administration has suspended the troop withdrawal plan and announced a thorough review.
In addition to Germany, NATO countries such as Spain (1.2%), Belgium (1.1%) and Luxembourg (0.6%) also remain far below the alliance’s spending target.
NATO sources told EURACTIV it will be crucial to see how defence spending will develop this year as the budget plans for 2020 had been drawn up before the COVID-19 pandemic hit.
“There are two scenarios here, either expenditure will be kept constant despite the economic downturn or governments will use a red marker on their budgets because of the crisis and trust that Biden might not mind as much as Trump would have,” the sources told EURACTIV.
However, despite the marked change in tone, the new US administration looks set to remain firm on pressing other members to do more to share NATO’s financial and military burden.
NATO’s recent reform report, compiled by a panel of experts and presented in December, has drawn up recommendations on how the military alliance should tackle new challenges in its backyard.
Among other things, it also includes the proposal to fund deterrence and defence measures at least partly from a community budget.
Alliance members would no longer have to bear all the costs themselves if, for example, they participate in the stationing of troops in the Baltic states or air surveillance missions.
NATO leaders are expected to consider the reform proposals at a summit in Brussels planned for later this year, potentially June.
However, according to NATO diplomats, a number of allies have made it clear they are not prepared to support such far-reaching proposals, even though relations with Russia remain tense while China is increasingly seen as a growing threat for the alliance.