U.S.'s NATO Allies Set for Fourth Annual Rise in Defense Outlays

(Bloomberg) -- NATO said its European members and Canada would increase defense spending for a fourth year in 2018 as the alliance braces for another summit with U.S. President Donald Trump, who used his inaugural visit to try to browbeat allies into expanding their military budgets.

In the run-up to a gathering next month of North Atlantic Treaty Organization leaders, the alliance said the combined defense budgets of its European member countries and Canada would expand 3.8 percent, bringing cumulative growth since the start of 2015 to about 15 percent or $87.3 billion.

“Spending in 2018 is going up,” NATO Secretary General Jens Stoltenberg told reporters Thursday in Brussels after the first part of a meeting of defense ministers from the 29-nation alliance. “This is more money for defense across Europe and in Canada.”

With the U.S. accounting for more than two-thirds of NATO’s defense expenditure, Trump has turned longstanding calls by Washington for Europe to foot more of the common security bill into blunt criticism of allies since taking office in 2017 vowing to pursue an “America First” agenda.

At a NATO summit that May, Trump refused to offer an explicit endorsement of the alliance’s collective-defense clause and instead hectored fellow leaders to pay more for security.

‘Key Theme’

That spectacle -- at the inauguration of a new NATO headquarters that features a piece of the destroyed World Trade Center to commemorate the only time the alliance has invoked its mutual-defense provision -- has left officials at NATO wondering what to expect at the July 11-12 leaders’ meeting and scrambling to show progress over the “burden-sharing” issue.

“Burden sharing will be a key theme of our summit next month,” Stoltenberg said. “I expect all allies to continue their efforts.”

Discord between the U.S. and its longtime partners has grown after Trump withdrew from a landmark global agreement to fight climate change, abandoned an accord to curb Iran’s nuclear ambitions and imposed metal-import tariffs on national-security grounds dismissed by countries around the world.

Spending Promise

In 2014, NATO members pledged to spend at least 2 percent of gross domestic product on defense by 2024. In Europe, only Estonia, Greece and the U.K. achieved the goal last year. Poland, one of Europe’s fastest-growing economies, was at 1.99 percent.

On Thursday, NATO didn’t provide a forecast for defense spending as a share of GDP for all alliance members. That figure was 2.42 percent of GDP in 2017, when it grew for a second year.

The U.S. led with expenditure of 3.6 percent of GDP, while European nations boosted their spending on such outlays to an average 1.5 percent from 1.4 percent. Canada registered 1.3 percent compared with 1.2 percent in 2016.

The alliance is seeking to bolster its ability to address security threats including Russian meddling in eastern Europe, Islamic terrorism and cyber attacks. It’s upgrading its command structure for the first time since the Cold War, adding a maritime security center in the Atlantic and a center responsible for troop movements in Europe.

At Thursday’s meeting, defense ministers approved plans to make Norfolk, Virginia, the location of the new maritime center, and the southern German city of Ulm the site of the mobility center.

These additions “will be essential for alliance reinforcements across the Atlantic and across Europe,” Stoltenberg said.

©2018 Bloomberg L.P.